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The Right of Foreigners to Acquire Real Estate in Serbia

The Right of Foreigners to Acquire Real Estate in Serbia
Aleksandar Marinković Chief Executive Officer

There are certain conditions that must be met for foreigners to acquire real estate in Serbia. First there must be reciprocity concerning the acquisition of property rights of the real estate. This means that, both individuals and legal entities, can acquire property right of real estate on the territory of the Serbia, either through legal transaction inter vivos (Sales Contracts, Gift Contract, etc.) and legal transactions mortis causa (by inheritance) only if there is reciprocity.

Acquisition through legal transactions among the living (inter vivos)

Law on Fundamentals of Property Relations (The Law) stipulates that foreigner individuals or legal entities that do business in Republic of Serbia can upon reciprocity acquire property rights of real estate which they need for their business activities. On the other hand, foreigner that does not do business in Serbia can upon reciprocity acquire property rights of real estate on the same conditions as citizens of Serbia.

In addition to this, foreign individual or legal entity cannot acquire agricultural land, as stipulated by the Law on Agricultural lands, unless it is differently stipulated by Stabilization and Association Agreement between the European Community and its Member States and the Republic of Serbia. Same Agreement stipulates that agricultural land means land used for agricultural production (arable land, gardens, orchards, vineyards, meadows, pastures, ponds, reeds and wetlands) and land that can be used for agricultural production.

The Court or other authority before which the question of reciprocity is raised (e.g. the Real Estate Cadastre), if it is not already aware of this, should seek the necessary explanation of reciprocity from the Ministry of Justice. Any other interested person may request clarification on reciprocity, as well.

The question of the kind of reciprocity required for the acquisition of real estate is not regulated by the Law, and its initial premise is that this acquisition does not require the existence of contractual (diplomatic) reciprocity with the foreign country, but rather that the legislation of that country allows the possibility of acquiring real estate for foreigners under conditions not significantly more severe than those stipulated by Serbian law, as well as in practice allowing citizens of Serbia to acquire real estate on the territory of the respective country (factual reciprocity).

The Republic of Serbia has established contractual reciprocity for the acquisition of property rights of the real estate through legal transactions, inter vivos, by individuals with only a small number of countries, based on trade and navigation contracts concluded in the first half of the 20th century.

In some of them reciprocity is explicitly contracted, and with some of them reciprocity exists by applying the Clause of the post privileged nation. These Agreements were signed with United Kingdom, United States, Kingdom of the Netherlands and Japan.

For other countries that Serbia has reciprocity with, but has not been contracted, the Ministry of Justice has, on the basis of the legal regulations of the respective states governing this matter, that is, by exchanging notes, established the existence of reciprocity.

Those countries are: Argentina, Australia, Austria Belize, Belgium, Belarus, Brazil, British Virgin Islands, Bulgaria, Greece Denmark, Dominican Republic, Israel, Iran, Ireland, Japan, Armenia, South Africa, Republic of Kazakhstan, Canada, China, Lebanon, Latvia, Lithuania, Luxembourg, Hungary, Malta, Mexico, Moldova, Germany, Norway, Panama, Peru, Portugal, Russian Federation, Romania, Singapore, Syria, Slovakia, Turkey, Uzbekistan, Ukraine, France, Netherlands, Croatia, Czech Republic Swiss, Confederation, Sweden, United Arab Emirates, Azerbaijan, El Salvador, Cuba, Senegal Yemen, Colombia, Republic of Korea and Sri Lanka.

Acquisition through legal transactions mortis causa

Foreigners may, under conditions of reciprocity, acquire the right of ownership of real estate located in Serbia by inheritance under the same conditions as domestic citizens.

Acquisition of immovable property is governed by a number of countries by bilateral Legal Assistance Treaties containing a national treatment clause, that is, stipulates that nationals of one Contracting Party may inherit property in the territory of the other Contracting Party under the same conditions and to the same extent as nationals.

In this way, contractual (diplomatic) reciprocity is ensured. Such a solution is contained in Legal Aid Agreements, Trade and Navigation Contracts with the following countries: Austria, Belarus, Bosnia and Herzegovina, Bulgaria, United Kingdom, Japan, Hungary, Mongolia, Poland, Russia Federation, Romania, Ukraine, USA, Slovakia, Montenegro, Netherlands, Czech Republic and Slovenia.

Relative to countries where there is no contract reciprocity for the acquisition of property rights by inheritance, for many years the starting point has been that reciprocity need not be determined in relation to each individual country, but rather to assume that each country recognizes the right of inheritance of real estate of our citizens to the evidence to the contrary, which means that foreign nationals may inherit real estate in the Serbia on the basis of assumed factual reciprocity, provided that the interested parties can prove otherwise.