What is “illegalized” or “illegal” real estate in Montenegro and what are the risks for the buyer

The concept of “illegalized” or “illegal” real estate

In the Montenegrin document on the ownership of real estate (list nepokretnosti) you can find a note: nema dozvolu, that is, “there is no building permit”. If you saw such a phrase, then you have a document for “illegalized” or “illegal” real estate. Tens of thousands of buildings in Montenegro do not have building permits, but at the same time they are the subject of turnover in the market – they are sold, bought, inherited and used for decades.

Background: where did illegal houses come from in Montenegro

In 1991, the disintegration of Yugoslavia began. Over the next 15 years, seven independent states appeared on this territory.

Local authorities did not have time to draw up new projects for the development of territories. In some regions, DUPs (Detailed Urban Plans) have not been developed for 20-30 years. This meant that the owners had no chance of obtaining an official building permit.

Having built a house, the owner registered it with the cadastral and tax services. The state accepted this building and issued a certificate of ownership (leaf of inaccuracy) with the mark “Nema gradzhevinske allowed”. After that, the object was included in the turnover in the real estate market. It was possible to perform any operations with it – to sell, give, rent.

This happened not only with private owners who built houses for personal residence, but also with developers. As a result, thousands of apartments in high-rise buildings entered the market without permits.

Start of legalization

A few years ago, the Montenegrin authorities finally took up cadastral issues.

Demolition of private property is not possible unless the property is located in a protected area. The owners are not to blame for the fact that during the transition period, state institutions were not ready to accompany the construction. Therefore, in 2016, the Montenegrin authorities launched the process of mass legalization of real estate. The Parliament adopted the Law “On the Regulation of Informal Objects” (Zakon o regularizaciji neformalnih objekta), which made it possible to bring all squatter construction out of the shadows. For legalization, you need to submit an application, collect a small package of documents and pay a tax for connecting to city communications (komunalije).

The deadline was July 15, 2018. But it failed to meet the deadline. In October 2019, the authorities reported that they received 51,000 requests, of which about 30,000 were processed.

It was decided that legalization would become indefinite, but only for objects that appeared before 2018 and were marked on orthophotomaps, which were made just during this transitional period. Thus, houses built after the deadline will not be legalized.

Real estate without building permits is still the norm in the Montenegrin market, there are still many such housing. You should not be afraid of buying such apartments and houses, but you need to carefully check the documents.

Recommendations

What if you are thinking about buying a house or apartment without a building permit? Here are our tips:

1) Find out if the owner of the property has submitted documents for legalization and whether they were accepted by the “opshtina”. If documents for legalization have been submitted and the owner confirms the presence of Elaborat, then you just need to wait until the cadastral service begins the legalization process in your area.

2) Be prepared to pay the so-called “communal”, a tax for connecting to city communications. On average, the fee on the coast is €70–150 per m2 of real estate. With a one-time payment, the amount is reduced by about 40%; you can also arrange an installment plan for any period up to 10 years.

3) Contact our specialist in order to find out all the details: whether the Technical Conditions were observed during the construction of the building, for example, whether extra floors were built, or that the building did not go overboard on someone else’s site.

Stages of legalization

• Applying

• Confirmation of application submission

• Analysis of object stability and safety

• Decision on legalization

• Standard package of documents for legalization of a house up to 500 sq. m

•    Statement. It can be submitted by the owner himself or his representative.

• Certificate of ownership – the so-called sheet of inaccuracy, an extract from the state register.

• Survey of the state of the object (elaborat), certified by a licensed geodetic organization (three copies), a copy of the cadastral plan or an excerpt from the cadastral plan.

• Seismic Safety Certificate – This is also prepared by a licensed professional such as an architect.

• Architectural design (three copies) by a licensed company. In addition to the basic characteristics of the object, it contains drawings of the foundation, cross sections and facades, a description of engineering solutions and communications. An architectural project does not need to be submitted for objects that are used as the main residence.