Buying an apartment is probably one of the most significant investments in life, and the decision between new construction and an older building can have long-term consequences on both the quality of living and your finances and legal security. As an attorney with experience in real estate transactions, I will explain everything you need to know before making a decision.

What is New Construction and What is an Older Building?

• New construction refers to apartments built in the last few years or still under construction.
• Older buildings are apartments that have been in use for decades and are located in older buildings.

Table: Advantages and Disadvantages of New Construction vs. Older Buildings

Aspect	New Construction	Older Building
Price per square meter	Higher, with possible VAT exemption for first apartment	Lower, but renovations can be expensive
Move-in readiness	After completion of works and obtaining permits	Immediately, if the apartment is registered and free of encumbrancesa
Energy efficiency	Modern insulation and installations	Often poorer, outdated installations
Legal documentation	Purchase agreement, pre-contract, investor verification	Possible inherited documentation issues
Risks and controls	Delays, possible mortgage, illegal construction	Possible inherited documentation issues
Warranty period	Exists (elevator, installations, facade)	Does not exist, everything at buyer’s expense

Buying an Apartment Under Construction – Legal Framework and Investor Verification

Buying an apartment under construction often seems like a more favorable option because prices are lower and the buyer can influence the appearance and layout of their future home. However, this type of purchase carries significant legal risks, especially when the investor is not transparent or appropriate security is lacking.

One of the key steps is investor verification, which you can begin with the following steps:

• APR (Business Registers Agency): Search the APR website to check if the investor is a registered company, its history, legal representatives, and whether there have been any changes or deletions of activities.
• National Bank of Serbia (NBS): On the NBS website, you can check whether the investor’s accounts are blocked, which may indicate financial problems and difficulty fulfilling obligations to buyers.
• CEOP (Central Registry of Integrated Procedures): This is where you check whether a construction permit has been issued for the specific building. This information is crucial because without a construction permit, the building cannot be legalized or registered.
• Cadastre and Land Ownership: Check whether the investor is registered as the owner or holder of usage rights on the land on which they are building.
• Documentation Review: The investor should have the following documents available: location information, construction permit, main project, proof of resolved property relations, and consents from relevant utility companies (water supply, electricity distribution).
• Talk to Previous Buyers: Contacting residents of previous buildings constructed by the same investor can be useful. Their experiences may indicate potential problems.

It is recommended that the contract with the investor include:

• An obligation for the investor to obtain a use permit at their own expense
• A clause delaying the investor’s right to the full purchase price until the use permit is obtained
• A security instrument, such as a bank guarantee for proper contract performance or a pledge statement

Buyers often overlook the possibility of agreeing on contractual penalties if the investor fails to fulfill their obligation, or a bank guarantee that provides security at least up to a specified amount. All of this is particularly important because, although it is possible to seek compensation through the courts, collection is often uncertain.

Buying an Older Building – Legal Checks and Advice

Older buildings are attractive to buyers due to lower prices, the possibility of moving in immediately after purchase, and often better locations. However, attention must also be paid to the following:

• Ownership and Legal Status Verification: The apartment must be registered in the cadastre with the seller as the sole owner. It is necessary to check whether there is a mortgage, recording of a dispute (zabeležba spora), pre-emptive right, or lien (plomba).
• Condition of Installations and Structure: A technical inspection of the apartment’s condition (electricity, water, heating) is recommended, especially in buildings over 30 years old.
• Utility Debts: It is necessary to check whether there are unpaid bills that may transfer to the buyer after the contract is concluded.
• Energy Passport: Older buildings often do not have satisfactory energy efficiency, which may mean higher monthly costs.

The Role of an Attorney – Your Legal Protection

Regardless of whether you are buying an apartment under construction or an older building, working with an attorney who specializes in real estate transactions significantly increases your legal security.

An attorney will:

• Analyze all documentation
• Check the status of the property in the cadastre and with relevant institutions
• Draft or review contracts and clauses that protect the buyer’s interests
• Advise on possible risks and propose protection mechanisms
• Handle the notarization of the contract and submit registration requests to the cadastre