The Purchase Process Step By Step...

1. Consultation: Your consultant will take time at the beginning of your trip to discuss your goals, ideas and expectations. This will allow your consultant to help you pick the most suitable option from our portfolio of properties. We recommend the viewing of 5-6 properties a day.

2. Viewing trip: Your consultant will co-ordinate viewings of chosen properties and drive you to the locations. All our agents are well informed about the local areas and will tell you all you need to know.

3. Decision: If you find a property you like, your consultant will guide you in making an offer, negotiating the final price, setting the purchase terms and conditions of payment. He/she can also advice you with regards to renovations and other investments.

4. Legal Representative: You will need to choose a legal representative in Montenegro to act on your behalf and take responsibility for the purchase process. Damen-Montenegro are happy to provide you with a list of lawyers in Montenegro with whom our clients deal regularly.

5. Power of Attorney: If you are not in Montenegro you will need to give a power of attorney (POA) to your legal representative in order for him/her to act on your behalf through the process of the preliminary agreement, sales contract, purchase tax and the final charge of ownership in the land registry. The POA has to be signed in front of the court (working days from 8 to 13 hrs) and translated by a court verified translator. Therefore, it is essential to prepare all the necessary information at least one day in advance.

6. Bank Account: It will be necessary for you to open a bank account in Montenegro and to give your legal representative authorisation to make the transfer for the property purchase from your bank account on your behalf. Please make sure you are supplied with transfer instructions which you will need for sending the money from your home account.

7. Title Check: Your lawyer will perform a title check on the property for you and confirm to you whether the property has the necessary paperwork for a clean purchase.

8. Survey:If you require independent assessment of the property, Damen-Montenegro can put you in touch with reputable engineers, architects and builders, etc., who will provide quotations for any necessary work.

9. Deposits: Deposits and reservations are often requested in cash and range from 5-10% of the agreed purchase price.

10. Pre-contract:A draft of the pre-contract will be drawn up, coordinated by your legal consultant. The final sales contract will be agreed between the lawyers of both the buyer and seller. Usually the reservation is 5% of the agreed purchase price, while the deposit paid on signing the pre-contract is 10%. Conditions usually include a standard clause stipulating that if the buyer pulls out of the purchase, then he/she loses the depost, while if the seller pulls out, then he/she is obliged to return double the amount of the deposit or reservation.

11. Money transfer: Please bear in mind that money transfers can take from 7 to 15 days to reach your Montenegrin bank account. This is because the transfer must go through an intermediary bank (usually Frankfurt). Some banks in Montenegro require at least three working days' notification for large cash withdrawals.

12. Purchase contract: This will be executed by your lawyer and coordinated by your consultant.

13. Contract Signing: Once the contract is signed by both the buyer and the seller (or their legal representatives), the buyer is the actual owner although the change of ownership in the land registry must subsequently be carried out to complete the process.

14. Purchase Tax: Purchase tax on a real estate in Montenegro is 2% of the value of the property as determined by the Inland Revenue Office. The value for the tax calculation cannot be smaller than the price stated in the sales contract.

15. Change of Ownership: Once the 2% purchase tax is paid, your lawyer will present the purchase contract (signed by both parties), receipt of tax payment and official request for the change of ownership of the property to the local Cadastre. The change of ownership procedure is usually completed within 60 days.

16. Property management: Your consultant will provide you with a list of companies that provide property management services, which include obtaining property and contents insurance quotes, the management of utility bills, renovations, lettings, etc.

Cost of Purchase

Real Estate Tax - Purchase Tax is set a a rate of 3% of the value of the property which is determined by the Inland Revenue Office. The property value for the tax calculation cannot be smaller than the price stated in the sales contract. Payment is typically due within two months of the purchase.

Lawyer F ee - Lawyer's fee is approximately €750 - €1.500 per transaction. However some lawyers also charge 1% + VAT (tax) of the purchase price.

Stamp Taxes - This is a one time charge for court registration of purchase contracts or pre-contracts.

Company or Private Route

There are two ways to purchase property in Montenegro, the traditional Private Buyer Route or the Corporate Buyer Route - forming a company. The legal advisor that we recommend will analyse our individual client's needs and expectations, and then will advise the most appropriate route to meet our client's objectives.

Foreign Exchange Transfers

The official currency in Montenegro is the Euro. When buying a property off plan in a new development, there is usually a phased payment process. To protect you against foreign exchange fluctuations that may work against you until the final payment is due, we can refer you to a foreign exchange currency broker who can help you eliminate this risk. In this way, you can precisely plan the amounts that you will need to have available giving you peace of mind.

Tax Implications

Montenegro does not have a double taxation treaty with all countries. We advise our clients to seek independent taxation advice in their local country in order to find the most beneficial structure for a tax perspective.

Financing

Financing for foreigners to buy property is now available in Montenegro through one bank. Please contact us and we will give you more information about this so you can contact them directly. The banks offering mortgages study case by case. There are however other options available for clients who do not wish to make an outright payment for their property. If you own a property in your home country, equity can be released by way of arranging a mortgage or loan against this. This service is provided directly by most banks and building societies, or you can seek advice from an independent mortgage advisor in your country of residence.