First, we should note that the Law does not recognize the term “real estate purchase agreement” but only “sales agreement”. The Law on Obligations defines that a sales agreement obligates the seller to transfer ownership of the sold item to the buyer and to deliver it to them for that purpose, while the buyer obligates to pay the price in money and take over the item.
The real estate purchase agreement is just one form of sales agreement and is the most commonly concluded agreement in legal transactions.
When concluding a purchase agreement, whether for an apartment, house, plot, garage or land, it is extremely important to be familiar with your rights and obligations, so that the entire process of buying or selling real estate is safe and efficient. It often happens that due to an unprofessionally drafted real estate purchase agreement, significant damage occurs, both for buyers and sellers.
Preliminary Checks
If you have found real estate you are interested in and plan to buy, the first and basic step to take before concluding the purchase agreement is to check the data registered in the real estate cadastre: whether the person presenting themselves as the seller is actually registered as the owner of the property, whether there is a co-owner and the extent of their rights, whether there are records of encumbrances or prohibitions on the property, and other important information.
Then, before concluding and notarizing the purchase agreement, the seller must prove ownership of the property, i.e., prove the legal basis for acquiring ownership of the property being sold (this is done through a sales agreement, gift agreement, inheritance decision, court judgment establishing ownership rights, life maintenance agreement, etc.).
Form of the Real Estate Purchase Agreement
The real estate transaction agreement is concluded in the form of a notarized (solemnized) document before a notary public in whose area the real estate that is the subject of the agreement is located. If the properties that are the subject of the agreement are located in the area of multiple notaries, each of those notaries is competent. An agreement not concluded in the prescribed form does not produce legal effect.
Content of the Real Estate Purchase Agreement
The real estate purchase agreement, like any agreement, must first contain basic information about the contracting parties, then information regarding whether the seller is a registered (knjižni) or unregistered (vanknjižni) owner of the property, followed by data describing the property itself (address, area, cadastral parcel number, cadastral municipality, property list, etc.), and the legal basis for acquiring the property.
Essential Elements – Subject Matter and Price
The items that are the subject of the agreement are real estate. Real estate, within the meaning of the Real Estate Transaction Law, includes land (agricultural, construction, forests and forest land), buildings (commercial, residential, residential-commercial, economic, etc.) and other construction structures, as well as separate parts of buildings (apartments, commercial premises, garages and garage spaces) which may have separate ownership rights.
These properties may be registered (uknjižene) in the competent real estate cadastre or unregistered (neuknjižene), if the owner is not registered as the holder of ownership rights in
the cadastre.
For the purchase agreement to have legal effect, the price must be determined or determinable. The price is determinable if the agreement contains sufficient data by which it can be determined. Payment of the purchase price may be made in dinars or in foreign currency, and the Law on Prevention of Money Laundering and Terrorist Financing provides that cash in these transactions may be used up to the amount of €10,000, and for amounts above that, payment must be made via bank transaction.
Clausula Intabulandi
So that the buyer can register their ownership rights on the property based on the notarized agreement and proof of payment, without special consent from the seller and without their further presence, a clausula intabulandi (registration clause) is inserted into the real estate purchase agreement. Without the clausula intabulandi, it is not possible to transfer ownership rights in the cadastre from the seller to the buyer.
Considering that inserting the clausula intabulandi into the agreement with deferred payment is risky for the seller, it is often given in the form of a separate statement after the full payment
of the purchase price.
Sale of Property with Co-ownership – Pre-emptive Right
If multiple persons have ownership rights to a property in certain shares, the person intending to sell their co-ownership share is obliged to first offer it for sale to the other co-owners. If there are multiple co-owners, the co-owner with the larger share has priority in exercising the pre-emptive right. If there are multiple co-owners who would have the pre-emptive right, the
co-owner has the right to decide to whom they will sell their share.
If the holder of the pre-emptive right does not respond to accept the offer within 15 days of receiving it, the seller may then sell the property to another person, but not under more favorable conditions.
An owner intending to sell agricultural land is obliged to first offer it to the owner of the neighboring agricultural land. If there are multiple owners of neighboring land whose agricultural land borders the seller’s land, priority goes to the owner whose land borders the seller’s land to the greatest extent. If there are multiple owners with equal border lengths, priority goes to the owner with the largest land area.
The offer must contain information about the property, price and other sale conditions, and must be in writing.
If the holder of the pre-emptive right does not accept the offer, and the owner does not sell the property to a third party within one year of the offer being rejected, in the event of a new sale, the procedure must be repeated – the offer must first be made to the co-owners again.
If the seller sold the property without first offering it to the holder of the pre-emptive right, or sold it under conditions more favorable than those in the offer, the holder of the pre-emptive right may file a lawsuit requesting that the real estate sale agreement be declared invalid with respect to them and that the property be sold and delivered to them under the same conditions. The deadline for filing the lawsuit is 30 days from the day the holder of the pre- emptive right learned of the sale, and no later than three years from the date of conclusion of the agreement.