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  • Real Estate Laws and Regulations in Montenegro (2025)

    Contributed by Komnenic & Partners.

    1 Real Estate Ownership

    1.1 Legal Framework

    The right to ownership, along with other property rights, is guaranteed by the Constitution of the Republic of Montenegro. Constitutional protection is highlighted in Article 58, which stipulates that no one can be deprived of or restricted in their right to ownership, except when required by the public interest, with fair compensation. Besides the Constitution, the most important real estate legislation in Montenegro includes:

    • Law on Property-Legal Relations (Zakon o svojinsko-pravnim odnosima),
    • Law on Contracts and Torts (Zakon o obligacioniom odnosima),
    • Law on Spatial Planning and Building Construction (Zakon o planiranju prostora i izgradnji objekata),
    • Law on State Survey and Real Estate Cadastre (Zakon o drzavnom premjeru i katastru nepokretnosti), and
    • Law on State Property (Zakon o drzavnoj imovini).

    Overall, ownership right in Montenegro is recognized as the most extensive form of entitlement to real estate, granting its titleholder the broadest variety of rights (possession, usage, and disposal of the real estate), whilst other property rights, may provide fewer degrees of entitlement (such as easements, right of use and passage).

    When it comes to the acquisition of property by foreigners in Montenegro, Montenegrin law makes a difference for movable and immovable property. Therefore, a foreign person or entity can acquire the right of ownership of movable property under the same conditions as a Montenegrin citizen. However, when it comes to acquiring immovables (i.e., real estate), there are certain restrictions for foreign citizens in Montenegro, as foreign persons cannot have ownership rights to:

    1. Natural resources;

    2. Goods in general use;

    3. Agricultural land;

    4. Forest and forest land;

    5. A cultural monument of exceptional and special importance;

    6. Immovable property in the land-border area at a depth of one kilometer as well as islands;

    7. Immovable property located in an area which, for the sake of protecting the interests and security of the country, has been declared by law to be an area where a foreign person cannot have ownership rights.

    Exceptionally, a foreign natural person can acquire ownership rights on agricultural land, forests, and forest land with an area of up to 5,000 square meters, under the condition that the object of the alienation contract (purchase, sale, gift, exchange, etc.) is a residential building located on that land. A foreign person can also have the right to a long-term lease, concession, BOT, and other private-public partnership arrangements on immovables under the same conditions as a Montenegrin citizen.

    It is noteworthy that a foreign natural person can acquire the right of ownership of immovable property in Montenegro via inheritance, no different than a citizen of Montenegro. Additionally, foreign natural and legal persons can transfer the right of ownership to a domestic citizen via legal transaction, as well as to a foreign person who has the right to acquire ownership under Montenegrin law.

    Regarding the question of expropriation in Montenegro, it can be labeled as a legal process that occurs in the public interest and involves fair compensation, which can be determined in money or by providing ownership or co-ownership of other appropriate immovable property. A beneficiary of expropriation can be the state itself, a municipality, state funds, and companies that are majority-owned by the state, which, in accordance with the law, performs activities of public interest. The procedure of expropriation of immovables, for which public interest has been determined, is carried out by the competent Real Estate Administration.

    Expropriation occurs in the form of full loss of ownership (absolute expropriation) or in the form of retention of ownership rights with the imposition of an easement or lease for a certain period (partial expropriation). According to Article 4a of the Montenegrin Law on Expropriation, the purpose of expropriation is described as building facilities or carrying out works of public interest, communal infrastructure facilities, facilities for the needs of state authorities, authorities of the capital city and the municipality, health, educational, cultural and sports facilities, industrial, energy, water management facilities, traffic facilities with associated infrastructure, electronic communication infrastructure network facilities, as well as research and exploitation of mineral and other natural resources.

    1.2 Registration of Ownership

    Ownership rights on real estate in Montenegro are registered within the competent regional unit of Real Estate Administration, upon the finalization of the legal transaction or other mode of real estate acquisition. In fact, Montenegrin law prescribes the constitutive effect of registration, therefore it is not only mandatory but the acquirer can only be considered the owner of the real estate upon registration in the cadastre, managed and supervised by the Real Estate Administration, which is decentralized and divided into regional units. Therefore, the handover of real estate based on a purchase and sale contract has no effect on the transfer of ownership rights, since, according to the law, handover is not a way of acquiring ownership rights in real estate, as it is a case with movable property.

    This principle is consistently applied to the acquisition of other property rights based on a legal transaction and a mortgage, as the registration has a constitutive character. It must be borne in mind that when it comes to other means of acquisition (decision of a court or other state authority, acquisitive prescription, construction), registration in the cadastre is not a legal requirement for the acquisition of rights and therefore has a declarative character.

    1.3 Publicity of Real Estate Register

    Article 9 of the Montenegrin Law on Survey and Real Estate Cadastre proclaims a principle of publicity, meaning that everyone has the right to inspect the data contained in the cadastre (which can be done online, through the website of the Real Estate Administration), the right to be issued a real estate title deed, or a certificate that a certain real estate or right has been registered in the real estate cadastre. Detailed entries and documentation can be provided, upon request, to the parties directly involved (e.g., owner) and third parties who can prove a legitimate legal interest in accessing the files.

    Additionally, certain information may be obtained based on a request for free access to information pursuant to the Law on Free Access to Information.

    However, it is not uncommon that certain encumbrances and limitations are not properly registered, or are not updated; hence a thorough due diligence analysis should always be conducted before entering a transaction concerning the real estate.

    1.4 Protection of Ownership

    Another principle embedded in the Montenegrin Law on Survey and Real Estate Cadastre is the principle of trustworthiness, which stipulates that data registered on real estate and its rights are considered accurate; thus no one can suffer harmful consequences in real estate transactions and other relations in which this data is used. Registration decisions, as well as any decision from the Real Estate Administration, are subject to appeals and other legal remedies before competent authorities pursuant to the Law on Administrative Procedure. In these proceedings, the participation of involved parties is mandatory, and they are authorized to give all statements and use legal remedies to protect their interests.

    Additionally, when it comes to the protection of ownership, the Law on Property-Legal Relation prescribes multiple types of litigation proceedings to protect ownership, possession, secure unhindered ownership, etc. Although litigation proceedings may be lengthy, once they become final, judgments and decisions are enforceable through a public enforcement executor (or court in some cases), who has the ability to engage the police and other competent authorities for assistance.

    2 Real Estate Acquisition

    2.1 Share Deal or Asset Deal?

    A decision to opt for a share or asset deal shall be made depending on the facts of each case and by a previously made complex analysis encompassing all aspects, especially the nature of the investment, the intended business activity, and, of course, tax reasons.

    Both share and asset deals are present in Montenegro, whereas a prior “spin-off” option, representing the formation of an SPV company, is gaining more and more affirmation through recent commercial practice.

    2.2 Share Deal

    The essence of share deals revolves around acquiring ownership of the company itself, which is the owner of the target real estate.

    The seller and buyer are required to conclude a sale and purchase agreement (i.e., share transfer agreement), the subject of which is the sale and purchase of the company’s shares. This agreement, in practice, is an all-encompassing legal framework covering multiple areas of parties’ interest such as representations and warranties, conditions precedent, pre-closing, closing, guarantees, indemnification clauses, etc. The transfer of shares agreement shall be certified by notaries/courts in order to be eligible for registration in the Central Registry of Commercial Entities (Montenegrin company registry).

    It is noteworthy that share deals may be used to avoid the prohibitions and limitations for foreigners to purchase certain types of real estate (See Section 1.1), since in this case, the direct owner of the real estate would be a Montenegrin-based company.

    Typical positive sides to share deals include:

    • Tax advantages, as they are favorable to the buyer since it is not subject to RETT,
    • Continuity, as all licenses, permits, contracts, rights, obligations, and employees remain unchanged.
    • Typical negative aspects pertain to:
    • Acquiring the target company with its entire history, including its liabilities and claims,
    • Depending on the circumstances, the seller may be subject to capital gains tax.

    To minimize the risks, usually, if the share deal is chosen as the manner of acquiring real estate, the buyer tends to broaden the scope of the seller’s liabilities by stipulating a variety of guarantees, representations, and warranties. The basis of any good transaction is a due diligence analysis covering legal, corporate, management, financial, IP, and other aspects, which serves both parties in these terms.

    As highlighted above, another solution that may efficiently minimize transaction risks of the share deal is through the formation of an SPV company that will be the owner of the target asset. Thus, the transaction would have two steps: a) the first step: forming the SPV by restructuring the company, whereby the target asset shall also be transferred to the SPV, and b) the second step: acquiring the SPV’s shares. Considering the phases, the downside of this option is the lengthy procedure.

    2.3 Asset Deal

    An asset deal refers to the sale and purchase of specific real estate executed through a classic sale and purchase agreement.

    The parties are required to conclude the agreement before the competent notary (depending on the location of the real estate), which is then submitted to the Real Estate Administration for registration purposes.

    As in any transaction, a thorough due diligence analysis should be conducted, but it should primarily focus on examining the chronology of real estate changes in the cadastre, as well as the on-site inspection of the real estate, with the expert team. It is not unusual that there may be defects in the method of acquisition of ownership by the seller or their predecessor (void contracts, etc.) or that there is an earlier contract on the transfer of a right or a request for the recording of a burden, which has not yet been registered in the cadastre.

    Typically, the pros of asset deals are:

    • The possibility of picking the target assets,
    • Limitation of liability, since the risks of acquiring the entire company and its potential liabilities are excluded.
    • Typical downsides to the asset deals are:
    • All licenses, permits, and contracts related to the target real estate must be transferred to the new owner,
    • The buyer is subject to the RETT.

    2.4 Disposal Process

    As explained above, depending on the type of transaction, a different agreement, and its registration procedure will be conveyed before the authorities: i.e., in the case of a share deal, the registration of acquisition of the company’s shares is done by the companies’ register, and in the case of an asset deal, the registration of the sale and purchase agreement is done in the cadastre.

    The notary and other fees are not significantly burdensome to potential investors.

    It should be noted that these types of transactions may trigger the merger control process with the competent authorities, which should be obtained beforehand.

    Additionally, depending on the type of transaction, the location of the real estate, and the ownership, obtaining different approvals may also be needed (e.g., the sale of real estate located in National Parks is conditional upon Government’s pre-emption rights as provided in the Law on National Parks).

    2.5 Registration of Change of Ownership

    The registration of change of ownership rights based on sale and purchase agreements is done in accordance with the Law on Property-Legal Relations and the Law on State Survey and Real Estate.

    The procedure is initiated by the notary, who by authorization of the parties, submits the agreement to the competent Real Estate Administration for the registration of the new owner.

    As stated, the fees are not significantly burdensome and are standard pursuant to the Notarial Fee of Montenegro and state fees related to the Real Estate Administration.

    The timeframe for concluding the agreement before the notary is quite short, compared to the procedure of actual registration in the cadastre, which may be quite lengthy due to its limited staff capacity. Usually, the Real Estate Administrations responsible for the central and coastal regions are more affected, considering the large influx of requests.

    Once again, the sole signing of the sale and purchase agreement does not constitute ownership under Montenegrin law, since such title must be accompanied by registration in the real estate cadastre as the manner of acquisition.

    2.6 Risks To Be Considered

    As in any transaction, a comprehensive analysis of all the risks should be done. Several typical risks were outlined above, but some additional aspects specific to each jurisdiction should be taken into account, such as possible limitations in the disposal of real estate, namely pre-emption rights, etc.

    Noteworthy pre-emptive rights are found in the Companies’ Law of Montenegro, which sets forth that such rights belong to the company’s shareholders (if multiple shareholders) unless otherwise agreed in the company’s founding act/agreement and articles of association. Additionally, co-owners have pre-emptive rights when it comes to the sale of parts of the real estate owned by other co-owners. Pre-emptive rights concerning real estate may also be established by contracts, but in that case, they should be registered in the cadastre.

    Furthermore, we highlight once again that the target real estate should be thoroughly examined (both on-site and legally), as it may contain material and legal deficiencies.

    Namely, in the case of contracts with compensation, such as sale and purchase agreements of real estate (note: refers only to asset deals), each party is responsible for material deficiencies in its performance. The party is also responsible for legal deficiencies in performance and is obliged to protect the other party from the rights and claims of third parties that would exclude or narrow its rights.

    The seller is responsible for the material defects that existed at the time of the transfer of risk to the buyer, regardless of whether they were aware of this, as well as for those material defects that appear after the transfer of risk to the buyer if they are the result of a cause that existed before that. Insignificant material deficiencies are not taken into account.

    In any case, the buyer who timely and properly informed the seller about a defect may require the seller to remove the defect, reduce the price, or declare that they are terminating the contract. Regardless of the chosen option, the buyer is also entitled to compensation for damages.

    As for legal deficiencies, the seller is liable if there is a right of a third party on the sold item that excludes, reduces, or limits the buyer’s right, and the buyer was not informed about its existence, nor did they agree to take the item burdened with that right.

    If the seller does not comply with the buyer’s request to remove the legal deficiency, in the case of confiscation of the real estate from the buyer, the contract is terminated according to the law itself, and in case of reduction or limitation of the buyer’s right, the buyer may, at his choice, terminate the contract or demand a proportional price reduction. In any case, the buyer has the right to compensation for damages.

    3 Real Estate Financing

    3.1 Key Sources of Financing

    Real estate financing, encompassing its acquisition and development, is most commonly done via bank loans, shareholders’ loans, and from investor’s own funds. The investment is frequently financed on the basis of joint construction agreements, usually executed by the investor with the funding and the owner of the real estate (i.e., land) who contributes to their real estate. The constructed building will then be divided between the parties proportionally to their contributions to the joint project.

    The relevant legal framework includes the Law on Credit Institutions with the accompanying bylaws, the Central Bank’s decisions, and the Law on Contracts and Torts.

    3.2 Protection of Creditors

    Regarding the securement of bank loans, depending on the risk assessment analysis, loan amount, repayment period, etc., the most common security traditionally remains the mortgage over the subject real estate. Furthermore, additional bonds of the borrower and its shareholders or other affiliates are usually requested. Recent trends showcase the bank’s flexibility regarding acceptable collaterals, as they now accept pledges over receivables and shares.

    It is not unusual for shareholders to secure their loans via mortgage as well since the mortgage provides the priority order of repayment. Otherwise, their loans would be subject to a general procedure, which would require litigation proceedings, obtaining an enforceable judgment, and then initiating the enforcement proceedings before the public enforcement officer.

    4 Real Estate Taxes

    4.1 Transfer Taxes

    The transfer of real estate in Montenegro is subject to real estate transfer tax (RETT). Domestic and foreign legal and natural persons are treated equally regarding their obligation to pay RETT unless otherwise specified by an international agreement.

    The transfer of real estate is considered to be any acquisition of ownership rights over real estate in Montenegro. Acquisition of ownership rights over real estate includes purchase and sale, exchange, inheritance, gift, contribution and withdrawal of real estate from a business entity, acquisition of real estate in the process of liquidation or bankruptcy, acquisition of real estate based on a court decision or a decision of another competent authority, as well as other methods of acquiring real estate.

    The tax base for the real estate transfer tax is the market value of the real estate at the time of its acquisition in the case of sales/purchases. If the price stated in the documentation for acquiring real estate is lower than the market value or is not specified in the documentation, the local tax authority determines the market value of the real estate based on market prices at the time of the tax liability.

    The RETT rates in Montenegro are progressive and for real estate valued:

    a) up to EUR 150,000, the rate is 3%;

    b) over EUR 150,000.01, the rate is EUR 4,500.00 + 5% on the amount exceeding EUR 150,000.01;

    c) over EUR 500,000.01, the rate is EUR 22,000.00 + 6% on the amount exceeding EUR 500,000.01.

    The law provides for various RETT exemptions, such as (the list is not exhaustive):

    • State bodies;
    • Diplomatic and consular missions of foreign states accredited in Montenegro, under reciprocity conditions, and international organizations exempted from real estate transfer tax by international agreement;
    • Individuals acquiring real estate in the process of restitution of confiscated property and in the implementation of agrarian policy measures;
    • Montenegrin adult citizens residing in Montenegro who are acquiring a residential building or apartment for the first time to meet housing needs, up to 20 square meters per household member, provided they do not own a residential building or apartment in Montenegro;
    • Non-governmental organizations acquiring real estate for the purpose of performing the program activities for which they were established;
    • Individuals acquiring real estate in the process of expropriation or other proceedings for the taking of real estate for public interest purposes (construction of residential and commercial buildings, etc.);
    • Banks, when ownership rights to real estate are secured by fiduciary or mortgage transfer to the bank as a creditor, and when ownership rights to real estate are acquired in exchange for claims in the process of collecting claims based on approved loans and in the process of debtor bank reorganization in accordance with bankruptcy regulations, provided that the acquired real estate by the banks is sold within three years from the acquisition date;
    • Real estate transfer tax is not paid in the case when real estate is contributed to a company as an initial contribution or when increasing the share capital and when real estate is acquired through mergers, acquisitions, and divisions of companies conducted in accordance with the Law on Companies;
    • In cases of inheritance, gifts, and other instances of acquiring real estate without compensation.

    It is important to mention that the sale of newly constructed properties (but only the transfer to the first buyer) is subject to Value Added Tax (VAT) at a standard rate of 21%, whereas the RETT is not applicable.

    Additionally, provisions of relevant double taxation treaties may also be applied.

    4.2 Specific Real Estate Taxes

    Annual property tax is levied on real estate located within the territory of Montenegro, and the taxpayer is the owner of the real estate registered in the real estate cadastre or other property records (such as business books, registers, notarial records, etc.) as of January 1st of the year for which the tax is determined.

    The tax base for property tax is the market value of the real estate, and the criteria for determining the market value of real estate are more precisely defined by the Law on Property Tax. The market value of the property is considered to be its value as of January 1st of the year for which the tax is assessed.

    The property tax rate is proportional and ranges from 0.25% to 1.00% of the market value of the property. However, there are exceptions to this rule: (i) for secondary residential properties or apartments, the rate ranges from 0.30% to 1.50%; (ii) for unauthorized structures used to address housing needs, the rate ranges from 0.30% to 1.50%, and for those not used to address housing needs, the rate ranges from 0.30% to 2%; (iii) for undeveloped building land, the rate ranges from 0.30% to 5%.

    Tax reliefs applicable in this specific case pertain to property tax on residential buildings or apartments that serve as the taxpayer’s residence or permanent place of stay. The relief includes a reduction of 20% for the taxpayer and an additional 10% for each member of the household, up to a maximum of 50% of the property tax liability.

    The law also recognizes numerous tax exemptions, which include, for example, real estate owned by the state, real estate owned by the Central Bank of Montenegro, real estate owned by accredited consular and diplomatic missions, and others.

    The determination, collection, and control of property tax are under the jurisdiction of municipalities in whose territories the properties are located. Consequently, the tax rate is defined by each municipality, with each municipality adopting its own Decision on Property Tax. In doing so, it uses parameters prescribed by the Law on Property Tax and the Law on Tax Administration.

    Generally speaking, understanding the tax implications of real estate transactions in Montenegro is crucial for anyone involved in the real estate market, which is why both buyers and sellers must remain vigilant in this matter.

    5 Condominiums

    5.1 Legal Framework for Condominiums

    Condominium, or Condominium property, is defined in Montenegrin law as the right of ownership of separate parts of a residential or commercial building, which is indisputably connected with certain rights on the common parts of such building, as well as on the land on which that building was built. The law also makes a distinction between what is considered a separate or individual part (e.g., apartments, business premises, separate basements, separate attics, separate garages) of the building and the common or mutual part (e.g., foundations, vertical and horizontal construction, roof, hallways, staircases, elevators).

    A natural or legal person can have exclusive ownership, co-ownership, or joint ownership of separate parts of a residential building, while on the common parts of the residential building, which serve the building, all owners have common indivisible ownership. However, on the common parts of the residential building, which serve only some owners but not all, only the owners of those separate parts have common indivisible ownership.

    An interesting investment opportunity is reserved for mixed-use and condo hotels, which, as a form of exception, are a certain form of sui generis condominium property, pursuant to provisions of the Law on Tourism and Hospitality. Ownership rights can be obtained only over accommodation units with associated parking spaces (excluding rights over common rooms and complementary facilities of the hotel).

    5.2 Rights and Duties of Co-Owners

    Regarding the rights and duties of condominium owners in respect of their own individual units, the co-owners are free to use their individual part of the residential building, as well as to perform works on their individual part, in such a manner that they do not affect the individual part of another co-owner or the parts that serve the building as a whole.

    Regarding the rights and duties of condominium owners when it comes to the common parts and the residential building as a whole, they are obliged to use the common parts in accordance with their purpose and to the extent that corresponds to the rights of other co-owners. Co-owners can decide on all works in the common areas that aim to improve or facilitate use or increase income. Works that may cause damage to the stability or safety of the residential building, that change its architectural appearance, or that cause certain common parts of the building to be unusable by even one co-owner are prohibited.

    Condominium owners are also required to contribute to the expenses associated with maintaining the common parts of the building and the land for regular building use, as well as the costs related to building management. The Assembly of Condominium Owners determines the method of organizing the maintenance of the residential building, whereas the obligation to pay the maintenance is prescribed by law.

    5.3 Liability of Co-Owners

    Co-owners are liable for any damages, irrespective of fault, that result from failure to comply with regulatory requirements of maintaining their individual parts of the building. The performance of any works, along with its individual and common parts, must be kept in such a manner that ensures its functionality and prevents any potential damage. Therefore, The Assembly of Condominium Owners may also be held accountable for any damages resulting from non-compliance with regulations of maintaining the common parts of the building.

    5.4 Rights and Duties of Condominium Associations

    Condominium Associations in Montenegro take form in the Assembly of Condominium Owners. Assembly represents one of two governing bodies of residential buildings (along with the Manager) and is formed by owners of individual parts of the building or Condominium Owners. As mentioned before, Assembly is responsible for the maintenance of the common parts of the building, therefore it adopts a building maintenance program and ensures its execution, decides on improving living conditions in the building, ensures the dedicated use of the common parts of the residential building and decides on the manner of use of the land designated for the regular use of the building. On the other hand, the Assembly bears responsibility for damages resulting from neglecting or inadequately carrying out tasks within its jurisdiction.

    6 Commercial Leases

    6.1 Form and Contents of a Lease Agreement

    Generally speaking, the essential elements of any lease agreement under Montenegrin law are (i) the subject of the lease; (ii) the rent; (iii) the duration of the lease; as well as other important elements which include the obligations of the lessor, the obligations of the lessee, termination of the lease agreement, etc.

    It is important to emphasize that the Law on Contracts and Torts relies upon the principles of dispositive implementation of law provisions, which means that only in the absence of specific contractual provisions will the provisions of the law apply. However, the parties are not free to deviate from the imperative provisions of the law.

    Speaking about the category of commercial leases, Montenegrin law recognizes lease agreements for commercial premises. In this case, a written form as mandatory for this contract is prescribed, i.e., the contract must be certified by the competent authority (notary); otherwise, it is considered null and void (note: example of an imperative law provision).

    In practice, commercial leases typically include, but are not limited to, provisions regulating issues such as (i) repairs to the commercial premises; (ii) the amount of rent during repairs; (iii) special rights of the tenant during repairs; (iv) significant alterations to the commercial premises and the necessity of the lessor’s consent for such alterations; (v) compensation for the costs of common facilities; (vi) maintenance costs; (vii) the possibility of subletting the commercial premises and the conditions for subletting; (viii) installed equipment; (ix) notice period and notification of termination.

