Usually, in editorial materials on HomesOverseas, we talk about how to buy a house in a particular country; However, the sale process also has many nuances; Difficulties, in particular, are associated with calculations and transfer of funds to the Russian Federation if the owner is a Russian; For the first publication in a new section, we chose a direction with a fairly active market – Montenegro.
Housing sales in Montenegro have decreased slightly compared to the boom of 2020 – 2022, nevertheless, there is a demand for real estate by the sea and in the mountains. The owner of an apartment or villa, who puts it up for a real, not an inflated price, can find a buyer for his object in one or two high seasons (spring, autumn). At the same time, hot offers sometimes fly away in a couple of weeks.
Stages of real estate sale in Montenegro
We study the market and contact the agency
The sale of real estate is a complex and long–lasting process. First, you need to “look around the market” by searching the Internet for similar objects, determine for yourself the minimum price for which you agree to part with the property, think about how and where you can accept payment. If you find it difficult to assess, consult with a realtor. Agents monitor the situation at the moment and will help not to make it cheap – on the one hand, and not to scare away customers – on the other.
We recommend that you immediately contact a real estate agency in your municipality. A specialist will advise you on how to accept payment, help you remove encumbrances, if any, and become your representative during the transaction if you are leaving.
There are many so-called gray realtors on the market of Montenegro. You should not mess with them, risking your money and nerves! Choose a company that is officially registered as a legal entity, has an office, a website. Professionals protect their reputation, provide high-quality service and take care of customers.
Of course, you can also sell an object yourself, especially if you live in the country, know the context well and are ready for certain troubles and risks.
We advertise the object and show it to potential buyers
You will need good photos of the apartment or house itself, which should be supplemented with views from the window and pictures of the surrounding area. It is important to present your “product” to the buyer in the most advantageous way!
An accurate and moderately detailed description will also help the client not to miss an offer among similar ones. We recently talked about how to avoid mistakes by placing an advertisement on a real estate portal.
If you have entrusted the sale to a broker, he is engaged in the search for a buyer, and, therefore, advertising on various sites. By the way, agencies sometimes find a buyer among their “old” clients by sending a newsletter to a closed database.
The realtor usually takes over the impressions as well. You leave the key with the agency for safekeeping, and it conducts “field work”, showing your apartment or villa to customers. Professionals do not just lead tours from room to room, but make the right accents, convincing you to make a choice in favor of your lot.
If you are showing the object yourself, it is worth preparing phrases-magnets that will accompany the demonstration of bedrooms, bathrooms and terraces. This can be information about the distance to the sea/lifts to the mountains – for resort housing or about shops, clinics, schools – for urban apartments, as well as, for example, mention of pleasant neighbors, information about security systems, transport links, brands of equipment, wall thickness, sound insulation, and so on.
We conduct negotiations and conclude a reservation agreement
Let’s say the buyer liked your apartment. Then there is a discussion of the details:
- final cost,
- payment terms and methods,
- the amount of fines if someone does not fulfill their obligations,
- a list of what furniture/appliances remain in the apartment,
- the date of signing the main agreement.
If the parties have reached a consensus on all issues, a reservation agreement is drawn up. The buyer makes a deposit in the amount of 2000 – 5000 euros to confirm their intentions. The real estate agency acts as a guarantor-intermediary for the further successful completion of the transaction. After that, the seller, if he lives abroad, can fly in to sign the contract.
We sign the purchase and sale agreement
All real estate transactions, in accordance with the legislation of the Republic of Montenegro, are registered with a notary.
It is necessary to reserve a free time slot at the notary office for signing the purchase and sale agreement.
What does the seller need to prepare before the transaction?
- A receipt for payment of property tax for the last year. You request an extract from the tax office of your municipality in advance about the debts and repay them.
- Utility bills: electricity, water, garbage collection, maintenance of the complex.
- The bank details for which the buyer will have to transfer the amount.
- Consent to the sale from the spouse, if the property was bought in marriage, or a prenuptial agreement.
Who is present at the transaction?
- notary;
- are you as a seller or your proxy agent;
- the buyer or his representative by proxy;
- a court interpreter who will perform simultaneous translation during the reading of the contract. The presence of a court interpreter is mandatory for all foreigners who do not have a certificate of knowledge of the Montenegrin language!
Since all information on the transaction is provided to the notary in advance, in his presence it remains only to sign the contract and sign the book of registration of notarial acts. Next, the parties are given stitched and certified copies of the contract. At the same time, the buyer receives an incomplete version before payment – without an article on the transfer of ownership.
We accept payment from the buyer
When signing the contract of sale at the notary, the deposit is paid in cash. According to the legislation, it should not exceed 10,000 euros (the deposit that was left during the reservation of the object can be included in this amount). The buyer transfers the remaining amount to the seller’s bank account opened in any country in any currency (equivalent at the exchange rate on the agreed date), or transfers it in cash or through a currency transfer. Let’s repeat, all the conditions for calculations are prescribed in the contract.
