Purchase of real estate under construction from an investor, new construction
In this text, we shall try to provide simpleanswers to the questions which should be taken into account when buying an apartment, office space and/or garage, garage space from an investor, and we will also provide useful information from the standpoint of legal security and legal protection.
The text contains useful information as to whether the purchase of real estate in the construction stage is legally regulated, how it is regulated, in what stages and to what extent the buyer is legally protected, and whether there are risks for both the buyer and the seller in the process of purchasing real estate in the construction stage.
Purchase of real estate in the construction stage based on the issued construction permit (new construction).
Which documents are necessary for the purchase of real estate to be legally carried out during the construction stage?
The sale of apartments, office space, garages, in the construction stage is legally allowed. The person in the role of the seller with whom the contract is concluded is the Investor.
An investor is a company that holds certain rights on the land on which construction is being conducted, holds a construction permit, and has the right to build.
A construction permit is an administrative act adopted by the competent administrative body in the implemented administrative procedure, on the basis of which the Investor is granted the right to build a certain residential or residential-commercial facility, with precise indicators of the cadastral plot and cadastral municipality, the requirements of the facility in terms of the number of floors and height of the facility, gross and net area of the facility, number of apartments, office units and garages, and the validity period of the construction permit.
If real estate is purchased in this stage, what the potential buyer can do is to check the data publicly available on the website of the Agency of Commercial Registers, on the website of the real estate cadastre and potentially on the website of the National Bank of Serbia.
By inspecting the publicly published data, it is possible to obtain information about the Investor, their operation, liquidity, profitability, assets, indebtedness, connection with other legal entities, etc.
This information can be very useful because the risk is not the same from the standpoint of contract fulfilment if the real estate is purchased from an investor whose financial indicators point to successful and stable business and from an investor whose financial indicators show that it is annon-liquid and unprofitable business.
By inspecting the real estate cadastre, it can beestablished whether the person in the role of the seller has beenregistered with the appropriate right to the land, and potential existence of encumbrances and notes.
Further search in the register of construction permits can show whether a construction permit has been issued, with a legal validity clause, to whom the permit is issued, whether there is also a financier in addition to the investor, if the works have been registered, i.e.inwhich stage the facilityconstruction is.
By inspecting the website of the National Bank of Serbia, you can search for blocked debtors, and useful information can also be obtained by inspecting the register of bills of exchange, based on which a certain risk assessment can be performed with regard to the purchase of specific real estate in the construction stage.
What is the procedure for concluding the contract and mandatory contract form when buying an apartment, office space, garage in the construction stage?
The agreement reached by the buyer and investor on the subject of the legal transaction is followed by the procedure for concluding and certifying the preliminary contract or immediately the main contract at the notary public.
In the process of notarial solemnization of the contract, the competent notary public performs certain checks by inspecting adequate registers, i.e. first of all, they check whether there is a previously concluded contract regarding the same real estate and whether the person who appears to be the seller is authorized to conclude the legal transaction, as well as whether the necessary consents for the conclusion of the legal transaction have been secured.
What are potential risks when buying real estate in the construction stage, failure to fulfill the investor’s obligations in terms of construction completion, obtaining a use permit, etc.?
When purchasing real estate in the construction stage, the investor undertakes to complete the construction of the facility within a certain deadline, to provide all the necessary design and technical documentation necessary for connecting the facility to communal and other infrastructure, all with the aim of getting a use permit and registration of the facility with the real estate cadastre office.
It is important to understand that in the legal system of the Republic of Serbia, the buyer becomes the owner of the real estate after the registration with the competent real estate cadastre, which means that it is not enough for the selling price to be paid, for the keys to be handed over, and for the buyer to have moved in. In order to be legally secure, it is necessary that your right is registered with the competent real estate cadastre.
Author: Sanja Saric,
Law expert and business consultant