    Recent trends in Montenegro’s commercial lease market include a growing emphasis on automatic renewal clauses, where leases may be extended unless a party provides notice to terminate. Additionally, there is an increasing focus on compliance with formal registration requirements, ensuring leases are properly notarized and recorded to secure legal standing and enforceability.

    6.2 Regulation of Leases

    The Law on Contracts and Torts distinguishes between different types of lease agreements, by prescribing basic provisions for lease agreements and consequently regulating specific lease agreements such as residential and commercial lease agreements.

    It is noteworthy to mention that specific regulations may apply to real estate owned by the state of Montenegro. In such cases, additional formalities and conditions may be required (e.g., organizing public tenders).

    Although the parties have the autonomy of will, as previously mentioned, there are rules that cannot be circumvented. It is important to note that every contract, including this one, must be made in accordance with mandatory legal provisions and the fundamental principle of conscientiousness and fairness.

    6.3 Registration of Leases

    Although it is not mandatory to register the commercial lease, it certainly is a good option to record it before the competent Real Estate Administration to ensure the necessary visibility and security.

    The registration of the lease agreement is recorded in the real estate cadastre in the “G” section, which relates to encumbrances and restrictions. There is also the possibility of registering a pre-entry of the lease right if it is proven by a document and if the right and the will of the parties to register this right are indisputable.

    The current legislation does not provide for any register or database of concluded lease agreements, but there are public requests calling for the organizing of such a register.

    6.4 Termination of Leases and Renewals

    A commercial lease can be concluded for a fixed term or for an indefinite period. The more common practice is to conclude a lease for a fixed term, with the parties agreeing that the lease will be automatically renewed unless either party notifies the other of their intention not to renew the lease.

    A commercial lease agreement concluded for an indefinite term cannot terminate based on a unilateral notice before the expiration of six months from the conclusion unless the contract stipulates otherwise (i.e., the autonomy of the parties applies here). A commercial lease agreement concluded for an indefinite term terminates on the expiration of the notice period specified in the contract, which is typically three months unless otherwise agreed. Additionally, unless the contract specifies otherwise, the notice can only be given on the first or fifteenth day of the month.

    The law provides the possibility of terminating the lease at any time by the lessor, regardless of contractual or legal provisions regarding the duration of the lease, in the following cases: (i) the tenant, even after written notice from the lessor, continues to use the commercial premise contrary to the lease or causes significant damage by using it without due care; (ii) the tenant fails to pay the overdue rent within fifteen days of receiving written notice from the lessor; (iii) the lessor, due to reasons beyond his responsibility, cannot use the commercial premise where they were conducting their business and intends to use the premise leased to the tenant. The tenant has the same right in the following cases: (i) if the lessor does not provide the commercial premises to the condition they are obligated to deliver or maintain within a reasonable period allowed by the lessee.

    In this context, we can also discuss the tacit renewal of the lease, which occurs when a lease agreement is concluded for a fixed term, and upon its expiration, the lessee continues to use the commercial premises. For tacit renewal to take place, it is necessary that the lessor does not oppose the continuation of the tenant’s use of the space. In such cases, it is considered that a new lease agreement has been concluded for an indefinite term under the same conditions as the previous one.

    6.5 Rent Regulations and Rent Reviews

    The Montenegrin legal system does not regulate or restrict the amounts of rent, which means that the rents rely on market principles. However, general principles of contracting as stipulated in the Law on Contracts and Torts shall nevertheless be adhered to, e.g., the equivalency of mutual obligations, conscientiousness and honesty, good businessman standards, etc.

    There are certain cases where restrictions apply, namely the Law on Social Housing prescribes that the rent amount depends on the income of the tenant’s family household, the size of the residential building, and the amount of maintenance costs of the residential building and common parts of the residential building.

    6.6 Services To Be Provided Together With the Lease

    The relevant provisions of the Law on Contracts and Torts prescribe that the lessor is obliged to hand over the leased premises to the tenant in good condition. If the leased premise is in a condition described in the contract, it is considered to be in good condition, and in the absence of a contract, a good condition is the one where the leased premise can be used for the purpose for which the contract was concluded.

    The lessor is obliged to keep the leased premises in good condition for the duration of the lease and, for that purpose, to perform the necessary repairs. Anyhow, the lessor is obliged to compensate the tenant for the costs incurred by the tenant for maintenance which the lessor would have been obliged to do. However, the costs of minor repairs caused by regular use, as well as the costs of use itself, are borne by the tenant.

    6.7 Fit-Out Works and Their Regulation

    It is quite common in commercial practice that the leased premises are premises needing fit-out works, whereas, for the leasing of housing premises, it is less common.

    The relevant provisions of the Law on Contracts and Torts prescribe that if the tenant made any changes to the property during the lease, he is obliged to return it to the condition it was in when it was leased to him.

    The tenant can take away the additions he made to the property if the additions can be separated without damaging them, but the lessor can keep them if he compensates the tenant for their value at the time of return.

    However, it is important to note that the parties are free to deviate from the law provisions in contractual relations (apart from the imperative provisions), which they usually do in these cases, e.g., the rent amount includes the costs of fit-out works, or they specifically agree on the handover protocol dividing what belongs to whom upon the expiration/termination of the lease.

    6.8 Transfer of Leases and Leased Assets

    A lease agreement may be transferred by an assignment agreement concluded between the parties who are the parties to the lease agreement and the party receiving the rights and obligations from it. In the case of assignment, either party may assign its rights and obligations under the lease agreement, but it is conditional on the acceptance of the other party. The rights and obligations remain unchanged unless agreed otherwise.

    When the leased property is transferred to another person, the transferee takes the place of the lessor and assumes his obligations towards the tenant if he knew of the existence of the lease agreement at the time of concluding the agreement for such transfer.

    The transferee who did not know about the existence of the lease agreement at the time of concluding the agreement for transfer is not obliged to hand over the leased property to the tenant. In that case, the tenant may only claim damages from the lessor. The transferor (the original lessor) is anyhow responsible for the transferee’s obligations from the lease agreement as a joint guarantor to the tenant.

    Additionally, in the case of transferring the leased property to another person, the tenant has the legal right to unilaterally terminate the lease agreement.

    Considering these cases, for security reasons, it may be advisable to register the lease agreement in the real estate cadastre, since Montenegrin law provides for this option. In this case, it is considered that the transferee knew about the existence of the lease agreement, due to the publicly available information on the existence of the agreement.

    7 Zoning and Planning

    7.1 How Are Use, Planning, and Zoning Restrictions on Real Estate Regulated?

    The Law on Spatial Planning and Construction of Buildings is an umbrella act regulating the planning and zoning of real estate in Montenegro. It prescribes that there will be only two spatial planning documents for the territory of Montenegro: the Spatial Plan of Montenegro and the General Regulation Plan based on which all other planning documents will be adopted.

    The currently applied Spatial Plan of Montenegro was adopted in 2008 and it was meant to be valid until 2020 but considering that the new Spatial Plan has not yet been adopted (note: currently, its adoption is expected in the upcoming period), it remains in force. The new Spatial Plan should be valid for 20 years after its adoption.

    The General Regulation Plan of Montenegro, specifying the goals and measures of the spatial and urban development of Montenegro in more detail, once adopted, will be valid for 10 years upon its adoption.

    Until the adoption of the General Regulation Plan of Montenegro, a large number of previously adopted and currently applicable planning documents (both on a local and state level) will remain in force. All planning documents are available on an online public register held by the relevant Ministry.

    When it comes to investing, it is advisable to assemble a coherent technical and legal team with a good understanding of the particularities of Montenegrin planning regulations. Adding to that calculation the specifics of the coastal area regime, UNESCO protection of certain areas, five National Parks in Montenegro, the requirements for preservation of nature, sustainable development, and assessment of impact to the environment, the more argument to do so.

    As for the construction process itself, under currently applicable provisions of Law on Spatial Planning and Building Construction it is not required to obtain a construction permit but rather to submit the construction report. However, the Parliament of Montenegro is expected to adopt new legislation in this matter by the end of February 2025, i.e. Law on the construction of buildings and Law on spatial planning.

    The proposed new laws are re-introducing construction permit to be issued either by local authorities or the relevant Ministry, depending on their division of competence.

    The vast majority of the procedure remains the same. Namely, in order to construct, the investor is required to prepare a concept design (“idejno rjesenje”) based on Urban and Technical Conditions extracted from the applicable planning document. The second step is obtaining the approval of the Main State or City Architect (their competence is divided depending on the type of building and its area) for the concept design. The next phase is preparing the main project (“glavni projekat”), which is a detailed elaboration of the concept design, encompassing at least an architectural project, construction project, electrotechnical project, and mechanical project. The main project is subject to certification and revision, which includes checking the compliance of the main project with urban and technical conditions, the law, special regulations, and rules of the profession, etc.

    Upon finishing the construction, under current laws, no usage permit is issued (note: except for complex engineering buildings); however, according to proposed law changes, it is also re-introduced into Montenegrin legal system.

    It remains to be seen what the final text of the enacted laws in this particular area will be, and more importantly, what impact the new legal provisions will have in practice.

    7.2 Can a Planning/Zoning Decision Be Appealed?

    The planning documents cannot be appealed, considering they are a public document adopted in an official law procedure and their validity is erga omnes. However, they may be the subject of constitutional reviews.

    As for the previously mentioned procedures referring to obtaining the necessary documents in order to construct buildings, they are governed by the Administrative Law and the Law on Administrative Dispute. The applicant has the right to appeal all the decisions to the second-instance bodies, and even to file a lawsuit against the decision made by the second-instance bodies.

    The Administrative Court of Montenegro has the jurisdiction to hear these cases, but it is worth noting that the big downside is the lengthiness of these proceedings (e.g., around two years). Additionally, extraordinary legal remedies are also available against the judgment, as well as the constitutional appeal.

    Please note that this article is intended for informational purposes and provides only a general overview. Specific details of each potential case should be individually assessed and considered.

  • Real Estate Laws and Regulations in Greece (2025)

    Contributed by AKL.

    1 Real Estate Ownership

    1.1 Legal Framework

    As a typical example of a first-generation human right, the right to property has been consistently protected by all constitutions adopted since the Greek War of Independence. Today, the fundamental right to property, whether in the form of real estate or movable property, is enshrined (while simultaneously confined) in art. 17§1 of the Constitution of 1975/1986/2001/2008/2019: “Property is under the protection of the State; rights deriving therefrom, however, may not be exercised contrary to the public interest.”

    At a statutory level, the protection of property has mainly taken the form of the different real rights (also known as “rights in rem”) regulated in the third section of the Greek Civil Code (GCC) entitled “Law of Real Rights”. GCC art. 973 establishes a numerus clausus of real rights, all of which vest in their holder legal, direct, and erga omnes power with respect to property. Amongst these rights, the ones applicable to real estate are:

    Ownership (GCC art. 999 et seq.): the fullest, all-encompassing real right which consists in using the property in any legal manner. Essentially identified with the property itself, ownership is best described as a jus in re propria (right in one’s own property), as opposed to the qualified nature of the rest of real rights, which grant a jus in re aliena (right in the property of another) and are therefore viewed as encumbrances of ownership.

    Servitudes (GCC art. 1118 et seq.): the rights attached either to another estate (predial servitudes) or a person (personal servitudes) which consist in enjoying one or more benefits from the substance of someone else’s property (e.g., a right of way). Usufruct, the right to fully use and derive profit from someone else’s property without altering its substance, is the most representative case of personal servitude, specially regulated in the GCC (art. 1142 et seq.).

    Mortgage (GCC art. 1257 et seq.): the right of a creditor to collect their claim with priority from the value of someone else’s real estate property. It is the most traditional example of a security interest.

    The above provisions of the GCC have remained virtually unchanged since the entry into force of the code in 1946. However, certain additional real rights have been fashioned from time to time by means of special laws, the most significant of these (from an investor’s point of view) being the so-called “surface right” introduced by Law 3986/2011. This right applies to certain types of public properties and grants powers similar to ownership exclusively over the buildings constructed thereon, derogating from the superficies solo cedit principle of land ownership according to which the owner of the land is also the owner of the buildings above it.

    Finally, apart from real rights, powers of usage and possession of real estate property may come in the form of contractual rights (rights in personam), such as the rights deriving from a lease agreement.

    As to the potential subjects of all the aforementioned real rights, these generally include all natural and legal persons, whether they be Greek or foreign. Nonetheless, for reasons of national security, Law 1892/1990 prohibits the acquisition of real, but also contractual rights in designated border areas (which admittedly cover a significant part of the country) to national and legal persons who are nationals of or seated in a country outside the EU or the EFTA. This prohibition also extends to the purchase of legal entities owning properties in border areas. The persons concerned may apply for permission to acquire real or contractual rights in such areas before a special administrative committee. The specific conditions and supporting documents for the issuance of the relevant permission are described in the recent Joint Ministerial Decision no. 114/497810/2024.

    The remainder of art. 17 of the Greek Constitution (§§2-7) is dedicated to balancing the conflict between the right to real estate property and the public interest through the process of expropriation, which results in the deprivation of private persons of their property. These rules are further specified in Law 2882/2001 (“Code of Expropriation of Immovable Property”). The main principles governing expropriation in Greece are the requirement of a public interest which renders expropriation necessary (in line with the constitutional principle of proportionality), a full (as opposed to a merely “just”) compensation corresponding to the value of the property, the determination of this compensation by the competent civil courts on a provisional and/or a final basis and its payment at maximum 18 months following the court decision, as well as the consummation of the expropriation process only upon payment of the full compensation.

    In closing this introductory section, here is a little snapshot of the Greek real estate market today: after a long decade of stagnation due to the 2009 debt crisis and having already recovered from the COVID-19 outbreak, it is continually showing vibrant signs of growth.

    The high level of demand for properties is illustrated by the following data: the total number of building permits issued in Greece from August 2023 to August 2024 was higher by 10,5% compared to the previous twelve (12)-month period, while house prices across the country saw an increase of 13,4% within 2023 and a total 71,6% increase from 2017 to 2024 (sources: Hellenic Statistical Authority, Building Activity Survey: August 2024, 28.11.2024, e-kathimerini, House price increase of 90% in eight years, 18.12.2024). Besides, Attica’s housing market has seen a 90% increase in sale prices since 2017 (e-kathimerini, House price increase of 90% in eight years, 18.12.2024).

    In recent years, the demand for residential properties has skyrocketed, pushing up prices accordingly. In order to address the matter of affordable housing, the government introduced several initiatives (such as the program “My Home”, ended in September 2023, and, currently, “My Home II”). In parallel, the framework of the Golden Visa scheme (i.e., the immigrant investor program) was recently updated (art. 64 of Law 5100/2024) with increases in the minimum value thresholds for qualifying under the program and the introduction of new restrictions (such as a minimum floor area, allowed uses, a provision that the properties acquired may not be used for short-term leasing, e.g., through Airbnb).

    Apart from housing, a significant portion of both domestic and foreign investment volumes are channeled into developing new hotels, villa complexes, and Integrated Tourist Resorts in different locations. Finally, the Ellinikon project, the breakthrough urban regeneration vision in the Athens Riviera is already coming to life and is anticipated to become one of the key drivers of the Greek economy in the near future.

    1.2 Registration of Ownership

    Pursuant to GCC art. 1198, registration of the relevant legal acts in public records is a precondition for the valid establishment and transfer of all real rights on real estate properties. There are currently two systems of publicity operating in parallel: the traditional so-called system of “registrations and mortgages” (GCC, Regulatory Decree 19/23.07.1941, Royal Decree 533/1963) and the newer system of the National Cadastre (Laws 2308/1995 and 2664/1998). It is the intention of the Greek state to fully replace the system of registrations and mortgages with the undeniably superior system of the cadastre. At this point, larger parts of the country are transitioning to the system of the National Cadastre, but a significant part of the country is still governed by the Land Registry regime.

    For the latter regions -and until the system of the National Cadastre is implemented in these areas as well-, the system of registrations and mortgages, represented previously by the competent Land Registries, is now operating through the competent Cadastral Offices. It is noted that the Land Registries are now fully abolished. The registrations and mortgages regime is structured around the persons holding real rights in a specific area, and searches therein are conducted by reference to the holders’ identities. The records are kept in a physical or digital form (books or digital platforms), depending on the progress of the digitalization process.

    On the contrary, the National Cadastre, represented by the competent Cadastral Offices, is organized by reference to each real estate property (land plot). Cadastral records are kept digitally in a unified database. Cadastral Offices are run by the legal entity under public law with the name “Hellenic Cadastre”, established by Law 4512/2018 and supervised by the Ministry of Digital Governance.

    Registration is generally not required for the establishment or transfer of contractual rights. However, in the case of a long-term lease agreement of more than nine years, future owners of the real estate property are only bound by the lease if this has been registered in the public records (GCC art. 618). Conditions and exceptions apply.

    1.3 Publicity of Real Estate Register

    In the case of Cadastral Offices still operating under the old system of registrations and mortgages (ex Land Registries), there is no absolute clarity as to whether the law offers the right to research their (physical) records to all individuals with properties registered therein, or only to certain categories of professionals (hence the divergent opinions Nos. 7/2020 and 69/2020 of the Prosecutor of the Supreme Civil and Criminal Court and the Legal Council of the State, respectively). The general practice is that the records are made available to lawyers, and interested individuals accompanied by their lawyers and bailiffs. It should be noted that a process to digitalize the records of all Land Registries has commenced; so far, only a few Land Registries  have completed the process, as the project is still at an early stage.

    Pursuant to Ministerial Decision 11206/2021, records of the National Cadastre are available either through in-site research at the computers of the Cadastral Offices, or through remote research in its database. In-site research is permitted to lawyers, bailiffs, notaries, and engineers (under different restrictions), while remote access is also granted to all other persons but only in relation to the registrations that concern them.

    1.4 Protection of Ownership

    The primary legal remedies established for the protection of ownership are the declaratory action (art. 70 of the Greek Code of Civil Procedure), rei vindicatio (GCC art. 1094), and actio negatoria (GCC art. 1108). A declaratory action is filed against a person who merely questions the ownership of the claimant, with the request that the claimant be officially recognized as an owner vis-à-vis the defendant. Rei vindicatio (loosely translated as a “direct claim”) is used to proceed against a person who unlawfully possesses or occupies a property, depriving the owner of such possibility, and results not only in the recognition of the owner’s right but also in the recovery of the property. Finally, actio negatoria (loosely translated as a “negative claim”) is filed in cases where the owner, although not absolutely forced out of their property, is unlawfully disturbed in the full enjoyment of their right of ownership by an offender, and the request consists in the cessation of the nuisance and/or the omission of a future nuisance.

    In the system of registrations and mortgages, a false or inaccurate entry does not prevent the true owner of a property from successfully protecting their ownership using the above remedies. Registration of the relevant legal act (e.g., a sale and purchase agreement, an act for the acceptance of an inheritance) only constitutes one of the conditions to be fulfilled for the transfer or establishment of a real right on a real estate property, and it does not guarantee itself said transfer or establishment. Also, entries do not facilitate the proof by the registered holder that they are indeed entitled to the real right in question: they would still have to prove in court the rest of the conditions prescribed by law for the acquisition of their right. Finally, persons who accept the entries of the system in good faith and proceed to legal transactions relying thereon are generally not protected. For example, the purchaser of a property from a person who appears to be its current owner by means of a sale and purchase agreement with the previous owner, which is in fact null and void, will not acquire ownership on the grounds of them trusting in the public records, save for very limited and rather marginal cases (e.g., if the registered sale and purchase agreement between the previous and the current “owner” is null and void due to it being fictitious).

    Conversely, the initial entry for every property in the National Cadastre becomes “final” after the lapse of a specific time period during which it can be challenged, which differs from area to area. Thereafter, entries produce a non-rebuttable presumption of accuracy, which means that the claims in rem (a declaratory action or a rei vindicatio) of the true owner of the property are erased. The true owner is limited to monetary claims against the inaccurately registered owner, and may only reclaim the property itself if it has not yet been transferred to another person for consideration. to-date, this presumption only applies to a few regions of the country. For all subsequent entries, a rebuttable presumption of accuracy is established: future registered holders of real rights on the same property will not bear the burden to prove the rest of the conditions (other than the registration) for the acquisition of their right; the opposing party will have to prove their absence. Finally, good faith in the previous entries of the National Cadastre benefits the person who relies thereon to acquire a real right, even if these entries are proven to have been inaccurate.

    Apart from filing a remedy for the direct protection of their ownership, owners may, alternatively or jointly, seek the protection of possession of their property against potential offenders, pursuant to GCC arts. 987 and 989. The actions related to possession not only manifest the advantage that possession is easier to prove than ownership (especially under the system of registrations and mortgages) but can also be accompanied by a request for interim measures (art. 733 of the Greek Code of Civil Procedure).

    2 Real Estate Acquisition

    2.1 Share Deal or Asset Deal?

    Acquisition of real estate may come in the form of either a direct acquisition of real rights on the desired property(-ies) by the investor (asset deal) or an indirect structure, where the investor gains control over a legal entity holding such right through the purchase of its shares (share deal).

    Share deals tend to be more preferred in the business world for a number of reasons. Their popularity is mainly attributed to the following features that distinguish them from asset deals:

    They are freed from the formalities of an asset deal, as sale and purchase agreements for the acquisition of shares are not required to be drafted by means of a notarial deed or registered with a Cadastral Office. They are therefore more straightforward, and investors may not only acquire but also dispose of real estate in a quicker and simpler manner.

    They do not entail notarial or registration fees or incur much lower taxes related to the transfer of shares.

    The insertion of a legal entity between the investor and the real estate asset, usually in the form of a capital company, comes with all the benefits of a separate legal personality, subject to rare cases of lifting of the corporate veil. That is, not only implications related to the specific business venture that is the acquisition and development of one or more real estate assets for a specific purpose will not affect the investor directly (at least not from a legal point of view), but also the business venture is further transferable as a whole. This is one of the reasons why Real Estate Investment Companies (REICs) tend to set up separate subsidiaries for their different projects.

    The existence of any (not regularized) illegalities of buildings on the purchased property will not threaten the validity of a share deal, whereas an asset deal with such objects would be null and void (see Section 2.4).

    Although more inexpensive and effortless in terms of the actual deal, it cannot be overlooked that purchasing a company that owns a real estate property involves risks not only related to the property but also the company itself. In addition, the formalities of an asset deal may be troublesome, but could potentially reveal significant findings, especially through the involvement and expertise of legal professionals (both lawyers and notaries), who would be qualified to notice abnormalities or insufficiencies in the property’s documentation. In this sense, multifaceted, meticulous, and sophisticated legal due diligence becomes of vital importance in the context of a share deal. Lastly, maintaining the purchased company naturally means embracing an additional set of corporate and accounting obligations.

    2.2 Share Deal

    A share deal consists of acquiring shares in, and thus gaining control over, a company owning (or holding any other real right on) the desired real estate property. These companies are usually capital companies, primarily in the form of a Societe Anonyme (SA) or a Greek Private Company (PC). They might constitute either special-purpose entities, with the limited function of owning the property in question, or actually engage in business activities. The acquisition of shares is achieved through a sale and purchase agreement between the old and the new shareholder(s).

    Before entering into the agreement and in order to assess the risks of the transaction, it is an essential part of the process for due diligence to be conducted on behalf of the prospective purchaser. Depending on the target company’s nature, size, history, activity, etc., varying types and degrees of due diligence may be required, including legal, financial, tax, operational, commercial, environmental, and others. Special due diligence of legal and technical character is carried out on the company’s real estate assets (see Section 2.6).

