(AG Real estate) Checking status of real estate before contract is signed

The next topic in the series of presentations of legal perspectives related to the domain of operations in the field of real estate is the due diligence on the status of a particular real estate before the contract is signed and executed. At this moment whereas the new, recently adopted Constitution of the Republic of Serbia has not yet reached its full scope and significance, the title subject is thus more than interesting and important.

At the moment when Serbia is trying to bring closer its legal and economic scene, through its new legislative projects to the contemporary solutions and systems present in Europe and rest of the world, bringing closer this issue to the foreign investors represents a very important segment in the process of further attraction and completion of their investments on the Serbian market.

The decision on purchasing a particular real estate depends on the legal certainty on the conclusion of such deal. We are faced with the questions whether we are buying from the owner, whether that real estate is under mortgage or other encumbrances, whether some third parties have any claim related to the said real estate and whether that diminishes or limits in any way the ownership rights of the future buyer, etc.

The answers to above questions can be found in the data in the respective Public records: – Except from the land books kept by the court, Real estate Certificates and the ownership certificates – the data on real estates kept by Republic Geodesic Institute – Real Estate Registry Agency, while there is also a Deed Book for certain smaller part of territory of Republic of Serbia. There is an assumption of absolute accuracy of the data contained in above Public records.

Current situation

Keeping records of real estate and related rights has been regulated by the Law on State Survey and Real Estate Registry and Registration of rights to Real Estates, Legal Rules from the law concerning Deed Book – where certain regulations from the Law on deed books of 1930 are applied.

The Law on State Survey and Real Estate Registry and Registration of Claims to Real Estates stipulates that the rights on real estates are acquired, transferred, limited and revoked with the registration within the real estate Registry, and that they have legal effect to the third parties starting from the date of registration. In case of multiple rights to one real estate, the right that was registered earlier has the priority.

At the moment a very complex and voluminous procedure is pending concerning combining of data on real estate from the Deed books with the data on real estates kept by the Real Estate Registry Agency. Once that work is completed, all data on real estate and actual rights will be included in the Real Estate Registry. Thus, the Republic Geodesic Institute, with its Real estate registry agencies, will have all data on lands, buildings, holders of the rights, as well as possible limitations concerning those real estate. Of course, as soon as this procedure ends, the deed books will cease to be valid, and the proof of actual rights related to real estate will be the document called the Real estate certificate.

Prior to completion of the aforementioned procedure, potential buyers of real estate in the Republic of Serbia has to firstly check all data that can be found within the Public books. At this moment, it means that the potential buyer should acquire excerpts from the Public books and do the inspection in those books. The inspection of Public books should also be done, if possible, on the very day of signing of the contract, which contract represents the legal base for acquisition of appropriate rights to the real estate. In this way, the potential buyer shall have required legal certainty necessary for the conclusion of such a deal.

Our advice to all potential buyers is to seek assistance and guidance from experienced lawyers before they enter into the sales procedure.

author : Dragan Ivković, partner

[email protected]

Božović, Đelić&Ivković, Beograd

source : AG Real estate