The transaction is considered completed for the seller after full payment of the property by the buyer. As soon as you have received the entire amount, inform the notary about it, and the process of transferring ownership begins.
At the stage of transfer of ownership, the presence of the seller is not necessary.
How can I accept payment to a citizen of the Russian Federation?
Funds cannot be transferred directly to a Russian bank account from a buyer who is a citizen of Montenegro or another country from the list of so-called unfriendly ones, such a payment will not be accepted by the bank.
If the seller has an open account in Montenegro or another country not under sanctions (for example, Kazakhstan, Kyrgyzstan, Israel), you can accept payment to it. However, you need to check with the bank whether it will be able to make a transaction to Russia if the owner needs money in the Russian Federation.
If there is no account, the development of a payment acceptance strategy begins. Currency transfer and payment in cryptocurrency can be used. The legislation of Montenegro has limited cash payments (no more than 10,000 euros), but such transactions, nevertheless, are still taking place. In this case, for the seller, again, the question arises of withdrawing money from Montenegro. It will be difficult to take them out through the declaration and along the red corridor.
It happens that both parties to the transaction are citizens of the Russian Federation and want to pay in rubles. There is such a possibility. The details are also spelled out in the contract: the payment terms, the remaining amount to be paid in euros, you can even fix the conversion rate of euros into the ruble equivalent. If the seller does not have an account outside of Russia, then the option of a transaction with a compatriot is preferable.
Another special case is when the buyer is a citizen of a state from the list of friendly ones. In this case, it is possible to transfer directly to the seller’s Russian account in a bank that is not disconnected from SWIFT.
Taxes and additional expenses for the sale of real estate in Montenegro
The seller is obliged to pay a tax on the income of an individual in the amount of 15%, regardless of the period of ownership of the property. The tax base in this case is the difference between the price you sell for and the price you bought the object for. To reduce the tax base, the confirmed expenses for the repair and equipment of the apartment are taken into account. The tax is paid at the beginning of the year following the year of sale. The deadline for filing a tax return is from January 1 to March 31. It should be noted that the Montenegrin authorities do not actually track the payment of this tax.
Among the additional expenses of the seller is a commission fee to the agency, since in Montenegro the buyer almost never pays for the broker’s services.
Notary costs are usually borne by the buyer’s side, but in some cases the seller and the buyer can share them.
Also, the seller, once again, needs a judicial (sworn) translator in the transaction. His services cost 50 euros per hour.
How are the seller’s rights protected during the transaction?
The seller is protected during the transaction due to two points.
The first is a notarized non–refundable deposit. If the buyer refuses the transaction, he remains with you. But it is worth remembering that if you refuse to complete the transaction, you will have to pay the buyer a double deposit.
The most important point that ensures the safety of the parties is the encumbrance on the real estate being sold. When signing the contract of sale, the notary places a restriction on the object in the cadastre. For the buyer, this means that the apartment cannot be re-sold or alienated. For the seller– it means that it will remain in his ownership until the closing of the purchase and sale agreement, that is, until the full settlement. If the transaction is not completed successfully, the owner remains with both the property and the deposit!
Pitfalls during the sale of real estate in Montenegro
Properly prepared transactions usually go smoothly. However, there are also various kinds of obstacles.
- Inconsistency of actions with one’s own family. The spouse may not give consent to the sale. Recall that it is required if the property was acquired in marriage and without a prenuptial agreement.
- Restriction on sale due to utility bills. It happens that the owners did not come for a long time, and they formed a debt to utility providers and a mark on the restriction on sale in the ownership sheet. To lift the ban, it is necessary to pay the bills and submit an appropriate application to the cadastre.
- Restriction on sale due to illegal actions of the developer. For example, the company illegally completed a floor, and this led to the illegal status of the whole building.
- Unregistered property rights of the seller.
Does the seller have to come to the deal?
To sell an apartment, you either need to fly to the deal in person, or issue a power of attorney to an agent. If you have chosen the second option, it is better to prepare the paper in advance directly in Montenegro. However, you can also make it at a notary in your country and send it. It is important to compose the text correctly so that there are no problems with government agencies. Already on the spot, the power of attorney is translated into Montenegrin and apostilled.
Realtors do not recommend sellers to indicate in the power of attorney the possibility of receiving the entire amount, as this involves great risks.
If you want to attend the deal yourself, set aside at least a week for the trip. This time will be spent on collecting the necessary documents, paying taxes, and making an appointment with a notary. It should be borne in mind that the queue at notaries in the Budva Riviera is longer than in the Manor, respectively, you will have to wait longer for a free time slot.
Thank you for the help in preparing the material of our experts in Montenegro:
Svetlana Zamotin, Director of the Tradegoria Agency
Irina Rasskazova, manager of the Antarex agency
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