    In the context of the company’s legal due diligence, it is investigated whether the company has been lawfully incorporated and operates in accordance with the corresponding corporate legislation (Law 4548/2018 for SAs and 4072/2012 for PCs), whether it complies with any applicable corporate governance or regulatory requirements (Law 4706/2020, as in force) and whether there are any provisions in the companies’ Articles of Association or call options that may prevent, or encumbrances on the shares that may devaluate the transaction. Also, a review of the company’s material contracts (e.g., loans, guarantees, insurances), employment policy, data protection policy, pending trials, etc. is performed. It is especially important to verify if the company has taken all measures in order to be exempt from the Special Real Estate Tax (EFA) (see Section 4.2).

    Following the due diligence, should the purchaser wish to proceed with the transaction, the sale and purchase agreement for the acquisition of the shares is drafted and executed. Law 4548/2018 on SAs does not prescribe a particular form for this agreement, while Law 4072/2012 on PCs only requires that it be written; therefore, the common practice is that a private document is signed, without the need to involve a notary public. In the case of SAs, the transfer of shares is then registered in a special company record (the shareholders’ record) along with the names of the contracting parties, and either a new share certificate is issued in the name of the purchaser or a relevant note is made on the existing certificate. Please note that as per art. 184 of Law 4548/2018, starting from January 1, 2020, all bearer shares issued by Greek SAs are mandatorily transformed into registered shares. Different registration procedures apply with regard to listed shares. A very similar procedure is followed for PCs.

    If, after the transfer of shares, the purchased shares, the company itself, or its real estate properties are revealed to fall short of what the parties had agreed (e.g., the purchaser discovers that the company is in debt or faces regulatory implications or its properties are subject to restrictions that they had not been informed of when entering into the deal), the provisions on the so-called “substantive” and “legal” defects of the object of a sale apply (mutatis mutandis), granting a – far from negligible – set of claims against the seller (see Section 2.6). However, a prudent purchaser is advised to not rest on the protection of the law mainly because, oftentimes, these claims would be activated (or at least realized) after the sale price has been paid, and also not all deficiencies of the purchased company could be easily categorized as substantive or legal defects. For this reason, additional protection is ensured through the inclusion of specific terms in the sale and purchase agreement, which incorporate the findings of the due diligence and contain representations, conditions precedent (e.g., deferred payments until the seller succeeds in removing an existing third-party right, such as a mortgage, from the company’s property), warranties (which guarantee the full spectrum of claims against the seller irrespective of whether they are in fault or not), indemnities and penalty clauses.

    As regards taxation, share deals are exempt from indirect taxes (VAT, stamp duty) and transfer taxes, save for a 0,1% Sale Tax levied upon the seller of shares listed in the Athens Stock Exchange (art. 9 of Law 2579/1998, as amended by art. 50 of Law 5073/2023). For the remaining part, the seller of shares who is a natural person is subject to a Capital Gains Tax, which is calculated at a rate of 15% of said capital gains (art. 43 of Law 4172/2013). If the seller is a legal person, a business income tax is imposed on the capital gains instead, at a rate of 22%; however, an exemption applies in the case that the legal person transferring the shares is a tax resident of Greece and maintains at least 10% equity holding in the company whose shares are being transferred for at least 24 months.

    Lastly, a share deal could be concluded through a merger of a company interested in acquiring the real estate property (or one of its subsidiaries) with the owning company, in which case special rules apply (Law 4601/2019).

    2.3 Asset Deal

    For the process of an asset deal preceding the execution of the sale and purchase agreement by means of a notarial deed and the risks to be considered by the purchaser, please refer to Section 2.6; for the ways in which such risks are usually addressed in the agreement, please see the relevant paragraph of Section 2.2 above, as these are common in share and asset deals; for details on the notarial deed itself and relevant fees, see Section 2.4; for the subsequent registration process and its fees, refer to Section 2.5; for applicable transfer taxes, please check Section 4.1.

    2.4 Disposal Process

    As explained above, the involvement of a notary public is not needed for a share deal, whereas an asset deal would only be valid if performed by means of a notarial deed.

    Apart from the sale and purchase agreement for the real estate property, a series of other documents are required by law for the conclusion of the asset deal by means of the notarial deed and are typically annexed thereto. These include, among others:

    • Certificates of payment of taxes related to the ownership of the property (i.e., ENFIA – see Section 4.2) for the years before the transaction, as well as proof of payment of the applicable transfer tax (FMA – see Section 4.1).

    • The Certificate of Completeness of the Building’s Digital Identity, by means of which an authorized engineer declares that the “Building’s Digital Identity” has been completed. The “Building’s Digital Identity” includes, inter alia, building permits, and relevant diagrams, energy performance certificate, if applicable, etc. (art. 52-61 of Law 4495/2017).

    • The seller’s solemn declaration and an engineer’s certification that a) the property is a vacant land plot, or b) that the building(s) existing thereon are legal, or c) that any illegal buildings existing thereon have been duly regularized. The engineer’s certification is now included in the Certificate of Completeness of the Building’s Digital Identity. Please note that, as a general rule set in art. 82 of Law 4495/2017, transactions for the transfer or establishment of real rights on properties with illegal (or not regularized) buildings thereon are absolutely null and void. However, this prohibition does not, interestingly, cover deals for the acquisition of shares in companies that are already lawful owners of said properties.

    Special documents might be required for reasons associated either with the subjects of the transaction (e.g., an insurance clearance certificate when a seller is a natural person performing business activities or any legal person), the natural or legal status of the property (e.g., a certificate of non-burnt land for private forests and forest expanses) or both (e.g., special administrative permission for foreign transferees of properties in designated border areas – see Section 1.1).

    A breach of duty by the notary public who has agreed to perform the transaction may result in their civil liability, disciplinary consequences, and, in special cases (e.g., the intentional non-attachment of the aforementioned solemn declaration and engineer’s certification to the notarial deed), is treated as a criminal act.

    Finally, pursuant to Ministerial Decision 111376/2012, notarial fees are calculated as an aggregate of certain standard fees (EUR 20 for the first page and EUR 5 for each of the other pages of the deed) and a progressive fee at a rate ranging between 0,80% and 0,10% on the higher of the objective price (see Section 4.2) or the price of the property agreed between the parties. Notarial fees are also subject to VAT.

    2.5 Registration of Change of Ownership

    As previously mentioned, registration of all legal acts resulting in the transfer or establishment of real rights on real estate property, a primary example being a sale and purchase agreement for the transfer of ownership, must be registered with the competent Cadastral Office.

    Registration is usually complete shortly after the notarial deed has been brought for registration, subject to delays caused by the process of reviewing the legality of the legal act (see below) and the understaffing of certain Cadastral Offices. In any case, for legal purposes such as the determination of the priority of real rights, it is the time of application for the registration of the (valid) legal act that is of consequence.

    Registration fees apply and are calculated based on a rather complex structure of standard and proportional fees and tend to differ slightly for (ex) Land Registries and Cadastral Offices. Indicatively, art. 6 of Law 4512/2018 provides that a fee at a rate of 0.5% or 0.6% on the value of the transferred property is payable for the registration of sale and purchase agreements with the Cadastral Office.

    Finally, the personnel of the competent registration authority are not commissioned to accept and register all legal acts brought before them in an unquestioning manner; however, their review is limited by law and its extent depends on the respective system that operates in each area. For the areas in which the system of registrations and mortgages still operates, the review of the registrants is generally formal, mainly focused on the confirmation that all required documentation has been submitted, and does not extend to the examination of the documents’ validity (art. 13 of Royal Decree 533/1963), save for certain cases of blatant nullity. On the other hand, for the areas in which the cadastral system operates, and in service of the principle of public faith in cadastral registrations, registrants proceed to a deeper review of the legality of the legal acts brought before them, verifying their suitability to produce the desired legal consequences (art. 16 of Law 2664/1998). In both cases, a breach of the registrants’ duties (e.g., the registration of a blatantly null and void agreement) may incur their civil liability, and disciplinary penalties, but also, in extreme cases and provided that the registrant acts with intent, criminal responsibilities.

    2.6 Risks To Be Considered

    The acquisition of ownership (and other real rights) on real estate, be it through a share or an asset deal, might involve considerable risks associated with either the validity of the transaction itself or the possibility to legally, safely, and effectively proceed to the envisioned use and/or development of the property. For this reason, thorough legal and technical due diligence should be conducted on behalf of the prospective acquirer.

    Legal due diligence typically includes the review and confirmation of an uninterrupted sequence of titles (i.e., legal acts capable of producing the transfer of a real right, such as sale and purchase agreements, deeds of acceptance of inheritance, court decisions, etc.) duly registered in the public records, that is, either in the physical or digital records of the competent former Land Registries or in the system of the National Cadastre (see Section 1.2). The titles themselves should be reviewed in terms of their validity, for a minimum 20-year lookback period. This period is essential because it is the time required to acquire a property by adverse possession (extraordinary usucaption), and continues to benefit the consecutive successors of the initial possessor of the property. Furthermore, it is investigated if there are any registered encumbrances or other property defects (e.g., mortgages, prenotations of mortgage, servitudes, long-term leases, lawsuits, seizures) or non-registered leases. In any case, it should be remembered that the factuality of the conclusions reached through a title review is inevitably dependent on the system of publicity that applies in the area of the property (see Section 1.4).

    Technical due diligence, performed by engineers, usually focuses on confirming the property’s location and dimensions, as well as inspecting existing buildings and structures in order to confirm their compliance with the corresponding building permit(s) and applicable legislation. This last verification is crucial because, as explained in Section 2.5, the transfer of real rights on properties with illegal (or not regularized) buildings thereon is generally impossible.

    Finally, legal and technical advisors collaborate in order to review the property’s spatial and urban planning status (or “planning identity”), which delineates the ways in which the property can be built on and exploited. Indicatively, it is determined whether the land plot falls inside or outside a city plan, what are the allowed land uses and applicable building terms and restrictions deriving from such status, and whether limitations arise from special legislation on forests and forest expanses, cultural heritage, nature conservation areas, foreshore and beach zones, etc.

    If the purchaser wishes to bind their prospective seller in advance (e.g., for a certain sale price) before the completion of the due diligence, it is common practice to conclude a preliminary agreement. Such agreements are also useful for the seller to bind prospective purchasers before they (the seller) gather all necessary contractual documentation (see Section 2.6). In order to be valid, a preliminary agreement should contain all the essential elements of the final sale and purchase agreement, and also be drafted by means of a notarial deed (GCC art. 166). For the remaining part, it might be either unilaterally, or bilaterally binding.

    In the event that, after the final transfer is complete, a purchaser finds out that the property is flawed with substantive or legal defects that they were unaware of during the transaction, they hold a set of claims against the seller. This means that if the seller manages to prove that the purchaser had knowledge of these defects, they are exonerated from the purchaser’s claims.

    More specifically, in the case of substantive defects, i.e., if the property (objectively and subjectively) does not correspond to its description according to the contract, is not suitable for its intended use, etc., the purchaser has the right to a) demand that the defect be rectified (if applicable), b) request that the sale price be reduced, c) rescind the sale and purchase agreement, or d) seek compensation, either exclusively or in addition to the previous rights (GCC arts. 540 et seq.). The first three rights are available regardless of the seller’s fault (by way of intent or negligence), whereas compensation generally requires demonstrating such fault. In case of legal defects, i.e., third-party rights that hinder the enjoyment of the purchaser’s right, the purchaser may, regardless of the seller’s fault: a) require proper performance of the sale and purchase agreement and possibly claim compensation for the delay in proper performance, b) insist on performance on the contract despite the defect and claim compensation for the existence of the defect, c) rescind the sale and purchase agreement, or d) exclusively seek compensation (GCC arts. 515-517).

    Please refer to Section 2.1 on share deals to see the ways in which the purchaser may ensure greater protection through the sale and purchase agreement, which applies to asset deals as well.

    3 Real Estate Financing

    3.1 Key Sources of Financing

    Banks represent a primary source of real estate financing in Greece, as debt financing on a commercial scale is reserved for licensed credit institutions. To this end, they provide loans, project finance schemes, or sale and lease-back contracts.

    Investment capital can be raised through the stock market, institutional funds, or through the issuance of bond loans. Bond loans, governed by Law 4548/2018, are only available to Greek Societes Anonymes and have proved a particularly effective instrument, both among companies specialized in real estate investments (REICs) and other corporations. The so-called category of “green bonds,” issued for the financing of sustainable real estate projects, appears to be increasingly attractive across all sorts of investors.

    Another practice worth mentioning is finance leasing, whereby a regulated financial lessor acquires property from the original owner and enters into a long-term lease with the interested investor, combined with an option to acquire ownership of the property at a pre-agreed residual value (typically nominal or even zero).

    In addition to the above, funding is available for real estate investments through various national and European development programs. Indicatively, special state funds from the Greek Recovery and Resilience facility are dedicated to incentivizing and supporting certain types of sustainable “Strategic Investments,” i.e., large-scale projects that are deemed particularly important for the national economy and for which a unique framework exists.

    3.2 Protection of Creditors

    A creditor’s primary security when financing real estate projects are, unsurprisingly, mortgages and prenotations of mortgage over the debtor’s properties. Other securities include:

    Pledges over the debtor’s shares and bank accounts.

    Nominal pledges on debtor’s goods in turnover, machinery equipment, etc. in accordance with Law 2844/2000, or floating charges.

    Personal or corporate guarantees granted by the debtor’s shareholders or entities affiliated with the debtor.

    The assignment of insurance claims, rental claims, and generally all receivables generated by the property(-ies), as well as any claims arising from material contracts of the debtor (e.g., a management agreement with a hotel operator).

    The assignment or establishment of pledges over claims arising from loans granted to the debtor by its shareholders.

    In addition, financing agreements contain covenants, such obligations of the debtor to maintain a certain legal and financial status and inform the creditor about any changes, to comply with applicable laws and regulations, to not dispose of or encumber the real estate property(-ies), to not dispose of receivables, to not proceed to corporate transformations and/ or distributions, etc.

    4 Real Estate Taxes

    4.1 Transfer Taxes

    The transfer of real rights on real estate properties is subject to taxation. These transfer taxes are levied once and burden either the transferor or the transferee (usually, a seller or a purchaser) of said rights. They include:

    The Real Estate Transfer Tax (FMA) – Law 1587/1950. This tax is imposed on the purchasers of the real rights at a rate of 3% (subject to minimal increases for the benefit of local authorities) on the higher of the objective price (see Section 4.2) or the price of the property agreed between the parties. Exempt from the FMA are, up to certain amounts, the natural persons who purchase properties that shall serve as their main residence. The FMA must be paid by the purchaser before the execution of the notarial deed for the transfer of the real right.

    The Value Added Tax (VAT) – Law 5144/2024 (New VAT Code).. In place of the FMA, VAT is imposed on the transfer of real rights on new and unoccupied buildings (or parts thereof in the case of a horizontal property) whose building permit has been issued after January 1, 2006, at a rate of 24%. Subject to the tax are all natural and legal persons in the context of their business activities. Any subsequent transfers only incur FMA for the purchaser. It is important to point out that persons subject to VAT may opt for a deferral of their obligation to pay VAT until December 31, 2025, in which case the transferee’s obligation to pay FMA applies.

    The Capital Gains Tax on Real Estate (FYA) – art. 41 of Law 4172/2013. Capital gains realized by natural persons upon disposal of their real rights are taxable at a rate of 15%. However, the application of this tax has been continuously deferred since its introduction and is currently deferred until December 31, 2026. If the seller is a natural person acting in the context of their business activities or a legal person, these capital gains are, instead, subject to business income tax (at a rate of 9-44% depending on the tax bracket for the former and 22% for the latter).

    4.2 Specific Real Estate Taxes

    Not only the transfer, but also the mere ownership (or the holding of other real rights apart from mortgages but also, the possession) of real estate in Greece is subject to taxation. The following taxes are levied on an annual basis on the ownership of real estate properties:

    The Uniform Real Estate Property Tax (ENFIA) – Law 4223/2013. This tax consists of a principal tax, imposed on each real estate property located in Greece and owned by a natural or legal person, and a supplementary tax, imposed only on legal persons for the aggregate value of the taxpayer’s rights on real estate. The principal tax on buildings is calculated by multiplying the surface of the building with a so-called “basic tax,” which ranges between 2.00 and 16.20 depending on the price zone where the building is located, and other coefficients regarding the building’s oldness, floor, façade, etc. Price zones are determined by means of a decision of the Minister of Finance (latest available is the Ministerial Decision No. 57732/2021, as amended by means of the Ministerial Decision No. 19033/2022) and these prices form the basis of the renowned system of “objective values,” which should – albeit frequently have not – converge with the current market values of the properties. Similar rules apply to vacant plots. The supplementary tax is imposed on legal persons and is calculated in general at a rate of 0.55%, although exceptions apply (e.g., for properties which are used for any kind of business activity, it is calculated at a rate of 0.1%)

    The Municipality Duty (TAP) – art. 24 of Law 2130/1993. This tax, also imposed on natural and legal persons alike, is collected through electricity bills in favor of Municipalities. The tax is imposed at a rate ranging between 0.025% and 0.035% on the real estate’s objective value and (if applicable) further multiplied by a rate derived from the building’s oldness. Until recently, it was provided that in case of transfer of real estate assets, a certificate of full payment of the Municipality Duty (TAP) had to be appended in the relevant deed as a condition of its validity. However, said obligation was abolished, pursuant to art. 33 of Law 5076/2023.

    The Special Real Estate Tax (EFA) – art. 15 et seq. of Law 3091/2002. Only applicable to legal persons, this tax is calculated at 15% of the property’s objective value. This extortionate tax was introduced in order to tackle the tax avoidance problem of offshore companies regarding their real estate in Greece since the ultimate beneficiaries of these properties remained secret from Greek authorities. Therefore, among other exceptions, companies with a registered seat in Greece or in another country within the EU or the EEA or a third country (provided that this country is not included in the Greek list of non-cooperative jurisdictions), which (i) have registered shares (or the equivalent in their jurisdiction), (ii) disclose their ultimate beneficial shareholders (individuals), and (iii) such individuals hold a Greek tax identification number, are exempt from paying the EFA.

    5 Condominiums

    5.1 Legal Framework for Condominiums

    A much more conventional example of a divergence from the superficies solo cedit principle than the “surface right” (see Section 1.1), condominiums exist in Greece in the form of horizontal and vertical properties, which are collectively referred to as “divided properties.”

    Horizontal properties are mainly governed by GCC arts. 1002 and 1117 and Law 3741/1929. Horizontal ownership is the special form of ownership that consists of (a) exclusive ownership of a floor or an apartment in a building and (b) a mandatory co-ownership on the land plot and the building’s common areas (roof, yard, stairways, etc.). Vertical properties, in turn, were introduced by Legislative Degree 1024/1971, pursuant to which the aforementioned provisions on horizontal properties also apply, mutatis mutandis, to vertical properties, forming a shared legal framework for both concepts. Vertical ownership is the special form of ownership that consists of (a) exclusive ownership of a building constructed on a land plot with two or more separate buildings and (b) mandatory co-ownership of the land plot and the common facilities thereon. The two types of divided properties may also coexist, if a vertical property is also partitioned into horizontal properties, creating a so-called “composite vertical property.”

    Apart from their conceptual differences, it should be mentioned that, unlike horizontal properties, the establishment of vertical properties is not allowed in non-urban areas (i.e., on land plots beyond city plans and settlement boundaries). However, certain exceptions apply; one to be considered is Integrated Tourist Resorts (Law 4002/2011).

    Divided properties are typically established by means of an agreement between all the co-owners of the whole property, a unilateral act of the sole owner of the property, or an agreement between the owner (or owners) of the whole property and the transferee of the divided property. All these acts must take the form of a notarial deed and be registered in the public records.

    5.2 Rights and Duties of Co-Owners

    The rights and duties of the owners of divided properties derive from Law 3741/1929, as well as the provisions of the GCC on co-ownership (arts. 1113-1117). It is also typical – albeit not mandatory – that additional rights and obligations are set by virtue of By-laws established through an agreement of all the co-owners, which must take the form of a notarial deed and be publicly registered.

    In relation to the part of the property exclusively owned by them, the owners of divided properties enjoy all the powers emerging from the right of ownership. As regards the common parts of the property, each co-owner holds a right of free use and repair thereof, on condition that the rights of the other co-owners are not harmed and that the ordinary purpose that these parts are destined to serve is not altered.

    In terms of duties, each co-owner shall contribute to the common expenses of the whole property depending on the value of their divided property and be obliged to take the necessary measures for the maintenance of the common areas in the event of imminent danger.

    5.3 Liability of Co-Owners

    An owner of a divided property may breach their obligations under the law or the By-laws (if in place) and thus become liable vis-à-vis the other co-owners. If the breach consists of offending the exclusive ownership of another co-owner, this co-owner is equipped with the actions in rem and the remedies related to possession described in Section 1.4, as well as claims for the compensation of any damages suffered. Similarly, if a co-owner offends the co-ownership of the rest on the common areas of the property (e.g., by arbitrarily occupying a common space), each of the other co-owners may protect their percentage of co-ownership or co-possession by exercising the same claims, and also request compensation for any personal damage. In any case, each of the other co-owners holds a primary right to request that another co-owner conforms to all their obligations under the law (e.g., that they pay their share in the common charges) or the potential By-laws (e.g., that they cease to exercise an activity which is not allowed in the building), and demand compensation if damages occur.

    5.4 Rights and Duties of Condominium Associations

    Together, all the owners of divided properties on a land plot form a union of persons that is not endowed with a legal personality (GCC art. 107). The two main bodies serving this union are the General Meeting of the Co-owners and the Administrator, whose role is usually elaborated in the By-laws, as the relevant provisions of Law 3741/1929 are frugal.

    The General Meeting of the Co-owners decides on matters related to the maintenance, improvement, and use of the common parts of the property. The majorities required for decision-making are fixed in the By-Laws. These majorities, however, may not amend the By-laws (which constitute an agreement between all the co-owners) or unanimous decisions of all the co-owners.

    The Administrator is typically elected by a majority at the General Meeting in accordance with the By-laws; in the absence thereof, a consensus of all co-owners is required for their appointment. The Administrator is usually responsible for the execution of the maintenance works in the common areas, the allocation of the common expenses, and the legal representation of the union of the co-owners. Finally, the law does not require the Administrator to also be a co-owner, but the By-laws may.

    6 Commercial Leases

    6.1 Form and Contents of a Lease Agreement

    Just as for any regular lease, no particular form is required for the validity of a commercial lease; even an oral lease agreement can be binding. The usual practice, however, is for the lease contract to be concluded through signing a private document. In any case, tax legislation requires that the basic information of all real estate property leases (whether be it written or oral) be declared on the Greek electronic system for taxation services, whereby they receive a registration number and a so-called “certain date.”

    Commercial leases must at least define:

    • The amount of the rent, which is usually paid on a monthly basis and adjusted annually (see Section 6.5).

    • The commercial or professional activity which the lessee may exercise in the leased premises.

    The parties may also agree on an obligation of the lessee to practice said activity.

    Other terms standardly found in commercial leases include:

    • The duration of the lease.

    • The amount of a security deposit or a bank letter of guarantee provided by the lessee.

    • Obligations of the lessee to keep the leased premises in good condition and repair any damages thereto, pay any utility charges and common area expenses, maintain a set of insurance policies, etc.

    • The exclusive responsibility of the lessee to obtain all applicable permits and approvals to exercise the agreed activity and/or perform any construction or fit-out works.

    • The reasons for which each party may terminate the lease.

