Although Serbian Constitution introduces the general principle of equality between Serbian nationals and foreigners, in certain domains it allows for this proclaimed equality to be limited through laws.
That said, one of the rights that foreign legal and natural persons can only enjoy to a limited extent pertains to the possibility of acquiring real estate in Serbia, an issue which is increasingly gaining prominence. Whereas the conditions for natural persons that will not perform a business activity to acquire real estate are quite transparent and easy to understand, the situation for those who will, and for legal persons is rather vague, and to a large extent still represents a legal void.
The legal act which regulates the conditions for acquiring real estate in Serbia is the Serbian Basis of Ownership and Proprietary Relations Act (“BOPR”). While it deals to sufficient detail with the possibility for foreign natural persons to acquire real estate they will use for residence purposes, the only conditions it sets for legal and natural persons which will perform business activity is that the property must be necessary for performing the business activity, and that reciprocity exists in terms of acquiring property between Serbia and the byer’s home country. BOPR further stipulates that the opinion of the Ministry of Trade serves as proof of the former condition, and the Opinion of the Ministry of Justice as proof of the latter. When coupled with the fact that BOPR states that the two opinions must be obtained as condition precedent for successful notarization of the Sale Purchase Agreement, failing to provide any further detail for the procedure in obtaining or the conditions for providing positive opinion (or at least delegating it to be determined by an act of lesser legal force), the issue of the lack of transparent procedure and guidance is even more apparent.
Such vague regime is understandable when we look at the historical development of BOPR. Namely, it was originally drafted and entered into force in the late 80’s, when there was not much interest by foreign companies to invest in Serbia. Although the interest for purchasing real estate in Serbia by foreign legal persons increased significantly in recent years, concrete steps towards creating an accessible and transparent regulatory environment regarding this issue have yet to be taken.
However, faced with the possibility set in BOPR on the one hand and the many requests on the other, the relevant sector of the Ministry of Trade has developed its own ad hoc procedure and conditions through which it processes all requests that come from potential foreign buyers. Although this procedure does not rely on any legal act, and was developed purely through the case law of the Ministry, faced with the obligatory nature of this opinion, all that foreign legal persons intending to purchase property in Serbia can do for now is to abide by it. While it is not likely that BOPR will be amended any time soon, the long awaited Serbian Civil Code, still in the drafting process, promises to devote an entire section to this issue, hopefully alleviating the legal maze that potential buyers must go through.
By Milos Velimirovic, Partner, Sanja Dosen, Associate, Samardzic, Oreski & Grbovic (SOG)