The new law on legalization in Montenegro has blocked the sale of thousands of apartments, which has created significant problems for the real estate market.
What Happened
It is estimated that there are more than 100,000 illegal buildings in Montenegro. The adoption of a new law on legalization has stopped their further spread, but at the same time has stymied many existing transactions. The ban also applies to citizens who previously purchased such real estate and registered it in the cadastre with certain encumbrances. At the moment, they cannot sell or transfer it, as any, even minor, deviation from the approved project makes the transaction impossible.
What Is The Essence Of The Law
The new law, adopted a little less than a month ago, sets a deadline of six months for owners to report illegal buildings, followed by another five years for the legalization procedure. During this time, the sale of such real estate is not allowed, which raises the question of the duration of the entire process and the stagnation of the market.
About 62,000 illegal buildings have been officially registered, while it is estimated that there are at least twice as many in reality. At the same time, the previous law on legalization was in force for more than seven years, but only about 4,000 buildings were legalized, which further reinforces suspicions that the new procedures may take a very long time.
The Problem In Practice
This problem was first noticed by notaries, who in practice cannot issue a purchase and sale agreement if there is even the slightest deviation from the approved project. This means that even if all the necessary documents are available and taxes are paid, the owners are deprived of the right to dispose of their property, which creates a legal collapse.
Lawyers and notaries remind that for years the state has allowed the sale of such buildings and their registration in the cadastre under special conditions, and with the new decision it actually "pulled the trigger", leaving thousands of apartments and houses without movement. It is still unclear how much this will affect the real estate market, but experts are already predicting stagnation and a possible decline in prices, as supply will be limited and demand from investors may decrease.
Expert Opinion
"The main consequences of this law will fall on the shoulders of citizens who own such buildings. Their rights to dispose of property, that is, the right to peaceful use of property guaranteed by international acts, will be under threat. Inevitably, there will be a question about the constitutionality of such a provision," says Darko Churic, president of the Notary Chamber of Montenegro, noting that citizens are massively asking questions and complaints.
Government Position And Financial Expectations
The Department for the Legalization of Illegal Buildings believes that the ban on the sale of illegal real estate is necessary in order to curb the practice of illegal construction. "We believe that article 33, which prohibits illegal buildings, is good. We ensure the safety of those who built legally, and motivate those who built illegally to legalize their buildings as soon as possible and only then put them into operation. We are not going to abandon this decision," says Nikola Rajnatovic from the Department.
The state expects that due to legalization it can receive from 200 million euros to 400 million euros. However, given the modest results of previous regulations and slow administrative procedures, the timing and ability of the system to handle the expected number of requests remains an open question. Realtors warn that the uncertainty associated with the new law may force investors and potential buyers to postpone their plans, which, in turn, will lead to a decrease in activity in the market and its gradual cooling.
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