    As one would expect, the contents of a standard commercial lease in Greece today have been shaped, in large, by the two great socio-economic crises of recent years: the financial crisis of 2009 and the COVID-19 pandemic. By virtue of a radical reform of the legislation on commercial leases in 2014 (see Section 6.2), their minimum mandatory term was significantly lowered from 12 to three years. Surrounded by market insecurity and fluctuations, both parties to commercial leases have eagerly grasped the opportunity to conclude shorter contracts and freely re-evaluate their best interests more often. Moreover, following the COVID-19 pandemic, parties tend to negotiate more elaborate force majeure clauses.

    The central commercial streets and successful malls have recovered in the post-covid era, with rents showing significant increase as a result of high demand (source: www.ot.gr, Greek real estate: “Explosion” in commercial venues – Higher yields of malls, 04.05.2023, and www.ered.gr High street retail still the dominant factor of the Greek CRE market, 22.02.2024). Moreover, demand for new office spaces is remarkably high in recent years (source ekathimerini: “Jump in demand for new offices”, 20.09.2024).

    6.2 Regulation of Leases

    Commercial leases are regulated by Presidential Decree 34/1995, supplemented by the general provisions of the GCC on leases (arts. 574 et seq.). Considerable amendments were introduced to said presidential decree by virtue of art. 13 of Law 4242/2014, essentially creating two different regimes for commercial leases concluded before (“old leases”) and after (“new leases”) its enactment on February 28, 2014. The following information on commercial leases is focused on the current legal framework for “new leases.”

    Pursuant to art. 45 of Presidential Decree 34/1995, its protective regulations for the rights and interests of both parties are “semi-mandatory,” in the sense that a waiver of said rights upon the first conclusion of the lease agreement does not produce legal effects (unless stipulated otherwise in the decree), however, a posterior waiver is possible. This means that the parties can only conclude commercial leases that bind them with the total of “semi-mandatory” rights and obligations of the decree, and each of them can only later decide if they want to be deprived of one or more of these rights (or not). One example of these (drastically decreased by virtue of Law 4242/2014) rights is the right of the lessee, three years into the lease, to concede the use of the leased premises to a company established with a minimum participation of 35% by the lessee. However, the most prominent example regarding new leases refers to their duration under Law 4242/2014: this is mandatorily set at three years, even if agreed for a shorter or indefinite term, and may, of course, be agreed for longer. Commercial leases can only be dissolved during the mandatory three-year period by means of a subsequent agreement bearing a certain date. In this context, if the lessee is acknowledged to still hold a right of termination for convenience under the new regime (see Section 6.4), then a certain date would also be required for a subsequent waiver of this right.

    Please bear in mind that there are certain exceptions where the protective provisions of Presidential Decree 34/1995 do not apply, leaving the parties under the provisions of the GCC only. These exceptions include the lease of spaces within the premises of ports, airports, and train stations, within public spaces such as archaeological sites and universities, listed buildings, etc.

    6.3 Registration of Leases

    As a general rule, no registration is required for a commercial lease, neither as a condition for their validity nor as a prerequisite for the lease to have binding power over future owners of the leased property (however, see Section 6.8). The aforementioned declaration to the tax authorities (see Section 6.1) serves purely taxation purposes.

    6.4 Termination of Leases and Renewals

    The ill-advised wording of art. 13§2 of Law 4242/2014 had created a major interpretative challenge as to whether a “semi-mandatory” right to terminate a commercial lease for convenience (i.e., without cause) is applicable to new leases. Following contradictory decisions issued by several Courts of Appeals, the Supreme Civil and Criminal Court appears to have resolved the matter. Specifically, in its decisions nos. 1187/2023 and 971/2022, the Supreme Court ruled that new leases are binding for both parties throughout the lease, i.e., for at least three years or even longer, if the parties agreed on a longer term. Neither party is entitled to terminate for convenience during the agreed term. After the expiry of the term and/or leases agreed for an indefinite term, the lease may be terminated for convenience, subject to observing a three-month notice period.

    With regard to termination for cause, the reasons granting a right to each party to terminate the lease are usually set down in a relevant clause and are mostly associated with a breach of contractual terms. In any case, the law provides that the lessor may terminate the lease if the lessee makes improper use of the property (GCC art. 594), if they fail to pay rent in time (GCC art. 597), or for a “serious cause,” that is, for any occurrence which, combined with all other circumstances, renders the continuation of the lease intolerable. However, unless the parties have explicitly agreed otherwise, it is no longer possible for lessors to invoke reconstruction of the property, owner-occupancy, or the intention to practice their own business in the leased premises as causes for termination. On the other hand, the lessee is mainly equipped with a right to terminate the lease if the leased premises have not been delivered in time, wholly or in part, in a (substantive or legal) condition that renders possible their unobstructed use as agreed (GCC art. 585).

    When a commercial lease reaches its natural end upon the completion of the minimum mandatory three-year period or any longer-term agreed, the parties may of course agree to renew it. In the absence of such new agreement, if the lessee continues to use the leased premises and the lessor does not object thereto, it is deemed ex lege that the lease has been renewed under the same terms for a duration which is, now, indefinite (GCC art. 611). An indefinite duration means that any party may, at any time, terminate the lease without cause, with a three-month prior notice, according to the recent judgments of the Supreme Civil and Criminal Court mentioned above.

    6.5 Rent Regulations and Rent Reviews

    Presidential Decree 34/1995 explicitly states that the amount of the rent is freely determined by the parties, as is the percentage and frequency of its adjustment. For the case where the parties have not agreed on a rent adjustment clause, the law establishes a system for its adjustment after the second year of the lease, based on either the objective or commercial value of the leased premises and, following that, an annual readjustment based on the shift in Consumer Price Index (CPI) statistics.

    However, is it rather extraordinary for a specific rent escalation clause not to be included. It is typically agreed that the rent shall increase annually by a percentage equal to the percentage of change in CPI, often further increased by another percentage (e.g., CPI + 2%). Rent review clauses, whereby the rent is brought in line with the current market value of the leased premises through real estate appraisal, are also allowed, yet not as popular (especially for shorter leases) since they result in additional costs for both parties and a mutual agreement on the new rental price is not guaranteed.

    However, the contractual right to freely agree on the rent adjustments was restricted recently due to the runaway inflation in Greece. Specifically, art. 96 para. 1 of Law 5007/2022 provides that the increase rate for the rents of commercial leases cannot exceed 3% for the years 2024 and 2025, even if the parties had agreed differently. 

    Furthermore, through its arts. 288 and 388, the GCC offers useful tools for the adjustment of rent in the case of a material change of circumstances. Especially art. 388, granting a right to request judicial intervention for the adjustment of a contract whose balance has been disrupted by unforeseen events, has been widely used in the past decade of the financial crisis in Greece.

    6.6. Services to be Provided Together with the Lease

    There is generally no specific service prescribed by law that the lessor of a commercial lease shall provide to the lessee. Lessors do have a general obligation under GCC arts. 575 and 592 to maintain the leased promises in the condition that is appropriate for the exercise of the agreed commercial activity and repair any damages caused by the regular use of the premises by the lessee; these obligations, however, are usually passed on the lessee through the lease agreement.

    Other than the above, the parties may freely agree on any additional service to be provided by the lessor. One such example would be a lessor of a shopping mall undertaking to provide cleaning, security, and marketing services to the lessees running the shops within the mall.

    6.7 Fit-Out Works and Their Regulation

    As a general rule provided by the GCC (art. 591§2) any investments in the form of fit-out works resulting in the increase of the premises’ commercial value shall be repaid by the lessor, but only if the lessor truly or presumably desired such fit-out works to be made and remain for the benefit of the property. For fixtures, instead of their right to repayment, the lessee may choose to remove them from the property. In any case, the lessor is entitled to require that the premises be returned to them in their original state (GCC art. 599), in which case the lessee is obliged to proceed to all necessary removals and perform any necessary works to restore such state.

    However, these provisions are often derogated from through special agreements in the lease contracts. It is often agreed that the lessor may choose to keep all improvements and fixtures for the benefit of the property, without a duty to repay the lessee, or alternatively choose to have the premises returned to them in their original state at the lessee’s cost. In the case where improvements and fixtures are agreed to remain with the lessor, it is typical that instead of repayment, a lower rent would be agreed upon, either during the fit-out works or throughout the lease.

    It should be mentioned that if the improvements and fixtures made by the lessee do remain with the lessor, the latter shall be taxed for these benefits with an income tax (an income “in kind”). Tax legislation stipulates that if the parties have agreed that the benefits shall stay with the lessor, then the annual income in kind shall be calculated by dividing the value of these benefits by the number of years of the lease. Other than that, if the benefits to be kept exceed basic fit-out works and result in the property acquiring features that influence its objective real estate value (e.g., the construction of new, or the expansion of existing buildings), then the owner/lessor shall bear a heavier real estate tax (ENFIA, TAP – see Section 4.2) burden.

    6.8 Transfer of Leases and Leased Assets

    In contrast to regular leases, commercial leases seem to be “immune” to the risk of potential transfers of the leased properties to new owners without the need to observe the additional formalities set by GCC arts. 614-618 (proof of the lease through a document bearing a certain date, registration of leases exceeding nine years in duration). This is essentially the case law of the Supreme Civil and Criminal Court, based on the argument that these provisions have been explicitly excluded from commercial leases by law. Thus, future owners are automatically (ex lege) bound by existing commercial leases for the remaining time of the lease. However, please note that this case law of the Supreme Court was formed under the old regime, where a minimum mandatory term of 12 years was fixed by law, and it has not been tested for new leases, whose minimum term has been set at three years.

    A noteworthy exception exists for the case where the old owner is succeeded by a new one, not by means of a consensual transfer, but as a result of enforcement proceedings initiated on the property of the old owner. The highest bidder in these proceedings becomes the new owner of the property and holds the right to terminate the lease. More specifically, if the property was attached after the conclusion of the lease agreement, the new owner can terminate the lease at any time and the lease is subsequently dissolved within six months  (art. 1009 of the Greek Code of Civil Procedure). On the contrary, if the lease agreement is concluded after the attachment of the property, the lease can be terminated within two months as of the date of the conclusion of the property’s transfer to the new owner; said termination takes effect after two more months (art. 997 of the Greek Code of Civil Procedure).

    As for the lessees, they are entitled to unilaterally transfer their rights and obligations deriving from a commercial lease (i.e., their position as lessees) in the case of severe health issues preventing them from continuing their commercial or professional activities in the leased premises. In the case of the lessee’s death, this right may be exercised by their closest relatives (art. 12 of Presidential Decree 34/1995).

    Other than the above cases, the transfer of a lease agreement presupposes a mutual agreement of all its old and new subjects.

  • Real Estate Laws and Regulations in the Czech Republic (2025)

    Contributed by PRK Partners.

    1 Real Estate Ownership

    1.1 Legal Framework

    Full ownership of real estate is recognized under Czech law. Ownership rights of real estate benefit from constitutional protection, which also sets forth crucial rules for expropriation – permitted only in exceptional circumstances, driven by the public interest, and subject to strict rules set forth by law and payment of compensation.

    The Czech Civil Code (Act No 89/2012 Coll.), which came into effect in 2014 as part of the entire private law recodification, governs all matters related directly to real estate, including fundamental provisions for conveyance contracts, rights related to liens and encroachments, condominium rights and obligations, commercial leases, and others. Since the recodification of private law, no further major changes to real estate ownership regulation can be expected for some years to come.

    In principle, any entity (a company or person) may acquire and own real estate in the Czech Republic with few restrictions. This means that not only Czech or EU residents, but also residents from third countries may acquire real estate in the Czech Republic.

    1.2 Registration of Ownership

    All land and most buildings in the Czech Republic are registered in the Real Estate Register (Cadastral Register), which is administered by the Czech State (through a specialized cadastral office authority). Records in the Cadastral Register are legally determinative, except in specific circumstances, such as proven fraud.

    Ownership rights – including mortgages, easements, pre-emptive rights, and other in rem rights concerning real estate registered in the Cadastral Register – originate, change, and cease to exist upon their registration therein.

    In addition to transfers under an agreement, the ownership title to real estate can also be acquired: (i) based on a decision of state authority; (ii) by operation of law; (iii) upon being built (in the case of buildings); (iv) through a public auction; (v) by positive prescription (the lawful (good faith) possessor of real estate is entitled to become its owner if it keeps the real estate in its possession for 10 consecutive years); and (vi) by other means (e.g., inheritance). In all these cases, the relevant change must also be registered in the Cadastral Register, the effect of registration is, however, of a declaratory nature only.

    The ownership right of real estate that does not need to be registered in the Cadastral Register – such as minor constructions (such as fences) and underground constructions – follows a similar regime as those of movable assets. Nevertheless, there are some formal requirements that apply to all real estate irrespective of its need to be registered in the Cadastral Register (see below).

    1.3 Publicity of Real Estate Register

    The Cadastral Register contains information on land parcels (including information about any buildings constituting a part of the given parcel, if any), buildings, housing and non-residential units within condominiums, rights to build, and other real estate established by operation of law. It also includes geometric descriptions of land parcels and most surface constructions along with their classification.

    The Cadastral Register is publicly available, and information on a particular real estate can be obtained through an extract, which represents proof of ownership of the given real estate or a right to it. An extract from the Cadastral Register contains, in particular, the following information about the real estate:

    (a) identification of the owner(s), and their ownership shares,

    (b) the surface area in square meters,

    (c) type of protection applicable (such as a historical area, if applicable),

    (d) reference to the purchase agreement or other title deed used as the basis for registering the current owner’s title to the real estate in the Cadastral Register, including the file numbers under which such contracts or other documents are kept in the archives of the cadastral authority,

    (e) restrictions on the ownership title to the real estate, i.e., mortgages, easements, rights to build, or pre-emptive rights – with a specification of the parties in favor of which the rights corresponding to such restrictions exist – the contracts or other titles under which such restrictions came into existence, as well as the file numbers under which such contracts or other documents are kept in the archives of the cadastral authority,

    (f) other rights registered in the Cadastral Register to the real estate in question,

    (g) an indication that the real estate or right vested in the real estate in question has been affected by ongoing judicial proceedings or proceedings before the cadastral authority.

    The archives of the Cadastral Register represent an additional source of information regarding real estate.

    A simplified extract is free and freely accessible on the web of the cadastral office. The official extract is easily accessible from every official administrative point of contact for a modest fee.

    Similarly, all documents kept in the archives of the cadastral office are accessible either at the competent cadastral office or online. However, this is a special service restricted to registered users only.

    1.4 Protection of Ownership

    The principle of material publicity of entries in the Cadastral Register (introduced under the current Civil Code) has been applied since January 1, 2015. This means that each acquirer of real estate (or any right in rem to such property) who purchased it based on an asset deal for consideration and in good faith reliance on the correctness of the relevant entry in the Cadastral Register is protected against third-party claims, even if the previous entry into the Cadastral Register was incorrect.

    Similarly, any person affected by any change of an entry in the Cadastral Register is entitled to challenge it.  However, such a challenge, even if successful, can have a materially adverse effect on the registered owner only in specific situations and subject to satisfaction of certain conditions, such as timely registration of a “note on the dispute” (in Czech: poznamka spornosti) with the Cadastral Register. A note of disputability does not prohibit transfers of ownership, but any ownership transfer of real estate marked by a note of disputability would interrupt ownership in good faith.

    The above is without prejudice to the general right of anyone to challenge an entry in the Cadastral Register that affects them. The outcome will, in such a case, be opposable only against the person who acquired the right after registration of the note of disputability in the Cadastral Register.

    2 Real Estate Acquisition

    2.1 Share Deal or Asset Deal?

    It is possible and typical in the Czech Republic to structure deals both as direct sales of real estate (asset deal) as well as indirect sales by selling a shareholding in a special purpose vehicle company owning the real estate (share deal).

    Asset deals are most common in disposals of real estate among private investors, whereas share deals are most common in business deals. Share deals have the following key advantages:

    (a) share deals are subject to fewer formalities since the relevant share purchase agreement (SPA) must not be registered in a public register (unlike an asset deal, which must be registered in the Cadastral Register – after first filing the related application);

    (b) the disposal is completed on one closing date (as opposed to an asset deal, which is only completed upon its registration in the Cadastral Register);

    (c) even though the property transfer tax has been abolished in the Czech Republic, with retroactive effect from December 1, 2019, share deals continue to be less burdensome from a tax point of view (this especially applies to the application of VAT to asset deals, as the tax treatment remains unclear in specific cases, and asset deals may not benefit from an exemption, unlike share deals under certain circumstances);

    (d) gains made on asset sales are generally subject to corporate income tax (if realized by corporations) or personal income tax (if realized by individuals) and will be taxed at the applicable rate (progressive rates of 15% or 23% for individuals, and a flat rate of 21% for corporations (a reduced rate of 5% apples to the income of certain investment funds, and 0% applies to income generated by specific pension funds of pension insurance institutions). Under certain circumstances, capital gains realized by individuals could be exempt at their level as well; and

    (e) share deals have, in most cases, no negative impact on the contractual relationships of the SPV owning the real estate, as there is no change in the contracting parties (except for contracts with change of control clauses and similar undertakings).

    In this respect, it should be noted that acquiring an SPV through a share deal involves other risks not necessarily related to the property, but to the SPV itself, such as past or even hidden corporate, contractual, or tax liabilities.

    2.2 Share Deal

    A share deal is a commonly used term for the disposal of a shareholding in a corporation. In terms of real estate, the two most common entities used are the limited liability company (in Czech spolecnost s rucenim omezenym) and the Czech joint-stock company (in Czech akciova spolecnost). Thanks to its simplicity and variability, a limited liability company is the most commonly used form while joint-stock companies are often used as a holding entity. There are no specific restrictions with respect to real estate holding entities and, as a result, other types of Czech or foreign entities are available to investors. Both entities can have only one shareholder.

    In most real estate share deals the closing occurs within the same day as the signing since the transfer is completed and effective upon the execution of the SPA. For limited liability companies, the signed and effective SPA must also be delivered to the company; for transfers of book-entered shares in a joint-stock company, the transfer becomes effective upon registration in the Central Depositary of Securities. Although registering the transfer in the Commercial Register is mandatory, it is of a declaratory nature only.

    The price for the shares (derived from the value of the underlying real estate owned by the SPV) is usually split between a full repayment of the shareholder’s loans and the purchase price of the shares. The market standard is direct payment to the seller’s bank account, which is done on the closing day.

    The fees associated with a share deal are quite modest and include the costs of verification of signatures and registration of changes in the Commercial Register.

    2.3 Asset Deal

    In asset deals, if the transfer relates to real estate that must be registered in the Cadastral Register (all land and most buildings), the transfer only becomes effective upon registration; if the ownership title to the real estate is not subject to registration in the Cadastral Register (if it is transferred by agreement), ownership is acquired on the effective date of the relevant agreement.

    The transfer document (i.e., a purchase agreement) must properly define and delineate the land parcels and buildings to the extent stated in the law. Non-compliance with this obligation can result in a defective transfer. The transfer document must be in writing, with the signatures of both parties officially verified and located on the same document. Unlike many other jurisdictions, the involvement of a notary public is not required, and the transfer document does not have to be in the form of a notarial deed.

    If the real estate is purchased by or sold to municipalities or public authorities, there are additional obligations and processes as set out in specific laws.

    The mandatory registration of a real estate transfer in the Cadastral Register means there is a lag of approximately 25 days between the signing of the deal and its closing. As a result, the purchaser generally deposits the purchase price in an escrow account of a notary public or a bank, with the funds released to the seller only after successful registration in the Cadastral Register of the purchaser’s title to the real estate.

    The fees associated with an asset deal are a bit higher than the fees associated with a share deal, but they remain modest and cover verification of signatures, registration of changes in the Cadastral Register, and escrow charges.

    2.4 Disposal Process

    A standard real estate transaction usually starts with due diligence performed by the purchaser. In larger deals or deals where the participation of more institutional investors is expected, the purchaser’s due diligence is preceded by the seller’s own vendor due diligence, the outcome of which is shared with interested investors. Although the investors are allowed access to a data room in order to check the vendor report and present their bids, an in-depth analysis of all assets is typically only open to selected (winning) bidder(s).

    A proper real estate due diligence will include a 10-year historical review of the acquisition title chain, a review of encumbrances, construction compliance, environmental issues, and all other aspects that are relevant to the nature of the property in question. While some local purchasers forego proper due diligence and rely solely on the information set forth in the Cadastral Register, clients are advised to conduct a full independent review of all matters that may interfere with their future intended use of the property. In addition, all corporate, financial, and tax aspects should be investigated by the purchaser as well, in order to limit the risk of undisclosed liabilities or other defects without a proper reduction of the purchase price.

    Once due diligence has been successfully completed, the parties can launch negotiations over the share purchase agreement.

    A purchaser wishing to protect its interests against undisclosed defects in the acquired SPV, underlying real estate, or shares thereon, must negotiate various remedies in the SPA either to improve the statutory rules on the seller’s liability for defects or to replace it with purely contractual regulations (usually as monetary compensation for the decrease in the value of the acquired assets) since a common issue is that deficiencies in an acquired asset are not easily categorized as defects. The most common remedies consist of agreed remedy or claim processes, indemnities for known risks, and seller’s post-closing covenants, which are secured by various schemes of deferred payments, escrows, guarantees, or contractual penalty clauses.

    Several types of consent might be required, depending on the specific circumstances. They include:

    (a) consent of a beneficiary of a pre-emption right,

    (b) corporate consents, including consents of the Ministry of Finance or municipal assembly,

    (c) consent of a bank in cases where a mortgage is vested in the real estate,

    (d) spousal consent if the seller is married, or with a divorce in process, or

    (e) architect’s consent in the event authors’ rights can apply with respect to the real estate.

    For asset deals, the seller is obliged to hand over to the purchaser the original energy certificate pertaining to the real estate as well as complete up-to-date project documentation.

    2.5 Registration of Change of Ownership

    Both share deals and asset deals must be registered in their respective registers. Registration of a share deal is of a declaratory nature only; registration does not affect the signing and closing of the deal. On the other hand, registration of an asset deal is a mandatory condition for the transfer of the title (with respect to real estate that must be registered in the Cadastral Register).

    Therefore, once the relevant transfer agreement with respect to an asset deal is executed at least one of the parties to the deal, if not both together, must fill in and file to the cadastral office the application for registration along with the underlying transfer document. Procedural aspects of title and other record registration in the Cadastral Register are governed by the Act on the Cadastral Register (Act No. 256/2013 Coll.).

    Once the cadastral office receives the application for registration of a change, it informs the owner of the subject real estate and other entitled persons that proceedings have been initiated. There is a 20-day mandatory wait period before a registration can be approved; this is to give sufficient time for all concerned parties to raise objections to the registration process, if necessary.

    If all statutory requirements are met, the cadastral office will register the ownership right and inform the participants of the proceedings. The registration is retroactive – meaning that the transfer’s effectiveness begins from the date of submission to the cadastral office of the application for registration, even though the registration process generally takes three to four weeks.

    The fees for registration are symbolic.

    2.6 Risks To Be Considered

    Without prejudice to the principles and rules governing the Cadastral Register, it is important to note that there are still unrecorded encumbrances vested in real estate (such as utility protection areas, municipal or state pre-emption rights, unrecorded easements, and ownership rights acquired through acquisitive prescription or public paths, ways, and roads). A pledge over property (including real estate, movables, shares, and receivables) might exist or be created by a decision of the tax administrator or other competent public authority without the existence or creation of this pledge being necessarily apparent from a Cadastral Register extract.

    Similarly, titles to even duly registered rights might still be successfully challenged and annulled due to, for example, a breach of mandatory rules protecting disposals with state or municipal property, a breach of public tendering rules, etc.

    Moreover, prudent investors go beyond just legal due diligence, they may also arrange for technical due diligence as well as an on-site inspection. Such steps minimize unexpected post-closing complications and trouble. In case of any doubts, a smart purchaser will request strict and broad representations and warranties from the seller, together with liquid security, or will ensure that the appropriate W&I insurance has been obtained.

    3 Real Estate Financing

    3.1 Key Sources of Financing

    Acquisitions of real estate in the Czech Republic are typically financed by a combination of debt and equity. Most debt financing for local real estate transactions is provided through secured bank loans.

    Alternatively, finance leasing of real estate is also available on the market. In this case, a regulated financial institution acquires real estate from the original owner; at the same time, the financial institution concludes a long-term lease agreement with the ultimate investor. At the end of an agreed period, the investor is usually obliged to acquire ownership of the real estate at a pre-agreed residual value.

    3.2 Protection of Creditors

    Investors looking for a bank loan will most likely need to provide a wide range of security, including in most cases, a mortgage over all of the real estate, subordination of any shareholder loans, a pledge over cash and receivables, and other securities. A mortgage over real estate registered in the Cadastral Register is perfected upon its registration.

    Enforcement of a claim is subject to obtaining an Execution Order issued by a court or a recognized arbitration proceeding or by the (future) debtor voluntarily executing a Deed of Enforcement. Private enforcement of a mortgage/pledge is also possible if explicitly agreed upon in the underlying mortgage/pledge agreement.

    4 Real Estate Taxes

    4.1 Transfer Taxes

    The real estate acquisition tax was abolished in 2020 with a retroactive effect on all real estate property transfers effected as of December 1, 2019.

    4.2 Specific Real Estate Taxes

    The real estate tax is generally payable by every owner of land or a building located in the Czech Republic. Generally, real estate taxes are calculated according to the size of the property rather than based on market value. Consequently, real estate taxes in the Czech Republic are not as significant as they may be in other countries.

    The tax base for land depends on the area of land occupied (residential land) or the price of the land (agricultural land). The tax on buildings depends on the size and number of above-ground floors of the building. Yearly rates for residential land range from CZK 0.20 to CZK 5 per square meter; agricultural land is taxed 0.25% to 0.75% of the average price of land per square meter; and the buildings are taxed CZK 2 to CZK 10 per built-up square meter. All the rates can be multiplied by a coefficient from one to five, depending on the type and location of the property (for example, the yearly real estate tax for a 100-square meter apartment in Prague without a parking space or adjoining land would be CZK 1,200).

    A real estate tax return generally must be filed by January 31 of the calendar year (with certain exemptions) immediately following a calendar year during which any changes occur to the real estate (including ownership change).

    5 Condiminiums

    5.1 Legal Framework for Condominiums

    Condominiums do exist in the Czech Republic and provide an important alternative to housing cooperatives. The Civil Code provides full regulation of condominiums.

    Czech legislation characterizes a ‘condominium’ as a combination of exclusive ownership of a unit (apartment, or non-residential unit, represented by a delimited part of a building) with co-ownership of what is left after deducting all the units located in the building (common premises). The exclusive ownership of the unit and co-ownership of common premises are inseparable in the event of disposal. The unit has the status of immovable property and, as such, is registered in the Cadastral Register.

    Where there is a condominium, there is usually a condominium association (in Czech spolecenství vlastniku jednotek). The law obliges unit owners to establish a condominium association in buildings with at least five units, where at least four are owned by four different owners. The condominium association then manages the building for all unit owners, provided that the unit owners form the highest decision-making body of the condominium association – the assembly of co-owners.

    5.2 Rights and Duties of Co-Owners

    The unit owner(s) is entitled to use the unit exclusively and to manage it at their will, with respect to other unit owners and their rights. However, the unit owner’s management must not affect the common parts located inside the unit (including load-bearing walls, central heating, etc.) and the common premises reserved for his exclusive use (such as balconies). Unit owners must not jeopardize the functionality of such common premises through their interventions.

    The unit owners have the right to use premises common to all co-owners (such as lifts, corridors, and stairs) as well as the obligation to follow the rules issued by the condominium association for common premises management. This obligation, however, is conditioned by the owners’ acquaintance with the content of these rules. Furthermore, the unit owners are obliged to contribute to the management of the building in proportion to their co-ownership share (generally according to the proportion of their unit’s floor size to all units in the building).

    We also note that a court may order the sale of a unit of an owner who breaches a duty imposed on them by an enforceable court decision in a manner substantially limiting or precluding the rights of other co-owners.

    5.3 Liability of Co-Owners

    Once a condominium association is established, all unit owners are obliged to guarantee that the condominium association’s debts will be paid. This obligation was introduced to protect debtors since the rights and duties of a condominium association are strictly limited to the “usual needs” of the building and its management and, as a matter of example, even though its liabilities are financed by contributions of the unit owners, the assembly of the condominium association can decide not to collect these contributions.

    5.4 Rights and Duties of Condominium Associations

    Czech law sets out that a condominium association is a legal entity determined by its purpose, i.e. to manage the building and the land plot underneath the building. “Management” includes all activities to which unit owners are not bound to, but that are necessary or appropriate for the proper care of the managed real estate and maintenance of the common premises. It means that all activities of the condominium association as well as all the rights and duties that are vested in it must be directed toward this purpose.

    The condominium association is entitled to acquire rights and commit to obligations, but only for the purpose of managing the real estate. The condominium association must not carry on business or participate directly or indirectly in the business activities of its members, as that is not in line with its purpose.

    6 Commercial Leases

    6.1 Form and Contents of a Lease Agreement

    Commercial leases in the Czech Republic are private agreements; a written form is not mandatory.

    A standard commercial lease agreement is usually very detailed and overrules non-mandatory statutory provisions. It generally addresses in particular:

    (a) proper identification of both parties, of the real estate in which the leased premises are located, and clear identification of the leased premises,

    (b) agreed purpose of the lease including agreed location(s) of the tenant’s signage,

    (c) amount of rent and annual review,

    (d) amount of private charges and common service charges paid by the tenant and their precise scope and calculation,

    (e) lease term – most commercial leases are concluded for a definite period of time and give the tenant only a very limited possibility to prematurely terminate the lease,

    (f) renewal clauses, rights of first refusal, expansion options as well as other options that give the tenant some flexibility with regard to, in particular, the size of the premises,

    (g) landlord’s financial incentives and fit-out contributions (if agreed),

    (h) sublease and setoff restrictions,

    (i) security provided by the tenant in the form of a bank guarantee, corporate guarantee, or cash deposit, generally amounting to three- or six-monthly payments, and

    (j) the division of maintenance and repair obligations (landlords are usually responsible for structural repairs and maintenance of the common premises).

    6.2 Regulation of Leases

    Although the Civil Code regulates leases, the provisions applicable to commercial leases are mainly non-mandatory, and contractual parties can freely deviate from the statutory provisions.

    This is not the case for residential leases. Here, contractual parties may only deviate from statutory provisions for the benefit of the tenant. Although rents are not regulated, the landlord cannot freely increase an agreed-upon rent and must follow certain specific rules.

    6.3 Registration of Leases

    If the subject of the lease is registered in the Cadastral Register, the lease agreement may then be registered in the Cadastral Register, but it is not a legal prerequisite. This decision is left up to the parties and is rarely utilized. The registration process is burdensome and the parties tend not to be willing to disclose the agreed commercial terms to third parties (see 1.3 above – Publicity of real estate register).

    6.4 Termination of Leases and Renewals

    Most commercial leases are concluded for a definite period of time, with limited possibilities for the tenant to prematurely terminate the lease. These tend to be strictly limited to only a few termination reasons specified in the lease agreement. Statutory termination reasons – which are vague and non-mandatory – are in most cases replaced by contractual terms.

    Typically, a party may terminate the lease if the other party grossly violates its obligations under the lease agreement or goes bankrupt. The landlord is usually entitled to prematurely terminate the lease if the tenant is in default with payment of the rent or service charges, if the tenant uses the subject of the lease contrary to the agreed use, or if the tenant subleases the subject of the lease or a part of it without the landlord’s prior consent, etc.

    We note in this respect that during an insolvency proceeding the insolvency administrator can prematurely terminate a lease without being bound by statutory or contractual terms.

    Similarly, parties generally replace the lease renewal rules set out in the Civil Code with more sophisticated and bespoke contractual terms.

    6.5 Rent Regulations and Rent Reviews

    The parties are free to determine the rent amount. Czech law sets no limitations on rent with respect to leases of commercial premises.

    In retail commercial leases, turnover rents are commonly used.

    Annual rent reviews are based either on European harmonized indexes (such as MUICP), with respect to leases denominated in EUR, or the Czech consumer price index published by the Czech Statistical Office, for leases denominated in CZK.

    Unless there is a mechanism for a change or increase of the rent in the lease agreement, such as an indexation clause, the amount of new rent is subject to the parties’ agreement.

    6.6 Services To Be Provided Together With the Lease

    As a rule, all costs related to the leased premises and/or the entire real estate paid by the landlord are recoverable from the tenant (including real estate tax, insurance, etc.), if agreed in the lease agreement. However, the landlord cannot recover private charges (electricity, water, telecommunications) from the tenant at a higher amount than the sum actually paid by the landlord to the service providers, unless the landlord is officially authorized to commercialize such commodities.

    Tenants are obliged to pay a pro-rata share of the common service charges according to the size of the leased area, usually as regular fixed advance payments that are reconciled after the end of the respective year.

    With respect to the actual use of utilities consumed in the premises, tenants pay the costs according to consumption, either measured by separate meters or calculated on the basis of the size of the leased area.

    6.7 Fit-Out Works and Their Regulation

    The tenant may carry out fit-outs, improvements, and alterations to the leased premises only with the landlord’s prior consent. Landlords usually require a copy of all documentation related to alterations and improvements to be submitted and maintain the right to inspect how the works are performed and to stop the performance of any works if they are not carried out in accordance with the provided specifications or rules and regulations set forth by the landlord or competent authority. The related permits are usually the tenant’s responsibility.

    For tax reasons, the tenant is, as a primary option, requested to surrender the leased premises in the same condition as at their handover at the beginning of the lease. Any other situation has various tax impacts on both the tenant and landlord.

    The tenant can only be reimbursed for the costs of improvements from the landlord by agreement. If the landlord consented to the improvements but did not undertake to reimburse the tenant, the tenant may obtain compensation for the increase in value of the leased premises at the end of the lease. The increase in value is to be determined by the parties (on the basis of the costs incurred by the tenant) or by an expert if they fail to agree.

    If the tenant’s improvements carried out in the premises meet the statutory definition of technical improvement and the landlord agrees not to increase the acquisition book value of the real estate, the tenant may depreciate the costs of improvements of the leased premises performed and paid for by the tenant.

    6.8 Transfer of Leases and Leased Assets

    As a general rule, the tenant is entitled to assign wholly or partially its rights and obligations under the lease agreement, or to sublease the premises, but only with the landlord’s prior written approval. The landlord’s approval is very often granted even in advance for a tenant’s intragroup assignments or subleases.

    A share deal has no negative impact on the lease relationship, as there is no change of contractual party (unless the lease agreement contains special covenants of the landlord in this respect, which is rather unusual).

    With regard to an asset deal, under statutory provisions of the Civil Code if the owner of the leased premises (and/or real estate) changes, the rights and duties arising from the lease agreement pass to the new owner by operation of law, and none of the parties are entitled to prematurely terminate the lease for this reason. This rule applies to the new owner – unless the new owner had no reasonable cause to doubt that the purchased real estate was free of all leases (which would be very unusual as regards business leases).

    Nevertheless, if the landlord transferred ownership of the leased premises (and/or real estate), the new owner is not bound by any stipulations on the landlord’s duties which are not provided by a statute. However, this rule does not apply if the new owner was aware of the former landlord’s stipulations. Because of this more and more tenants now oblige the landlord to ensure that the potential new owner has been duly informed about the terms and conditions of their lease.

    7 Zoning and Planning

    7.1 How Are Use, Planning, and Zoning Restrictions on Real Estate Regulated?

    Construction activities in the Czech Republic are subject to complicated and burdensome zoning and construction regulations set forth in myriad laws and regulations that apply to the design, appearance, and method of construction. A new Construction Act enacted in 2021 entered into full force on July 1, 2024. Nevertheless, neither systems for digitalization of the permitting process exist nor are the implementing regulations in place and the construction administration seems not to be fully operational in at least the second half of 2024.

    The new Construction Act aims at the digitalization of all permitting processes. Although the adoption of new zoning plans for cities and their changes did not change in fact, the former default system of a zoning permit and building permit has been abandoned and the entire permitting process considerably simplified.

    The applications for the project permit have to be submitted electronically via the Builder’s Portal which triggers the entire permitting process during which the building authority collects all the statements, requirements, and comments from all the involved administrative bodies and other participants, and implements them into its project permit delivered electronically to the investor. This is without prejudice to the investor’s right to take care of the above process collect all the documents by himself and submit them to the building authority to speed up the process and gain control over terms incorporated into the project permit. Further, the involved administrative bodies are obliged to coordinate their statements and requirements and issue consolidated statements. However, nothing has changed about the necessity to obtain the opinions of the owners of neighboring real properties and utility network operators.

    A building may only be used after issuance of the use permit that specifies the sole purpose for which the building can be used. The use permit is only issued if the building was constructed in compliance with the issued project permit and the project documentation is approved by the building authority during the permitting proceedings.

    7.2 Can a Planning/Zoning Decision Be Appealed?

    The project permit may be subject to an appeal by any party to the proceedings, typically by owners of adjacent properties. The deadline for filing an appeal is 15 days from delivery of the project permit. The scope of objections to be revised on appeal is limited as the appellate body shall disregard objections that could have been raised earlier by the appellant as well as objections inconsistent with previously given consent or concluded planning contract.

    Newly, the appellate body shall change the project permit if it is contrary to the law instead of referring the file back to the first instance building authority as it was standard practice in the past. This should also shorten the time until a final decision is issued.

    The administrative action against the decision of the appellate body could be filed, however it has no automatic suspension effect.

    7.3 Energy Performance of Buildings

    Any construction of new buildings, major renovation, etc. requires prior issuance of an energy performance certificate. Certificates must also be obtained and handed over to the purchaser within the sale or lease of a building, residential or non-residential unit, or any part of it.

    Certificates can only be issued by an authorized expert and are valid for 10 years from the date of execution or until the first major renovation/reconstruction of the real estate for which it was issued.

    Effective from July 1, 2015, large entrepreneurs are obliged to prepare an energy management audit (energy management is understood as a set of technical equipment/facilities and buildings serving for energy consumption) on buildings used or owned by them. The energy audit should be updated at least once every four years.

  • Real Estate Laws and Regulations in Croatia (2025)

    Contributed by Ostermann Ivancic.

    1 Real Estate Ownership

    1.1 Legal Framework

    The Croatian Constitution places the inviolability of ownership in the category of the highest values of the constitutional order of the Republic of Croatia and one of the bases for its interpretation. It also provides that: (i) ownership is guaranteed under the Constitution but that it also obliges its holder to contribute to the common good, (ii) it is possible, as provided under the law, to limit or confiscate ownership in the interest of the Republic of Croatia, with market value compensation, (iii) the entrepreneurial freedom and ownership rights can be exceptionally restricted by law to protect the interests and security of the Republic of Croatia, nature, environment and people’s health, and (iv) that a foreign person can acquire ownership under the conditions prescribed by law.

    A key piece of legislation regulating real estate ownership as one of the proprietary rights is the Act on Ownership and Other Proprietary Rights (Official Gazette No. 91/96, 68/98, 137/99, 22/00, 73/00, 129/00, 114/01, 79/06, 141/06, 146/08, 38/09, 153/09, 143/12, 152/14, 81/15, 94/17; Ownership Act). Said source of law defines the right of ownership as a proprietary right that entitles its holder to exercise its rights over the owned property and its benefits, as well as to exclude every other person from it if not contrary to other persons’ rights and mandatory restrictions. The owner has the right to possess, use, utilize, and dispose of his property. In comparison to other proprietary rights (i.e., pledge [hypothecation], easement [servitude] right, etc.), which provide less volume of powers over property, the ownership is the one with the widest scope of authorizations and the only one that is not considered under the law as limited. Ownership Act has experienced amendments over time, but its main principles and structure have been a stable part of Croatian legislation.

    The Ownership Act also provides that there is only one type of ownership and that it obliges its holder (providing more details on the above-mentioned general rule from the Constitution to contribute to the common good) and that in general, when exercising his right, the owner is obliged to act with consideration towards the general and other interests that are not contrary to his right. In that sense, said act provides two categories of restrictions of ownership: (i) general (i.e. not to use the right for the purpose of causing damage to another person) and (ii) special restrictions (i.e. sequestration, expropriation). Such restrictions can only be imposed in volume and duration according to the rules set out in the respective applicable legislation.

    The Ownership Act defines that individual real estate consists of land plot(s), including everything that is relatively permanently connected to the surface of it or underneath it. When several land plots are registered with the land register in the same land register file, these plots are legally united into one body (land register unit), which, as such is legally one real estate. A land registry unit is additionally defined by the land registry’s main piece of legislation, the Land Registry Act (OG 63/19, 128/22, 155/23, 127/24; ‘Land Registry Act’) which provides that the land register unit (i) is a legal unit whose composition can be changed only by a land register write-off of cadastral plots or their land register adding to said unit and (ii) that can consist of one or more cadastral plots located in the same cadastral municipality.

    Buildings and other structures that are permanently attached to the land are not parts of the land if they are legally separated from it by a proprietary right that enables its holder to own such building or other structure on that land (for example, building right). The same applies to buildings and other structures that are legally separated from the land or from the common good by a legally established concession that authorizes its holder to own such a building or other structure.

    Ownership can exist in individual form (one owner) or with other co-owners so with respect to co-ownership regimes, the Ownership Act provides a regime of co-ownership and in addition to that – a special regime of individual ownership over particular/individual parts of the real estate (etage ownership) by partitioning of a real estate (legal division to individually owned units with common areas jointly owned by all etage owners as the co-owners). Etage ownership is regulated as a separate regime but general principles of co-ownership apply to a certain extent, especially to the common parts that were not subject to etage partitioning. Etage ownership over a particular/individual part of a real estate derives from and is non-detachable from the co-ownership part over the entire real estate. Also, it entitles the co-owner to exercise all his owner’s powers and duties while managing the individual part of the real estate instead of all co-owners as if the individual part was under their sole ownership and to do with such part and benefits deriving from it as they see fit and to exclude anyone else from it.

    This ownership regime may be established on a part of co-owned real estate which is an independent usage unit, suitable for the independent exercise of the co-owner authorities, such as an apartment or another independent space unit, where another independent unit includes independent business premises, garages, etc. Next to an apartment or another independent space unit, ownership of a particular part of real estate may extend to accessory parts, such as open balconies, terraces, gardens, cellars, attics, parking places, or another independent space unit. Any co-owner on whose co-ownership share(s) the ownership of a specific particular part of real estate has been established is entitled to all benefits derived from such part unless they belong to someone else based on another legal ground. On the other hand, each such co-owner is obliged to take care and maintain the apartment/etage or another independent space unit and its equipment (especially the one for utilities) so that other co-owners do not suffer any damages (for which the co-owner who caused the damage would be liable for damage compensation to other co-owners which suffered the damage). In this regime, any co-owner is authorized to solely and independently enter a residential lease contract or a business lease contract for such part, either in its entirety or partially (if possible), without having to request approval or consent from other co-owners, unless agreed otherwise and registered as such in the land register. The relationship between the co-owner as the lessor and the lessee is governed by the civil obligations legislation.

    With respect to rules for foreigners to acquire real estate in Croatia, the Ownership Act provides that its provisions also apply to foreign natural persons and legal entities, unless otherwise stipulated by law or international agreement. It furthermore provides that foreign natural persons and legal persons can, under the principle of reciprocity, acquire ownership of real estate in the territory of the Republic of Croatia on the basis of (i) inheritance and (ii) the consent given by the minister responsible for judicial affairs of the Republic of Croatia (without said consent real estate sale and purchase agreement is null and void).

    However, said rules do not apply to the citizens of the member states of the European Union and EU legal entities (having their registered seat in one of the EU member states) – they acquire ownership of the real estate under the same rules and legal requirements applicable to the ownership acquisition for Croatian citizens and legal entities with registered seat in Croatia.

    As regards expropriation, the Ownership Act regulates that in the interest of the Republic of Croatia, the ownership can be fully expropriated, as provided under the law (complete expropriation) or limited by constituting rights in favor of a third party over the owner’s real estate (incomplete expropriation), in which case the owner is entitled to compensation according to the expropriation legislation. A key piece of legislation regulating the expropriation is the Act on Expropriation and Determination of Compensation (Official Gazette No. 74/14, 69/17, 98/19), which governs in detail the system of expropriation, the method of determining the interest of the Republic of Croatia in that system, authorities responsible for conducting the expropriation procedure, preparatory activities and the rules of procedure for expropriation, the method of determining compensation for expropriated real estate, as well as other issues related to expropriation.

    The combination of different factors in the Croatian real estate market, such as high demand, inflation/higher real estate prices, and limited supply of available real estate have resulted in slowing down of the residential real estate market. A shortage of supply of available business premises is also present in the commercial/office market (especially in the capital city of Zagreb as the center of business activities) whilst the available volumes of retail/shopping malls and parks, as well as warehouse and logistic premises, have been stable in 2024.

    1.2 Registration of Ownership

    All proprietary (real estate) rights (ownership included) and other legally significant facts and relations are registered in the land register – specifically, the Ownership Act regulates that the ownership of the real estate is acquired by registration of the acquirer’s ownership in the land registry, as provided under applicable legislation, on the basis of the validly manifested will of the previous owner aimed at transferring its ownership to the acquirer. The same rules respectively apply to changes of ownership and its termination in legal transactions.

    Ownership of the real estate that is not registered in the land register is acquired by court deposit of an appropriate certified document with capacity for registration in the land register, by which the previous owner allows the registration of the acquirer’s ownership, to which the rules on acquisition by registration respectively apply.

    The main piece of legislation detailing and implementing said rules from the Ownership Act is the Land Registry Act  which prescribes the organization, arrangement, management, and safekeeping of land registers, defines the subject and types of entries as well as conducting the land register procedures.

    Land registries are maintained by the competent municipal courts as the first instance courts and are kept electronically, in the Land Registers and Cadastre Joint Information System – an information system in which all land register and cadastre data are stored, maintained, and managed. Within that system aligned land register and cadastre data are kept in the Land Information Database. Land registers are based on the data from the cadastral records, i.e., the cadastral survey.

    Whilst all proprietary rights are registered with the land register, the cadastre is a separate public registry in which the possession is registered, along with a description of the plots and maps of the cadastral municipalities and the ownership right after it has been acquired and registered in the land register. Under Croatian law, possession is defined as factual control over an object (real estate included) and the person having such factual control over the respective object is its possessor (i.e., exercises factual usage). Unlike ownership which is a proprietary right that authorizes its holder (the owner) to do whatever he wants with the object (real estate included), to benefit from it, and to exclude everyone else from it (with the only limitation that this is not contrary to others’ rights and legal restrictions), the possession is not a proprietary right but a potentially legally relevant factual control by possessor over the real estate.

    Under the Act on State Survey and Real Estate Cadastre (Official Gazette No. 112/18, 39/22, 152/24; Cadastre Act’) cadastral information on the real estates (i.e., their size/surface, number of the cadastral plot, usage, maps, etc.) are the basis for land registers maintained by the land register departments of municipal courts and these land registers are obliged to submit to the competent cadastre offices all of their decisions that affect the data in the cadastre immediately after the implementation of said decisions in the land register.

    Although the cadastre data is the grounds for land registries (for example, if several plots are merging or de-merging, changing surface, etc. such changes can only be done through cadastre on the basis of the authorized surveyors’ survey report requested by the owner, the authorized person or by the competent authority), said data is not grounds for acquiring ownership of the property per se – legal title and grounds for ownership acquisition are either a legal transaction, decision of the court or other competent authority, inheritance or by virtue of law and it is fully acquired once the registration is executed in the land register which is exclusive authorities for ownership (and other proprietary rights) acquisition, all as explained above. In that sense, it is important to differentiate the information on the ownership in the cadastre and in the land registries, with the information on the ownership in the cadastre having just an informative nature – the documents issued by the cadastre on the property which include the information on the possessor contain note that cadastre documents are not proof of ownership (only the excerpt from the land register shows the factual and legal status of the real estate at the time of issuing the excerpt and it is the only valid proof of real estate ownership).

    The cadastre should also be notified of the change of possessor in order for those cadastral records to be accurate – however, in practice, there have been discrepancies between the land register records and the cadastral records with respect to actual possessors. The reasons for those discrepancies are numerous and some go back historically – from the owners failing to in timely manner inform the cadastre of the changes that occurred in the land register (which before was not done by the land registries automatically as it is now but by the owners and possessors themselves) resulting in outdated data to for example, some places having issues with damaged or destroyed physical land register books that need reconstruction with the delicate process of their recovery and digitalization which has to be conducted thoroughly, etc. However, the situation is improving with the digitalization of the land register and cadastre records and with the obligation of the land registers to deliver to the cadastre all their decisions that need to be recorded in the cadastre. The process of overall digitalization of these public records conducted by the Ministry of Justice and Administration is not fully completed but it is ongoing and continuous.

    1.3 Publicity of Real Estate Register

    The land register is public and fully transparent, and anyone can request insight and issue of excerpts, copies, or printouts from the land register records. All such documents issued by the land register are legally considered public documents. It is also deemed that the land register truly and completely reflects the factual and legal status of the property. As explained in Section 1.2., all land register and cadastre data are electronically stored, maintained, and managed in the publicly available Land Registers and Cadastre Joint Information System with aligned land register and cadastre data being kept in the Land Information Database as part of that system.

    1.4 Protection of Ownership

    When conducted as provided under the rules provided by applicable proprietary and land register legislation explained above, the entries in the land register are binding. The acquirer who acted in good faith with trust in the land register records is legally protected if he did not know or, given the circumstances, had no sufficient reason to suspect that the land register data was not complete or that it was different from the non-registered status of the real estate. A lack of good faith cannot be laid against anyone just because they did not investigate the non-registered status of the real estate. A person who in good faith registered the land register right, acting with trust in the completeness of the land register, acquired it free of encumbrances that were not registered at the time when the registration was requested nor was it evident from the land registers in the moment when registration was requested unless otherwise provided under the law. The exception is when that acquirer does not enjoy protection regarding those rights, encumbrances, and restrictions that exist on the basis of the law and are not entered in the land register such as legal liens/encumbrances established by virtue of law the fulfillment of the legal prerequisites provided for this purpose by special pieces of legislation. Such encumbrances on real estate shall be entered in the land register at the request of the creditor and if failed to do so said encumbrances still exist.

    A person who has in good faith registered a land register right in the land register, acting with trust in the verity of the land register, enjoys the protection of that trust, especially since no one will be able to dispute the validity of such acquisition due to the invalidity of their predecessor’s registration after expiration of the deadlines for filing a lawsuit for cancellation (clearing) of the predecessor’s registration, as provided under land register legislation. It should be noted that these rules on protection do not apply if the property was stolen, i.e., if the predecessor’s acquisition was the result of a violation of the law.

    With respect to protection of the owner claiming unauthorized use of the real estate proprietary legislation provides that the owner is entitled to demand protection of the property from violations through the court proceeding in which the owner must prove (i) their ownership and (ii) the violation/disturbance in exercising the ownership rights. If a third party claims entitlement to actions that disturb the ownership, such claim is subject to the burden of proof of such entitlement. In the event of damage, the owner is entitled to damage compensation according to the general rules on compensation for damage under civil obligations legislation.

    2 Real Estate Acquisition

    2.1 Share Deal or Asset Deal?

    With respect to the form of the real estate being disposed to investors, the decision on acquisition either of the part or entirety of the business shares, i.e., the share deal model or the asset deal model depends on the individual circumstances of each transaction – the corporate structure of the target, its financial status and liabilities identified in the legal, technical and tax due diligence of the target, the industry in which the target company operates, i.e., in which the transaction is taking place and its specific characteristics and trends, type of the property, its legal status and tax treatment, as well as further business plans with the property (whether the asset in question is, for example, land with potential for construction and development or existing building/project with an existing established business model ready to be taken over and continued without interruption). With an asset deal, the purchaser acquires assets with a narrower scope of potential liabilities in comparison to a share deal where it acquires all liabilities of the target company’s business activities. Having in mind that potential risks associated with both types of transactions can be equally serious and damaging and that each transaction type is subject to different tax treatments, a proper business decision on the type of transaction and its structure must be substantiated by the results of the legal, technical (if necessary), and tax due diligence of the target company.

    2.2 Share Deal

    Limited liability companies represent a dominant type of corporate structure in Croatia and the vast majority of Croatian companies (over 90%) are incorporated as LLCs. The rules for share transfer in LLC are provided under the Companies Act (Official Gazette No. 111/93, 34/99, 121/99, 52/00, 118/03, 107/07, 146/08, 137/09, 125/11, 152/11, 111/12, 68/13, 110/15, 40/19, 34/22, 114/22, 18/23, 130/23, 136/24; Companies Act). That piece of legislation provides that an agreement for a share deal transaction must be concluded in the form of a notarial deed, or a private document certified by a notary public or a court decision that replaces such agreement and the same rule applies to undertaking of the obligation to share transfer. The share transfer does not require amendments to the articles of association of the target company. The target company’s articles of association can contain other conditions for the share transfer, especially if the target company’s consent to the transaction is required. Business shares to which the obligation to fulfill additional obligations is bound can be transferred only with the target company’s consent. If such consent is denied the acquirer who has fully paid for said share(s) is entitled to request from the court for such consent to be issued. The court will allow the transfer if no valid reasons for denying the consent exist, and if the transfer can be conducted without damage to the target company, its shareholders, and creditors.

    A share transfer must also be recorded in the share ledger and the list of shareholders has to be submitted to the court register. Registration of the new shareholder with the de-registration of the previous shareholder (if the transaction results in the end of the shareholding status of the seller) has to be executed in the court register. Usual fees related to share transfer (after conducting respective due diligence procedures) are, like in the majority of jurisdictions, costs of legal, technical, and tax advisors (for due diligence processes and for the transaction), court fees, and notarial fees. The notary fees depend on the value of the transaction but have a prescribed maximum amount, all as provided by the secondary legislation, Regulation on the Temporary Notarial Fees’ Tariff (Official Gazette No. 8/94, 82/94, 52/95, 115/12, 120/15, 64/19, 17/23. Amounts of court fees are prescribed in the Ordinance on Court Fees’ Tariff (Official Gazette No. 53/19, 92/21, 37/23).

    Particular rules for the joint stock companies are contained in a separate legislation piece, the Act on Takeover of the Joint Stock Companies (Official Gazette No. 109/07, 36/09, 108/12, 90/13, 99/13, 148/13) which provides general principles of takeover and detailed rules on conditions for the target company takeover bid, the takeover procedure, the rights and obligations of the participants in the takeover and the supervision of the procedure. By said Act Directive 2004/25/EC of April 21, 2004, on Takeover Bids was implemented into the Croatian legal system. It contains detailed procedural rules, conditions under which the takeover can be conducted, provisions on mandatory and voluntary takeover bids, and the rights and obligations of bidders and shareholders of the target company. The cost structure is more complex than in LLC share transfer and their final amount depends on the specifics of the individual transaction.

    With respect to the risks potentially transferred to the purchaser and their addressing in transaction documents please see Section 2.1.

    2.3 Asset Deal

    For an asset deal (in the presumed scenario the real estate being the asset) to be facilitated under Croatian legislation, several legal conditions have to be met, i.e., the following steps taken:

    (i) the agreement on the purchase of the real estate must be in written form and the signature of the seller must be certified by the notary public (the prescribed amount of fees for notarial services for such certification is symbolic),

    (ii) the seller must provide written consent to registration of ownership title to the purchaser (either within a real estate transfer agreement or in a separate document, depending on the terms of payment of the purchase price, and in both cases for such consent to have a full effect the seller’s signature must be certified by the notary public),

    (iii) complete application for registration containing all prescribed elements and information needs to be submitted to the land register electronically by a notary public or by an attorney, as mandatory users of electronic communication with the court through the Land Registers and Cadastre Joint Information System (if the application is not filed electronically, it will be dismissed by the land register) (prescribed amount of court fee for registration is symbolic),

    (iv) documents substantiating the application must be provided to the notary public or an attorney in original (electronic documents in proper electronic form are being considered as the originals) or certified copy, and

    (v) the competent land register department of the municipal court must pass the decision on allowing the purchaser’s ownership to be registered in the land register (the land register is obliged to issue a decision in the regular procedure within 15 working days from the day the proper and complete application has been filed to the land register).

    Having in mind that the real estate purchase agreement although is a legal ground for ownership title, does not automatically result in ownership transfer and that transfer, the moment of filing a complete application to the land register is of the most importance for the procedure. This is because the rules on applications’ priority rank apply meaning that the applications for registration are resolved and decided on in accordance with their priority which is determined by the moment (day, hour, minute, second) when the application for registration was submitted to the land register.

    In addition to essential elements of the real estate purchase agreement – real estate description and purchase price – that agreement usually contains provisions on dynamics of payment of the purchase price, seller’s warranties with respect to the legal status of the real estate, and other relevant circumstances, the moment of takeover, the moment of transfer of obligations on payment of the utilities and other costs, etc. It should be noted that Croatian legislation provides the possibility of entering into the real estate purchase pre-agreement by which the seller and the purchaser oblige to conclude the main real estate purchase agreement within the stipulated deadline and upon fulfilling of conditions agreed by the parties. The pre-agreement must have the same essential elements as the real estate purchase agreement (real estate description and purchase price) and it is usually entered into when certain activities must be conducted by the parties before entering into the main purchase agreement – so it usually contains provisions on the deadlines for securing financing of the purchase, procedure and deadlines on de-registration of certain land register entries over the real estate, registration of the pledge (hypothecation) in favor of the seller’s bank as the security for the loan repayment, etc.

    With respect to the risk potentially transferred to the purchaser and their addressing in transaction documents please see Section 1.4. 

    2.4 Disposal Process

    Please see Sections 1.2 and 2.3.

    As mentioned in Section 1.1., proprietary legislation provides that when the purchaser-foreign person is required to obtain the consent of the minister competent for judicial affairs of the Republic of Croatia for the acquisition of the real estate ownership, the purchase agreement for that transaction is null and void without said consent. The minister decides on the granting of said consent based on the request of a foreign person who intends to either acquire or dispose of that real estate. A foreign person who has been denied consent is not entitled to repeat the request for issuing consent for the same real estate for five years from the date of submission of the rejected application.

    2.5 Registration of Change of Ownership

    Please see Sections 1.2 and 2.3.

    2.6 Risks To Be Considered

    For some categories of real estate, several pieces of legislation provide legal pre-emption rights (right of first refusal) in favor of the Republic of Croatia or local and regional government units. One of those cases is provided under the Act on Inland Navigation and Inland Ports (Official Gazette No. 144/21) which regulates that the Republic of Croatia has the pre-emption right on real estate within the public port area. Furthermore, the Islands Act (Official Gazette No. 116/18, 73/20, 70/21) provides that the Republic of Croatia has the pre-emption right on the real estate on small, occasionally inhabited and uninhabited islands, and the real estate owner who intends to sell such real estate must submit a written offer to the competent authority which is obliged to respond in three months from the day of the receipt of the offer. If upon expiration of the deadline the owner does not receive a written notification of acceptance of the offer, it will be considered that the offer has been rejected.

    The Spatial Planning Act also provides the legal right of first refusal and it prescribes that the government, county assembly, the assembly of the City of Zagreb, the city council, and the municipal council pass the decision on determining the area in which said authorities have the right of first refusal on the real estate necessary for the construction of infrastructure or buildings with public and social purpose. The owner who intends to sell such real estate must, through a notary public or in some other appropriate manner, offer the property to the authority-holder of the pre-emption right and notify it of the purchase price and conditions of the sale. If the said authority does not respond with offer acceptance within 60 days from notification of the offer, the owner is entitled to sell the real estate to a third party but only under the same conditions or for a higher purchase price. Entering into the real estate purchase agreement contrary to these rules represents grounds for annulment of that agreement with a statute of limitation period for filing the lawsuit for annulment of three years from the day of concluding said agreement.

    Another piece of legislation regulating the legal pre-emption right (right of first refusal) in favor of the city, municipality, county, City of Zagreb, and the Republic of Croatia (with city and municipality having priority in exercising the pre-emption rights over the county, the City of Zagreb and the Republic of Croatia) is the Act on Protection and Preservation of the Cultural Heritage (Official Gazette No.145/24). That act lists the pre-emption right as one of the restrictions on transactions involving cultural goods. The seller of the cultural property, as well as the intermediary in the transaction (if any), is obliged (i) to inform the buyer that the real estate is a cultural property protected under the provisions of said act, (ii) to present proof of ownership of the cultural property to the buyer, and (iii) to present to the buyer documents on the waiver of the pre-emption right from the competent authority after the procedure of offering the property to the competent authority and its refusal within the legal deadline of 30 days from the day of the receipt of the offer in which the offer must be refused if the authority in question does not intend to exercise its legal pre-emption right.

    The Agricultural Land Act (Official Gazette No. NN 20/18, 115/18, 98/19, 57/22, 152/24) regulates that the Republic of Croatia has the legal pre-emption right (at market value) (i) on agricultural land with a surface over 10 hectares for continental areas and over 1 hectare for coastal areas and (ii) after expiration of ten years period from the date of conclusion of the real estate purchase agreement, for agricultural land that was previously purchased from the Republic of Croatia. In both cases, the owner of agricultural land that meets the said requirement is obliged to offer the land for sale to the ministry competent for agriculture which then has 30 days deadline to respond to whether it the offer will be accepted. If the decision is for the offer not to be accepted and for said legal right of first refusal not to be exercised, the seller is entitled to sell the land to the third party but not at a lower price than the one offered to the ministry.

    All above cases regulate legal pre-emption right (right of first refusal) which is established and exists (for an unlimited period) on the basis of applicable legislation. Croatian civil obligations legislation differentiates this type of pre-emption right from the contractual pre-emption right. Unlike the legal pre-emption right, a contractual one’s duration is limited to a period of five years. In both cases, the holders of the pre-emption right are entitled, under conditions provided under the law, to contest the real estate sale in court proceedings if it was carried out without the buyer/seller notifying them of the intended sale. The unsatisfied purchaser then, depending on the circumstances of the case, may seek damage compensation from the seller who was obliged to notify the holder of the pre-emption right.

    Additionally, with respect to claiming remedy of defects of the acquired real estate please see Section 1.4.

    3 Real Estate Financing

    3.1 Key Sources of Financing

    A significant number of real estate transactions (regardless of whether the transaction in question concerns the residential market or, for example, land for real estate development projects) in Croatia are financed by loans obtained from commercial banks. The main piece of legislation regulating the loan relationship between the bank and the real estate buyer (the borrower) is the Civil Obligations Act (Official Gazette No. 35/05, 41/08, 125/11, 78/15, 29/18, 126/21, 114/22, 156/22, 155/23) which provides general rules on loan agreements with the banks. It prescribes that the mandatory elements of the loan agreement are the amount and terms of granting the loan, the purpose of the loan, and its use and terms of repayment. Croatian banks do not practice loan pre-approval, so the standard procedure of loan approval includes the borrower (after evaluating and coordinating with the bank on its loan capacity) to provide executed the real estate purchase pre-agreement (if used in the structure of the transaction) and the main purchase agreement.

    In addition to the general rules provided in the Civil Obligations Act, loan agreements contain elaborate provisions detailing the terms of individual loans. With respect to the form of the loan agreement, the Civil Obligations Act prescribes that it must be in the written form and the business practice in banking and finance in Croatia with respect to the form of the agreement is for it to be in a form of a private document with its content certified by the notary public (with the same legal effects as a loan agreement in a form of a notarial deed). 

    3.2 Protection of Creditors

    The main type of security used in real estate transactions is a voluntary contractual pledge (hypothecation), one of the proprietary rights regulated by the Ownership Act (more on proprietary rights and their legal status please see Section 1.1. and as to the conditions and procedure [including the application of the priority rank principle] for its registration in the land register please see Sections 1.2. and 2.3).

    A pledge over real estate can be registered in the land register on the grounds of (i) legal transaction (voluntary pledge), (ii) court decision (court pledge), and (iii) meeting the legal requirements provided under the applicable legislation (statutory pledge). The Ownership Act defines the voluntary contractual pledge (hypothecation) over the real estate as a voluntary contractual pledge established without handing over the possession of the real estate to the creditor (who is entitled to neither taking over nor maintaining the possession over the real estate), which is acquired by its registration in the land register. In cases where the real estate for some reason is not registered in the land register, that right is acquired by depositing the certified document by which the owner expressly stated consent allows the registration of hypothecation over the real estate.

    In addition to the voluntary contractual pledge (hypothecation), Croatian legislation also regulates fiduciary ownership (transfer of ownership as a security) as another model of security for loan repayments. That type of security is present in the Croatian banking and finance market but to a lesser extent in comparison to hypothecation as a main type of security in the majority of real estate transactions. Hypothecation is established over the real estate on the basis of a hypothecation agreement which must be in written form, with prescribed content, and usually is in the form of a private document with its content certified by the notary public (with the same legal effect as a loan agreement in a form of notarial deed).

    Depending on the structure of the loan and its purpose, it is possible for the borrower and the bank to agree on additional security to be provided in the form of a voluntary pledge over a third party’s real estate used as collateral. In that case, the owner of that real estate is a party to the hypothecation agreement and must provide (either in that agreement or in a separate certified document) expressly stated consent (i) for their real estate to be encumbered as a security instrument and (ii) for registration of hypothecation in the land register in favor of the bank/lender.

    Unless otherwise agreed between the parties of the loan agreement and hypothecation agreement, Croatian legislation provides the possibility of disposal of the real estate on which a hypothecation has been registered with the land register, i.e., acquired by the bank/lender. Since the disposal of the real estate does not affect duly registered and acquired hypothecation, in that case, the purchaser of the real estate would acquire the real estate with that encumbrance (or could be remunerated from the amount of the purchase price in that transaction and then said encumbrance would be de-registered).

    In addition to hypothecation as a dominant type of security in real estate financing transactions in Croatia, another commonly used type of security is the promissory note (debenture) with prescribed content and in the form of a private document with its content certified by the notary public. Promissory notes are widely used and accepted as a security for many different types of contractual relationships in Croatia.

    4 Real Estate Taxes

    4.1 Transfer Taxes

    Under the Real Estate Transfer Tax Act (OG 115/16, 106/18), the subject of taxation is a real estate transfer/transaction, i.e., acquisition of the real estate (taxable at the rate of 3% of the real estate market value of in the moment of taxation). The only exception to this rule (i.e., to the definition of the object of taxation) is a real estate acquisition that is subject to VAT (at the standard rate of 25%), i.e., when the transaction is subject to the payment of the VAT then no obligation to pay transfer tax exists. The real estate transfer taxpayer is the acquirer of the real estate, and these tax rules equally apply to domestic and foreign natural or legal persons who are legally deemed equal in terms of payment of real estate transaction tax, unless otherwise provided under international agreement. For all tax advice in Croatia, only authorized advisors must be consulted.

    4.2 Specific Real Estate Taxes

    The Local Taxes Act (OG 115/16, 101/17, 114/22, 114/23, 152/24) regulates that the local government units are obliged to impose real estate tax (till January 1, 2025, the option of previous vacation home tax existed). At the moment of preparing this overview, real estate tax under said piece of legislation amounts from EUR 0.60 to EUR 8 per square meter of usable area of the real estate, depending on the decision of the municipality or city where the real estate is located. The taxpayers of this type of local tax are domestic and foreign natural persons and legal entities – owners of real estate on 31 March of the year for which the tax obligation is being determined. The Local Taxes Act provides 9 exemptions to the application of this type of tax (i.e., RE for permanent residence, RE in long-term lease, RE of public purpose and for institutional residence, etc.). 

    5 Condominiums

    5.1 Legal Framework for Condominiums

    Condominiums do not exist in Croatian legislation as they do in foreign jurisdictions and no legal framework for such a legal regime exists. Since the ownership is legally unlimited in Croatia, it is not possible to fully implement ownership and management limitations characteristic for legal solutions for condominiums in other jurisdictions.

    5.2 Rights and Duties of Co-Owners

    N/A – see Section 5.1.

    5.3 Liability of Co-Owners

    N/A – see Section 5.1.

    5.4 Rights and Duties of Condominium Associations

    N/A – see Section 5.1.

    6 Commercial Leases

    6.1 Form and Contents of a Lease Agreement

    The primary source of law for commercial leases is the Act on Lease and Sale of Business Premises (Official Gazette No. 125/11, 64/15, 112/18, 123/24) which provides that the lease agreement has to be in a written form and prescribes elements and provisions it should contain – in addition to information for identification of the parties (name, address/registered seat, personal identification number) and of the premises (land plot number, land register file number, surface, etage, position, layout as well as all other relevant data), the lease agreement must contain provisions on business activities to be carried out in the premises, use of common equipment and common areas, the deadline for the handover of the premises to the lessee (tenant), terms of the lease, amount of the monthly rent, conditions and manner of the rent increase/decrease and on the time and place of entering into the lease agreement. Said act provides that the lease agreement entered into contrary to these provisions is null and void.

    In addition to these mandatory provisions provided in the Act on Lease and Leases of Business Premises, commercial lease agreements can contain additional elaborate provisions detailing the terms of the individual lease (which is usually the case for leases of prime office market premises). They can vary depending on the type of the leased property and its features and level of equipment and facilities used by the tenants, specific needs of the tenant, their needs and requirements depending on the business activities and industry it operates in, whether and to which extent the fit-out-works will be carried out or not, what type of services will be provided by the lessor, types of security instruments to be provided, etc. Many lease agreements, especially more sophisticated ones in terms of lease relationship and obligation of parties are entered into in the form of a private document with its content certified by a notary public, in that way granting the lessor a higher level of legal protection in case of default of the lessee.

    With respect to the form of the lease agreement concluded by the Republic of Croatia or by the local and regional government unit, the Act on Lease and Sale of Business Premises provides for those lease agreements that their content must be certified by a notary public, otherwise, they are deemed to be null and void.

    The content of the residential lease (rent) agreement (rental agreement) is regulated under a separate piece of legislation, the Apartments’ Rent Act (Official Gazette No. 91/96, 48/98, 66/98, 22/06, 68/18, 105/20) and was not analyzed within this overview as its focus is a commercial lease of business premises.

    6.2 Regulation of Leases

    Legal rules for certain leases vary depending on the type of property – for example, the Agricultural Land Act provides detailed rules on the lease of different legal categories of the property, including legal requirements for entering into lease agreements depending on the type of the leased property, its form, conditions, and the procedural rules to be followed in all cases. Another example is the Act on the Management of the Real Estate and Movable Assets Owned by the Republic of Croatia (Official Gazette No. 155/23) which provides detailed provisions on prerequisites for entering into a lease agreement, procedure of entering into a lease agreement, rules for sub-lease, conditions for execution depending on the purpose of the lease etc. for different types of properties owned by the Republic of Croatia – development construction land, apartments and business premises, building with land for the regular use of that building, hiking facilities, camps, non-evaluated construction land, residential facilities, real estate under special management regimes, and real estate of strategic importance for the Republic of Croatia, owned by the Republic of Croatia. Said act also provided that, exceptionally, the ministry competent for state assets is legally authorized also for the management of other real estate whose management is under special legislation entrusted to another authority if the spatial plan for such real estate (whether in a separate construction area and/or outside the boundaries of the construction area) provides construction of golf courses, hotels, hotel resorts, camps, sports facilities, and other similar commercial buildings.

    6.3 Registration of Leases

    Croatian legislation does not provide an obligation on registration of commercial leases in the land register. Since all entries in the land register are public, registration of the lease in the land register provides visibility of the lease existence to everyone resulting in legal protection for the tenant to a certain extent – for example, in the case of sale of the leased real estate (although such protection exists also in case when the lease is not registered (since in the case of sale of the leased property the purchaser enters into the legal position of the previous owner [lessor], i.e., becomes the new lessor) by registration, the existence of the lease is publicly known to everyone, including the purchaser). However, it does not provide protection in all cases – for example, in the case when the lease is registered after existing, already registered hypothecation over leased property. In that case, if the real estate is sold in the enforcement procedure executed due to the lessor’s default from its loan agreement, such lease (in addition to some other encumbrances), will be de-registered from the land register and the new owner will acquire the real estate free of such lease, unless otherwise agreed between the purchaser of the real estate in the enforcement procedure and the lessee, all as provided under applicable enforcement legislation (Enforcement Act). A similar situation is in the case of a bankruptcy of the lessor – the general rule under bankruptcy legislation is that the leases do not cease by opening the bankruptcy procedure, however, the bankruptcy administrator and the purchaser of the real estate in the bankruptcy procedure are entitled to terminate existing leases.

    6.4 Termination of Leases and Renewals

    Under the Act on Lease and Sale of Business Premises, each contracting party may terminate the lease agreement (both the fixed-term and the open-ended) at any time, if the other contracting party does not fulfill its obligations stipulated under the lease agreement or under the provisions of the said act.

    The same act furthermore regulates that the lessor is entitled to terminate the lease agreement at any time, regardless of contractual or legal provisions on the term of the lease, in the following cases: (i) if the lessee (tenant), even after the lessor’s written notice (warning), uses the business premises contrary to the lease agreement or if it causes considerable damage to the premises by usage without due care, (ii) if the lessee does not pay the due rent within 15 days from the day on which was notified by the lessor on the due payments, and (iii) if the lessor, for the reasons not attributable to the lessor, cannot use their other business premises where the lessor’s business activities are conducted and therefore intends to use the premises occupied by the lessee. The lessor is entitled to termination of the lease agreement at any time, regardless of the contractual or legal provisions on the term of the lease, if the lessor does not hand over or maintain the premises in the condition as obliged to.

    The Act on Lease and Sale of Business Premises provides that, if the lessor does not hand over the premises to the lessee in the condition stipulated under the lease agreement and under the provisions of the said act, the lessee is entitled to terminate the lease agreement, or to request a proportionate rent reduction. Additionally, the lessee is entitled to request from the lessor to conduct appropriate activities in order for the premises to be in agreed condition and if the lessor fails to do so by the appropriate deadline, the lessee is entitled to carry out all necessary works for that purpose, at the lessor’s expense. The tenant is also entitled to termination if the lessor does not provide the premises within the agreed deadline.

    If, during the term of the lease, it becomes necessary to carry out repairs on the premises necessary for the premises to be maintained in the condition in which the lessor is obliged to and which repairs are the lessor’s responsibility and obligation to undertake, the lessee is obliged to notify the lessor in writing without delay and set an appropriate deadline for conducting the works. If the lessor carries out the work without notifying the lessor, the lessee is not entitled to compensation for such costs and is liable to the lessor for all damages caused by failing to notify, except if the works in question were of an urgent nature. If the lessor was appropriately notified but has failed to conduct the works to which were obliged to in said deadline, the lessee is entitled to carry out all necessary works for that purpose, at the lessor’s expense, or to terminate the lease agreement. In general, the parties to the lease agreement are free to agree on different terms of lease termination, unless otherwise expressly limited by law. In practice, many lease agreements, especially more complex and sophisticated ones, have a more exhaustive and elaborate list of reasons for termination.

    For the lease agreements concluded with the City of Zagreb, the city or municipality as the lessors for the real estate located in certain streets, parts of streets, or on certain squares for which it has been decided by said lessor’s representative body that they can be used for carrying out only certain business activities (for example, certain traditional or scarce craft), the Act on Lease and Sale of Business premises regulates termination by virtue of law if the lessee unilaterally changes the intended purpose of the leased property. 

    With respect to the automatic (tacit) renewal of the lease, neither the Act on Lease and Sale of Business Premises nor the Civil Obligations Act (subordinate application of its general provisions on the lease agreement is provided for the business premises lease agreements not regulated under the Act on Lease and Sale of Business Premises) provide it. Such a renewal option must be agreed between the parties to the lease agreement.

    Tacit renewal of the rental agreement is provided under the Apartments’ Rent Act and was not analyzed within this overview as its focus is a commercial lease of business premises.

    6.5 Rent Regulations and Rent Reviews

    The Act on Lease and Sale of Business Premises contains only basic provisions on the rent and usually lease agreements provide more detailed provisions on the rent formula, its indexation, payment securities, and rules for its enforcement.

    In addition to the case of the tenant’s right to request proportionate rent reduction described in Section 6.4. of this review, the Act on Lease and Sale of Business Premises provides several other situations in which the full or proportionate rent reduction will be applied. For example, under the act, the lessee is not obliged to pay the rent during (i) repairs on the premises necessary for the premises to be maintained in the condition in which the lessor is obliged to and which the lessor is obliged to undertake and pay for, and (ii) works on public areas, the facade and the roof of the building, which resulted in preventing the lessee to use the premises. However, the lessee is not entitled to claim damage compensation for loss of profit in that case. Additionally, if the lessor was only partially prevented from using the premises, then will be entitled to a proportional rent decrease only.

    Another similar situation provided under the same act is the one regulated under the provision stating that, in the term of the lease, the lessor is entitled to carry out the fit-out works in the premises or the works for the purpose of reducing energy and maintenance costs and is obliged, at least two months before the commencement of works, to provide written notice to the lessee informing on (i) the type and scope of works to be carried out, (ii) the duration of time for completion works, and (iii) the new amount of the rent.

    Some pieces of legislation contain provisions on rent revaluation after a certain period (individually determined as per agreement of the parties, depending on the conditions of the lease agreement in question) – for example, the Agricultural Land Act regulates that said provision is a mandatory element of every lease agreement.

    6.6 Services To Be Provided Together With the Lease

    The Act on the Lease and Sale of the Business Premises regulates that the lessee is obliged to pay due costs of using common equipment and providing common services in the building where the leased premises are located unless agreed otherwise. It is considered that the compensation for said costs is not included in the rent unless otherwise agreed between the parties. In general, this rule is reflected and detailed in lease agreements, and in practice, the scope of services provided by the lessor depends on the type of building and the level of its quality and equipment, so they are individually agreed upon between the parties.   

    6.7 Fit-Out Works and Their Regulation

    The Act on the Lease and Sale of Business Premises is silent on the matter of the fit-out works, so they are usually fully addressed in the lease agreement (from their scope, engagement of the parties in carrying out the works and their respective roles and responsibilities, value of the works and the potential compensation to ownership of the executed works and regulation of mutual rights and obligations after the termination of the lease).

    On the most general and broad level regarding the tax implications of the fit-out works – the lessee could be entitled to claim deductible input tax with respect to the fit-out works as well as for them to be treated as tax-deductible expenses (since the fit-out-works are executed for business purposes [conducting tenant’s business in the leased premises] if all legal requirements from tax legislation for such tax treatment are met). For all tax advice in Croatia, authorized advisors only must be consulted.

    6.8 Transfer of Leases and Leased Assets

    With respect to the transfer of the leased assets please see Section 6.3.

    7 Zoning and Planning

    7.1 How Are Use, Planning, and Zoning Restrictions on Real Estate Regulated?

    Spatial planning is regulated under the Spatial Planning Act (Official Gazette No. 153/13, 65/17, 114/18, 39/19, 98/19, 67/23; Spatial Planning Act) which provides rules on spatial planning system: objectives, principles, and subjects of spatial planning, monitoring of the spatial situation and the area of spatial planning, spatial planning conditions, adoption of the Spatial Development Strategy of the Republic of Croatia, spatial plans including their production and adoption procedure, implementation of spatial plans, construction (building) land development, proprietary rules for construction (building) land development, and supervision.

    Spatial planning is conducted according to the spatial plans, public documents with powers and status of secondary legislation which regulate purposeful organization, use, and function of certain areas including prerequisites for planning, development, and protection of the state, county, and local areas in Croatia, all with the aim to achieve goals of the spatial planning according to the spatial planning principles. Construction and all other spatial interventions and activities must be carried out in accordance with the spatial plans.

    Spatial plans have the legal force of by-laws and exist on three levels: (i) the state level (urban development plan at the state level adopted/passed by the Croatian Government and all other spatial plans are adopted by the Croatian Parliament), (ii) the county level (adopted by the county assemblies), and (iii) the local level (adopted by the city or municipal councils).

    All spatial plans must be passed in accordance with the Spatial Planning Act and all spatial plans of all levels must also be mutually compliant and harmonized. All spatial plans of lower level must be harmonized with the spatial plans of higher level, spatial plans of a narrower area must be harmonized with the spatial plans of a wider area of the same level and the spatial plans of the same level must be mutually harmonized in the same manner as the spatial plans of different levels.

    Spatial planning legislation comprehensively and in detail provides rules on their reach and scope. Spatial plans at the local level (city and municipality level) are the most detailed ones and are significant and valuable for construction as well as all other types of other spatial interventions. Local-level spatial plans are:

    (i) Spatial development plan of the municipality/city – mandatory passed for the construction area of the municipal and city areas and the separate construction area outside the central settlement of a large city. It regulates a) the conditions of implementation of spatial interventions in the area within its scope for which no urban development plan is being passed and b) guidelines for producing the urban development plans whose scope is determined by the general urban development plan. This type of spatial plan also determines the area covered by the general urban development plans, the development urban plans, and the infrastructure corridors important to municipalities and cities.

    (ii) General urban development plan – mandatory passed for urban construction outside the urban area of the large cities and remote construction areas. It regulates a) the conditions for all spatial interventions in the area within its scope for which the urban development plan is not being passed and b) the guidelines for planning the urban plan areas located within the area of this type of local spatial plan.

    (iii) Urban development plan – mandatory spatial planning document for unconstructed areas and constructed areas intended for urban transformation and urban sanitation. It regulates the conditions for the implementation of all spatial interventions within its scope and, in addition to other mandatory parts, it must contain a) detailed plans of the division of its area to separate parts with respect to their purpose, b) display of plots intended for construction, and c) other conditions for use, planning, and construction in the area within its scope. The adoption of this type of local spatial plan is not mandatory for the area within its scope for which the spatial development plan of the municipality/city or the general urban development plan provides conditions for the implementation of spatial interventions in the area with the level of details prescribed for the urban development plan.

    7.2 Can a Planning/Zoning Decision Be Appealed?

    The general rule in procedures for the adoption/passing of all spatial plans is that a competent authority conducting the procedure must carry out the procedure which includes public discussion on the spatial plan proposal in which anyone can participate in a manner of providing opinions, proposals and remarks within the deadlines and the procedure as prescribed by the Spatial Planning Act. Once the decision on the implementation of an individual spatial plan is passed, an appeal can be filed on which the competent ministry (as the 2nd instance authority) decides, and an administrative dispute can be initiated against the 2nd instance decision. The same rules apply to the decision on the amendment, revoking, annulment, and/or extension of the decision on the implementation of individual spatial plans.

    With respect to individual decisions for the purpose of construction passed within the legal framework of spatial planning legislation – location permit, the Spatial Planning Act also provides the possibility of appeal or possibility of initiation of administrative dispute (depending on the level of the authority which passed the decision) within the detailed procedure for its passing in all cases for which its passing is prescribed as a legal prerequisite for construction. Legal procedure rules for obtaining construction permits and operating permits are contained in detail in the construction legislation.

  • Real Estate Laws and Regulations in Bulgaria (2025)

    Contributed by Schoenherr.

    1 Real Estate Ownership

    1.1 Legal Framework

    The right of ownership is a fundamental right under the Bulgarian Constitution. Article 17 of the constitution explicitly provides that real estate ownership, including the right to inheritance, is guaranteed and protected by law.

    In Bulgaria, property (including real estate) is private or public (state or municipal property). State and municipal property are differentiated into public state and private state property, or public municipal and private municipal property. The law expressly defines which real estate constitutes public state or public municipal property. Any real estate that is state or municipal property but is not defined as a public state or public municipal property constitutes private state or private municipal property.

    The rights of all real estate owners (private or public) and the protection given by the law to such rights are equal, except for the possibility of real estate constituting public state or public municipal property to be subject to disposition or encumbrance and acquisition by prescription (continuous possession for five years in good faith or otherwise continuous possession for 10 years). Forfeiture and acquisition by prescription are possible only in relation to real estate constituting private state or private municipal property as well as any type of individual private ownership. A special legislative provision stopped the term for acquisition by prescription in relation to private state/municipal property from running between May 31, 2006, until December 31, 2023, thus preventing the possibility of acquiring private state/municipal property by prescription. However, this provision was declared by the constitution court in April 2023 to be in contradiction with the Bulgarian Constitution, thus, allowing since this date and under certain conditions the acquisition by prescription also of private state/municipal property.

    Bulgarian law allows for limited ownership rights over real estate, such as the usufruct right and the right to build. The latter allows the owner of a piece of land to grant to a third party the right to construct a building on the land, in which case the third party becomes the owner of the constructed building.

    The Constitution and the applicable legislation allow for expropriation of ownership based on special procedures prescribed by the applicable laws for such needs which may not be satisfied otherwise. The Bulgarian Constitutional Court applies this protection strictly and recently invalidated certain newly introduced amendments to a law allowing for a faster expropriation procedure.

    Under Bulgarian law, there are certain restrictions regarding the acquisition of agricultural land by foreigners. Natural or legal persons who have been a resident or established in Bulgaria for more than five years are eligible to acquire titles to agricultural lands. Legal persons with registrations under Bulgarian law less than five years old may acquire titles to agricultural lands if the shareholders in or founders of the company have been resident or established in Bulgaria for more than five years (Domiciles Conditions).

    The following are ineligible to acquire and hold titles over agricultural lands: (i) commercial companies in which the shareholders directly or indirectly are companies, registered in jurisdictions with preferential tax regimes; (ii) commercial companies in which the shareholders do not meet the Domiciles Conditions, as stated above; and (iii) joint-stock companies that have issued bearer shares.

    In 2024 the Bulgarian real estate market continues to grow rapidly, as it did in the previous years following the first shock of the COVID-19 pandemic. The focus is on residential areas and the increasing interest of buyers in larger apartments and houses near big cities and mainly the capital, Sofia. 2023 also showed increased interest in the purchase and lease of office areas, as transactions in this sector almost halted with the start of the pandemic.

    1.2 Registration of Ownership

    The Real Estate Register (RER) is maintained by the Registry Agency which has offices with the regional courts across the country. Each real estate transaction is registered in that office of the RER, in the parish in which the particular real estate is located. The RER is a public register.

    Registration in the RER as the owner of a piece of real estate does not automatically mean that the registered person is the real owner. Ownership is proved by title documents and not merely by the fact of registration in the RER. Therefore, it is recommended that title due diligence be conducted when acquiring real estate.

    The RER is still organized by the so-called “personal system” and not by the “lot system.” This means that the batches in which the registered information is filed are created not by lots but by title holders. The “lot system” was recently initiated, but the process has not finished yet.

    All rights in rem over real estate must be registered, namely, (i) ownership (sole ownership, co-ownership), (ii) limited real rights to construct buildings, (iii) limited real right of use, (iv) mortgages, (v) easements, (vi) leases for a term of more than one year, and (vii) attachments (i.e., seizure of a property to secure a judgment or to be sold in satisfaction of a judgment). Claims for rescinding agreements transferring ownership or establishing limited real rights, claims for proclaiming such agreements null and void, and claims for proclaiming a preliminary agreement as final are also entered in the RER.

    1.3 Publicity of Real Estate Register

    The RER is public. Anyone may make an inquiry in both the electronic database and the paper-based files of any RER office about any real estate located in the region of the respective regional court. The RER also provides distant access to the underlying documents as well as online access to the electronic database in all real estate offices in Bulgaria.

    1.4 Protection of Ownership

    In Bulgaria, private real estate is, in principle, transferred by a notarial deed. When real estate is private state or municipal property, it is transferred by an agreement in writing. The execution of the notarial deed or of the written agreement has a constitutive effect. The registration of real estate transfers with the RER has only a declaratory effect. The document by which a natural or legal person proves their title over certain real estate is a notarial deed or an agreement in writing or other documents depending on the manner of acquisition.

    The level of protection of real estate ownership provided by the law is in line with EU standards. An owner who claims unauthorized disposal or use of real estate may file a civil claim and may request the opening of criminal proceedings against the alleged intruder.

    Bulgarian law provides that a person who has possessed a real estate property in good faith continuously for five years becomes its owner. Hence, if an owner has possessed the real estate in good faith continuously for five years, it is very likely that its title cannot be challenged by raising new restitution and eviction claims. It is also admissible to add the periods of possession in good faith of consecutive owners in order to achieve the required five-year term and acquire the title by prescription.

    A title to real estate becomes absolutely stable after a ten-year period of continuous possession (without any good faith requirement) unless this period is interrupted or terminated. Where the five-year period has elapsed, however, it is likely that an owner’s title to the real estate will endure third-party challenges.

    2 Real Estate Acquisition

    2.1 Share Deal or Asset Deal?

    Both share and asset deals are used in Bulgaria in transactions involving real estate. The transaction structure usually depends mostly on tax considerations rather than legal ones, as from a legal perspective there is no great difference.

    Our expertise and experience in the field show that investors usually prefer a share deal. If there are significant risks related to this type of transaction, then other means of acquisition may be discussed.

    2.2 Share Deal

    A share deal requires due diligence of both the real estate and the company that owns it. The key factors considered by investors in such a case are the financial history of the owner, the risk of insolvency or the existence of hidden obligations, and the status of the seller, i.e., the person/party who owns the shares and to what extent the potential investor may expect any claims for breach of representations and warranties related to the company’s standing to be successfully collected.

    There are no significant taxes and fees associated with a share deal, which is one of the main reasons why many investors use this transaction structure.

    As stated above, the main risk associated with such a transaction structure is the financial standing of the company being acquired. This risk is usually addressed by conducting tax and legal due diligence of the company as well as providing for extensive representations and warranties in the share purchase agreement (SPA). The SPA may also provide for certain guarantees (bank or parent company), insurance policies, etc.

    2.3 Asset Deal

    An asset deal is preferred in the case of smaller transactions or if there are certain risks (e.g., outstanding obligations, pending claims, etc.) related to the company that owns the respective real estate. The parties usually sign a preliminary agreement that regulates the terms and conditions for completing the title transfer. The preliminary agreement may be binding for both parties or only one of them. Usually, the purchaser has the option to decide whether to go on with the acquisition after completing due diligence. The next step is the signing of the transfer agreement in the form of a notarial deed, by which the title of ownership to the real estate also transfers.

    The taxes associated with an asset deal are usually around 3% of the transaction value and this is why some investors prefer a share deal, especially in major deals.

    The owner usually provides standard representations and warranties as to the title of ownership and lack of any liens on the real estate.

    2.4 Disposal Process

    The agreement (in case of an asset deal) must be made in the form of a notarial deed and must be certified by a notary public in whose region the real estate is located. The parties or their representatives must be present in person before the notary public for the signing of the notarial deed. The notary must read the notarial deed to the parties. These formal requirements affect the validity of the agreement. When the real estate to be transferred is state or municipal property, the agreement must be made in writing. The notary fees depend on the transaction value and are fixed by law.

    In the case of a share deal, there may be certain requirements as to the form of the share purchase agreement depending on the type of shares. Further registration with the Commercial Registry or other relevant registries may also be required in this case.

    The time for handover and passing of all risks is stipulated in the purchase contract. Usually, the parties agree to hand over the real estate at the time of transferring the purchase price to the seller’s account. All risks pass to the buyer upon signing the agreement if the agreement itself does not stipulate otherwise.

    2.5 Registration of Change of Ownership

    Once the agreement for the transfer of ownership is signed before the notary public the latter must register it with the RER on the same day. The registration fee is 0.1% of the transaction value. The judges with the respective regional RER office review only the description of the property for whether it meets the legal requirements.

    As stated above, the fact that a person is registered as the owner of certain real estate with the RER does not automatically mean that they are the actual owner of the real estate. Therefore, it is recommended to conduct a title due diligence prior to acquiring real estate in Bulgaria.

    2.6 Risks To Be Considered

    Sales contracts on real estate frequently contain warranties relating to the defective or faulty performance by the seller.

    The statutory warranty period for real estate defects is one year. This can be extended or shortened by mutual agreement. The time starts running from the handover. If the seller disputes the defect, the purchaser has to file a claim within the relevant warranty period in order to prevent the claim from becoming statute-barred. The burden of proof that the defect existed upon transfer of possession is borne by the purchaser. The seller is not liable if the purchaser was aware of the defects when the sale contract was executed.

    If third-party rights on the real estate are discovered after the sale, the statutory warranty period is five years from title transfer. The purchaser is entitled to cancel the contract in court, whereupon the seller is obliged to pay back the purchase price together with compensation for the costs of the transfer and for damages caused. However, if the purchaser was aware that such third-party rights existed at the time of the sale, the seller is obliged to pay back only the purchase price.

    There are no pre-emptive rights or rights of first refusal under Bulgarian law, except in the case of co-ownership, i.e., if a co-owner wishes to transfer their share in the real estate, they are obliged to offer the share to the other co-owner under the same terms and conditions as to the potential purchaser.

    Any other rights (e.g., mortgages, ownership claims, lease agreements, etc.) must be registered in order to be opposed to the new owner.

    3 Real Estate Financing

    3.1 Key Sources of Financing

    The most common method used to finance the purchase of real estate is a mortgage loan. The creditor registers a mortgage simultaneously with the purchase of the real estate. The mortgage must be registered with the RER in order to be both valid and opposable to third parties.

    3.2 Protection of Creditors

    As stated above, the main type of security used in real estate financing is a mortgage. If the transaction and/or financing is more complex (e.g., involves a lot of properties), a special pledge over the commercial enterprise also may be considered.

    Mortgage enforcement is a rather swift process. To enforce a mortgage, a creditor can file an application requesting the court to allow immediate execution and to issue a writ of execution. The court procedure takes approximately seven days without informing the debtor. If the creditor is a bank, it must provide the court with an excerpt from the accounting books certifying the amount of the debt and the mortgage agreement/application. The mortgage agreement does not have to contain a clause certifying that it establishes an executory right. On the grounds of the issued writ of execution, the creditor can initiate execution proceedings.

    The special pledge enforcement is out-of-court enforcement and in certain cases may be preferable to mortgage enforcement. The start of the enforcement is registered with the Special Pledge Register and the creditor is entitled to sell the pledged assets directly to third parties.

    4 Real Estate Taxes

    4.1 Transfer Taxes

    There is a transfer tax in the range of 2.5%-3% for any real estate transfer. The exact amount depends on the municipality where the real estate is located.

    4.2 Specific Real Estate Taxes

    Real estate owners must pay an annual property tax and garbage collection fees. The amount of these taxes and fees, again, depends on the municipality where the real estate is located.

    5 Condominiums

    5.1 Legal Framework for Condominiums

    The concept of condominiums is recognized by Bulgarian law and there is a special act in this respect – the Condominium Management Act (CMA).

    The CMA regulates public relations involving the management of common areas of buildings under condominium ownership arrangements and the rights and obligations of the owners, users, and occupants of individual units.

    The management of common areas of buildings under condominium ownership in closed-type residential complexes (residential parks) is regulated under a written agreement concluded between the investor and the owners of individual units. Such an agreement may be registered with the RER and is binding for any new owner of a unit in such a complex.

    5.2 Rights and Duties of Co-Owners

    The owners of units in a condominium are entitled to (i) use the common areas of the building in accordance with their designation and (ii) participate in the management of the condominium.

    The condominiums are governed by (i) the general meeting of the owners and (ii) the management council or manager elected by the general meeting. At the general meeting, the owners have the right to vote in proportion to the undivided shares that they own in the condominium.

    5.3 Liability of Co-Owners

    The owners also have certain obligations, amongst which the most important ones are: (i) not to obstruct the other owners, users, and occupants from using the common areas of the building; (ii) not to engage in repair and overhaul activities in their unit, which result in impairment of the design parameters of the construction; (iii) to fulfill the requirements set out in the respective statutory regulations when keeping animals in their units and not to cause inconvenience to their immediate neighbors; (iv) to comply with the decisions of the condominium management bodies; (v) to pay the costs of repairs, major overhaul and major renovation of the common areas of the building, replacement of common installations or equipment, and contributions to the repair and renovation fund in a proportion corresponding to their undivided shares in the common areas; and (vi) to pay the costs of management and maintenance of the common areas of the building.

    5.4 Rights and Duties of Condominium Associations

    The owners of condominiums may establish an association with the purpose of obtaining money from European Union funds and/or the public or municipal budget, from grants and subsidies, and/or use of their own resources for the purposes of major overhaul and/or major renovation of buildings under condominium ownership arrangements. Such an association has the status of an independent legal entity established under the CMA and is registered with the local municipality.

    6 Commercial Leases

    6.1 Form and Contents of a Lease Agreement

    There is no standard form of a lease agreement in Bulgaria. The parties are free to negotiate all lease terms, provided they are in accordance with the Bulgarian Obligations and Contracts Act. The law does not require the lease to be in written form in order to be valid. However, a written form of the lease agreement with notary-certified signatures is required if the agreement is to be registered with the RER.

    The standard terms and conditions of the commercial lease agreements are related to the terms of a lease, termination rights, rent, service charge, indexation, maintenance and repair obligations, subletting, etc.

    Commercial lease agreements related to offices, shopping centers, and even industrial buildings have developed a lot in the past decade. The entry of major EU and US companies has introduced in Bulgaria the standard terms and conditions used for commercial lease agreements in the EU and USA.

    6.2 Regulation of Leases

    There is no difference in the regulation of lease agreements according to the type of property. Moreover, the law is rather liberal when it comes to regulating leases and there are no rules for commercial leases that cannot be contractually excluded.

    6.3 Registration of Leases

    A lease agreement may be registered with the RER if the agreement is signed in writing with notary-certified signatures. If a lease agreement is registered with the RER, it is binding for the registered term for the new owner in case of transfer of the leased real estate.

    6.4 Termination of Leases and Renewals

    If a lease agreement is signed for a fixed term, it may not be terminated without cause if not explicitly agreed in the agreement. The lease agreement may be terminated with cause on the grounds agreed in the agreement.

    If the lessee continues to use the real estate after the expiry of the agreed lease term, the lease agreement is deemed to be prolonged as a lease agreement without term. In such a case, the lessor may terminate the lease at any time with one-month notice.

    6.5 Rent Regulations and Rent Reviews

    There are no statutory rent regulations and reviews.

    6.6 Services To Be Provided Together With the Lease

    The lessor may provide additional services (e.g., cleaning, maintenance, etc.) if agreed with the lessee, but is not required to by law.

    6.7 Fit-Out Works and Their Regulation

    Fit-out works are agreed upon between the parties. There are no statutory regulations. Under the law, the lessee is obliged to return the real estate in the state in which it was delivered taking into account normal wear and tear.

    6.8 Transfer of Leases and Leased Assets

    If a lease agreement is registered with the RER, it is binding for the registered term for the new owner in case of transfer of the leased real estate.

  • Real Estate Laws and Regulations in Albania (2025)

    Contributed by Kalo & Associates.

    1 Real Estate Ownership

    1.1 Legal Framework

    In the Constitution of the Republic of Albania (Constitution), it is stipulated as one of its essential principles, that the right to private property (which includes the concept of real estate ownership) is guaranteed and protected by the Constitution. Furthermore, private real estate property is equally protected by law as state-owned property. The real estate property can be gained through donation, purchase, or any other means provided in the Civil Code and specific laws. The major means for gaining real estate property pursuant to the Albanian legislation are through contract, inheritance, adverse possession, connection, and a mixture of property, processing, etc.

    Moreover, the Constitution provides that real estate property can be expropriated or restricted only for public interests and against fair compensation. The process of expropriation for public interests is regulated by means of Law No. 8561 dated December 22, 1999, On expropriation and taking into temporary use of private property for public interests as amended, along with a set of secondary legislation which thoroughly regulates the expropriation process.

    Pursuant to the Civil Code the property is the right to possess, enjoy, and freely dispose of the property within the limits defined by law. Obviously, the Real Estate owners have broader rights in comparison with other categories of beneficiaries from real rights (i.e. lease, usufruct, etc.) which usually have the right to possess and enjoy the real estate property in accordance with the contract but do not have the right to dispose of the property.

    Recently, a major development has occurred regarding the possibility of privatization of state-owned real estate for the purpose of investing. In this sense, Albania has adopted or updated a series of legislation aiming to promote foreign investments through the possibility of granting long-term use, with favorable conditions (the so-called “1 Euro Contracts for 99 years”) or transfer in property of private investors of state-owned real estate. Such legislation encompasses Law No. 9967, dated July 24, 2008, as amended, known as Law on Privatization, and the Council of Ministers Decision No. 54, dated February 5, 2014, On determining the criteria, procedures, and means of granting the state properties through lease, emphyteusis or other contracts, as amended, the Law no. 55/2015, dated May 28, 2015, On strategic investments in the Republic of Albania, as amended, which is completed in the specific field of touristic investments by the Law no. 93, dated July 27, 2015, On Tourism, as amended, and by the Law no. 71, dated October 17, 2019, On Albanian Investments Corporate, for other investment projects.

    The Albanian legislation has some restrictions in connection with the acquisition of lands from foreigners. More specifically, it is not allowed the purchase agricultural lands, woodlands, meadows, and pastures from foreigners. However, such restrictions can be overcome through the acquisition or establishment of Albanian legal entities, which can be made by foreigners without limitation, and which in turn can acquire or purchase such land without restrictions. Restrictions are applicable also for the purchase of lands within the city areas. The foreigners are able to acquire such lands in the case they lease the land with the purpose of investment and perform an investment which according to the construction permit, exceeds three times the value of the land determined by Council of Ministers Decisions. The same as with agricultural land, even in this scenario, foreigners may acquire land by establishing an Albanian legal entity.     

    1.2 Registration of Ownership

    The ownership of real estate is duly registered in the State Cadaster Agency which organizes and maintains the real estate registers for privately-/state-owned immovable properties and in which are registered the real estate rights over such properties. The activity of the State Cadaster Agency is regulated through Law No. 111/2018 On the Cadaster. The State Cadaster Agency is under the direct supervision of the Prime Minister’s Office.

    All private or state-owned properties should be registered in the State Cadaster Agency. With the entry into force of Law No. 111/2018 is supposed to be finalized the whole process of digitalization of the cadastral registers/maps and conclude the process of the initial registration of all the real estate properties. This means that while digitalizing all the existing real estate properties, the State Cadaster Agency scrutinizes the legality of the property registration and invites the owner to remedy any deficiencies that might be noted. This process decreases considerably the risk of having overlaps of properties and overlaps of cadastral maps.

    Upon successful completion of the registration process of the relative immovable property, the State Cadaster Agency issues the Certificate of Ownership, the Property Card, and the Cadastral Map per each immovable property, which constitute the evidence of effective ownership of such immovable property.

    Pursuant to the Civil Code, the following transactions must be registered in the State Cadaster Agency:

    • contracts for the transfer of the ownership of the real estate and the acts for their voluntary separation;
    • contracts through which are established, recognized, amended, or cease to produce effects real rights over the properties, such as usufructs, usage, emphyteusis, easements, and other real rights;
    • legal acts by means of which are waived the above real rights;
    • legal acts through which a commercial entity was established which has under ownership a real estate or enjoys other rights in rem over these properties; and
    • court judgments related to real estate matters and the bailiff actions for the seizure or sale of real estate property in auction.

    1.3 Publicity of Real Estate Register

    The information in the real estate registry is not publicly available. Such information may be accessed by the relevant state authorities, prosecutions, or courts based on a valid legal reason. Also, the public notaries have access to the real estate register however this information can be used and/or processed by them only for reasons of effectuating transactions with real estate properties.

    1.4 Protection of Ownership

    Any transaction with a real estate property (at least the ones specifically provided in the law) should be registered in the State Cadaster Agency, however, such registration is not always a condition precedent for the validity of the transaction. The Law on Cadaster provides that any transaction or legal action that is necessary to be registered in the real estate registry should be registered within 30 days from the execution of the agreement, otherwise, a fine of approximately USD 30 per day is applied.

    The entries of the real estate registry provide a legal presumption of the existence of the real estate rights over the relative immovable property, which is considered valid until a court of law has stated otherwise.

    The Constitution provides that property rights are protected by law and real estate rights can be deprived only upon due process of law. While the Civil Code specifically regulates the procedural means for the protection of real estate rights. More specifically such modalities are the claim for restitution of property, the claim for the cease of violation of property (actio negatoria), and the claim for the determination of the boundaries. Basically, these procedural means are the available modalities provided in Albanian law for remedies against unauthorized disposal or use of real estate.

    2 Real Estate Acquisition

    2.1 Share Deal or Asset Deal?

    In the Albanian jurisdiction, the most encountered modality of real estate disposal is the asset deal in which the owner sells to the investor the real estate property through a Sale Purchase Agreement (SPA). In the case the real estate belongs to a commercial entity, the investor may purchase the company which is the owner of the real estate asset (share deal). However, the share deal is rarely used as a modality of transfer of real estate and is used in cases when the main interest of the investor is the company (owner of the real estate) and not the real estate asset itself.

    From the perspective of Albanian law, the purchase of real estate through asset deals is more a straightforward process in comparison with the share deal. In these cases the buyer usually conducts real estate due diligence on the ownership documents and if necessary technical measurements of the property and it is conducted the process of signing the SPA in front of the public notary, who performs afterwards the registration of the SPA in the State Cadaster Agency and obtains the ownership certificate in the name of the buyer.

    While in the share deal, the investor should perform in addition to the real estate due diligence also a full legal and financial due diligence which is usually a time-consuming and expensive process. The SPA for the share deal must cover in addition to the real estate matters also other important elements necessary for the purchase of the company.

    2.2 Share Deal

    It has to be noted that in Albania, to the best of our knowledge are almost nonexistent companies that have as their scope of activity the ownership of a real estate asset and the management of such an asset. For this reason, the share deal is very rarely used and practically it is encountered in case the main interest of the investor is the acquisition of the company and not of the real estate.

    As a matter of practice, a share deal process starts with full financial and legal due diligence which may be produced by the seller and/or the buyer as the case may be. Afterward, the parties negotiate the terms and conditions of the SPA by means of which is basically transferring the ownership of the shares from the seller to the buyer. The SPA is filed with the Business Registration Center and the shares are transferred to the buyer. In the share deal, if the name of the company is not changed, then no other bureaucratic procedures are performed with the State Cadaster Agency for the RE. In the case the name of the company is changed, then the SPA for the share deal is deposited to the real estate registry and another ownership certificate is issued with the new name of the company.

    The main pieces of legislation used for this kind of transactions are the Civil Code, Law No.9901 dated April 14, 2008, On Commercial Entities and Entrepreneurs, and Law No.131/2015 On the National Business Center.

    In the transaction document (SPA), the risk is transferred to the purchaser however usually the SPA contains the necessary representations and warranties in order to protect the purchaser’s rights to the maximum extent possible.

    2.3 Asset Deal

    As explained above, the asset deal is a rather more simple transaction in comparison with the share deal. The transaction is focused almost exclusively on the real estate and the buyer should thoroughly review the property documents. Depending on the value of the asset, real estate due diligence would be highly recommended for the Albanian jurisdiction, which might significantly mitigate any potential risk related to the property documents.

    The transaction document for the purchase of real estate (SPA) must be signed in front of a public notary (thus must be in notarial form) and the latter performs all the necessary procedures for the registration of the SPA with the State Cadaster Agency. Prior to the execution of the SPA, the public notary verifies electronically that the real estate is free of any liens, restrictions, pledges, and encumbrances and afterward collects the signatures of the buyer and seller in the SPA. The latter is filed with the State Cadaster Agency for registration only in the case the buyer, deposits in the escrow account held by the notary, the full sale price. After the Cadaster transfers the ownership of the real estate to the buyer and issues the Ownership Certificate (within a maximum of 30 days), the sale price is transferred to the seller’s bank account.

    The public notary fees are paid in accordance with a joint instruction of the Ministry of Justice and of Finance and are calculated as a percentage of the sale price.

    The applicable legislation for the asset deal is the Civil Code, Law No. 110/2018 On the public notary, Law No. 111/2018 On the cadaster, and other important legislation and secondary legislation depending on the nature of the real estate.

    2.4 Disposal Process

    According to the Civil Code, the SPA must be in written form and entered into in front of a public notary, who follows the procedure for the registration of the SPA with the State Cadaster Agency as explained in section 2.3. above.

    There are no specific consents, approvals, or proceedings for real estate disposal unless the real estate is mortgaged in favor of a financial institution or is seized by the tax authorities or a bailiff. In this scenario, the transaction can be performed only in the case the tax obligation or the debt is duly paid, and the seizure order is lifted.

    2.5 Registration of Change of Ownership

    Please refer to Section 2.3.

    2.6 Risks To Be Considered

    As a matter of principle, there are no hidden, pre-emptive, or first-refusal rights to real estate. However, in the case, that the real estate is under the co-ownership of two or more owners, and one of them would like to sell the property, the other co-owners have the pre-emption right for the purchase of a share of the property belonging to another co-owner who is selling the property.

    The Civil Code provides that the unsatisfied Purchaser can claim remedy of defects in the case within 10 days from the moment of noticing such defects. In any case, such defects must be claimed within two years from the handing over moment. In the case the building is constructed agreement, such deadline can be extended up to 10 years from the handing over moment.

    3 Real Estate Financing

    3.1 Key Sources of Financing

    The classical and most encountered practice of sources of financing in Albania is the mortgage. This activity is conducted through commercial banks and is an activity regulated by Law No. 9662 dated December 18, 2006, On the Banks in the Republic of Albania, as amended, and closely supervised by the Bank of Albania (regulatory authority) which has adopted a significant number of regulations which are binding for the commercial banks. In addition, the mortgage is also specifically regulated in the Civil Code.

    A recent trend arising in real estate financing is also their purchase through a financial lease, with a transfer in ownership option. In this case, the financial institution acquires the real estate on behalf of the buyer and leases to him during the period agreed, and at the end of the lease, the buyer has the right to buy the property at the agreed price. The advantage in this case is that, considering that the financial institution remains the owner of the immovable property during the lease, has more security to provide financing also in cases when the mortgage option would not be viable.

    The financial lease is regulated by Law No. 9396, dated May 12, 2005, On Financial Lease, as amended, as well as by the Civil Code.

    3.2 Protection of Creditors

    The mortgage is the main type of security in real estate financing. The Civil Code defines the mortgage as the real right that is placed over the debtor’s property in favor of the creditor in order to ensure the fulfillment of an obligation. Another modality for the protection of creditors which is frequently used in real estate financing is the guarantee which can be a personal guarantee and/or a corporate guarantee. In addition, there could be pledges or securing charges agreements placed over movable assets which could be used as securities in real estate financing. Usually, the pledges and securing charges are taken as additional guarantees to the mortgage in real estate financings.

    4 Real Estate Taxes

    4.1 Transfer Taxes

    Individuals are subject to a personal income tax at a rate of 15% applicable on the capital gain (i.e., the difference between the registered value of the immovable property and the sale price). However, it should be emphasized, that the sale price cannot be lower, for tax purposes, than the references issued by the state authorities.

    Legal entities (in addition to the corporate income tax in the case the seller is a corporate/entrepreneur) are also subject to the local tax on the transfer of immovable properties. In the case of a sale of land, the applicable tax is at the rate of 2% of the sale price. In the case of a sale of a building, the tax is calculated based on the surface of the building and its location (the tax may vary from ALL 100 to ALL 2,000 per square meter). 

    4.2 Specific Real Estate Taxes

    Ownership of immovable property is subject to the annual tax on immovable properties based on the below categories:

    • Buildings with residential purposes – 0.05% of the registered value or of the minimum legal value in case the prior is lower;
    • Buildings with commercial purposes – 0.2% of the registered value or of the minimum legal value in case the prior is lower;
    • Agricultural Land – from ALL 700 to ALL 5,600 per year, depending on the location; and
    • Construction Land – from ALL 0.14 to ALL 20 per square meter, depending on the location and purpose of use.

    5 Condominiums

    5.1 Legal Framework for Condominiums

    Condominiums do exist in the Albanian jurisdiction and are regulated by Law No. 10112 On the administration of co-ownership in residential buildings. The law aims to regulate the legal relations in the field of administration of co-ownership in residential buildings with two or more owners, land and ancillary facilities, which are in compulsory co-ownership, determination of subjects, relations between them and with third parties, rights, and obligations of mutual, as well as the relevant sanctions, in the case of non-fulfillment of these obligations.

    In units where there are two or more owners, the co-ownership relations between the owners are regulated in accordance with the provisions of the Civil Code, the law mentioned above, and the Council of Ministers Decision (CMD) No. 447, dated June 16, 2010, on Approval of the standard regulation for the administration of co-ownership in residential buildings, which establishes general rules on the administration and maintenance of condominiums in residential buildings.

    Law No. 10 112 On the administration of co-ownership in residential buildings specifies that the deed of co-ownership shall be registered with the immovable property registration office, under whose jurisdiction the residential building is located, in accordance with the laws and rules of immovable property registration of the Civil Code. The co-ownership title is registered in the name of the creator.

    5.2 Rights and Duties of Co-Owners

    The rights and obligations of the co-owners are focused on the maintenance of the condominium, informing the co-owners on the changes or damages that may occur, the monetary investment needed for the building as well as participating in decision-making on the administration of the condominium in co-ownership. According to Law No. 10 112 For the administration of co-ownership in residential buildings, the owner of the condominium has the right to:

    a) to request from the other co-owners, in the obligatory co-ownership where he belongs, or from the users of these special units not to infringe the use and enjoyment of indivisible objects, as well as to request compensation or correction of the damage, when the damage is caused by their actions;

    b) participate in decision-making;

    c) be informed by the assembly or the administrator/management company about the decisions taken in his absence;

    d) to be regularly informed by the administrator and by the assembly about the use of the administration fee;

    e) to be informed by the administrator/management company about the non-payment of the administration fee by other owners;

    f) to submit to the assembly proposals for the administration of the residential building.

    Along with these rights, the owner is obliged to:

    a) to respect the norms of ethics and coexistence, defined in the regulation of building administration;

    b) not to hinder other co-owners in the enjoyment of objects that are in compulsory co-ownership;

    c) to pay the administration fee even in the cases when he does not live or has rented the unit;

    d) to allow inspections and repairs of the common property within the unit owned by him.

    The co-owners of the units, including the “creator of the co-ownership” as long as he owns one or more units, represent the Assembly. In the first meeting, the assembly elects the board, determines the mandate, and decides the amount of the administration fee.

    5.3 Liability of Co-Owners

    The co-owners will be liable to other co-owners, the associations, and/or third parties related (e.g. the occupants of the condominium) for any action they take on the building or damage caused to it that violates their rights over the condominium.

    The CMD no. 447, dated June 16, 2010, on Approval of the standard regulation for the administration of co-ownership in residential buildings, presents a more extensive relationship between the co-owners, mentioning the norms related to the maintenance of the building, the physical stability of the building, the safety of life and public health, ethical norms of coexistence which, of course, are mandatory to the co-owners. The maintenance of quietness, the rules of usage of common areas, restrictions on the usage of individual property, and the keeping of pets are the key points that the article consists of as an integral part of the specific regulation of each co-ownership, regardless of the specifics of co-ownership.

    5.4 Rights and Duties of Condominium Associations

    The association of the condominium performs the tasks defined in the contract entered into between the co-owners or in the agreement with the board, depending on the chosen form of administration. According to Law No. 10 112 For the administration of co-ownership in residential buildings, there are two forms of condominium administration which consist of the administration through a condominium association or an administrator (physical person) who may be one of the co-owners or an outsourced person/entity. Whichever form is chosen for the condominium administration, shall be registered in the Administrators Book (Register) at the municipality, under which jurisdiction the individual/association exercises this activity.

    Condominium associations, in addition to the administration service, can cover with their activity also maintenance services, if they have the necessary qualification for specific maintenance activities, such as maintenance of elevators, restoration or reconstruction of facades or interiors, and any other type of activity, which requires special qualification, in a certain field. As mentioned above in Section 5.2., the assembly of co-owners approves the criteria and costs of administration, the administration fee, as well as the manner and time of its payment for each co-owner, which will finance the administration activity.

    6 Commercial Leases

    6.1 Form and Contents of a Lease Agreement

    The Civil Code provides that the lease agreements concluded for a period of more than one year must be in written form. In this case, the written form is mandatory only for probatory purposes (ad probationen), this means that the lease agreement is valid but it cannot be proved in the court through witnesses or any other means. According to Article 197 of the Civil Code, the lease agreements used for renting real estate for a period of over nine years must be mandatorily executed in front of a public notary and registered with the State Cadaster Agency.

    The Albanian jurisdiction does not make major distinctions between the properties leased for commercial reasons and the ones leased for other purposes i.e., living purposes, except for the duration, which can be of a maximum of 5 years in case of a residential lease, and up to 30 years in case of commercial lease. In any case, the legislator leaves it to the discretion of the parties to freely insert provisions in the lease agreement that might be necessary for the lease of commercial real estate.

    The usual content of a lease agreement in Albania includes inter alia the description of the leased property, the term of validity, the lease reason, the modalities and purpose of exploitation of the real estate, the rights and obligations of the parties, termination clause, dispute resolution mechanism, etc.

    A recent trend in the commercial lease of immovable properties relates to the possibility of having the lease price connected with the performance of the commercial activity. In this case, the parties agree to a base lease price, which is afterward variable based on the performance of the commercial activity. This allows for modulation of the lease price based on the fluctuation of the performance of the commercial activity.

    6.2 Regulation of Leases

    As a matter of principle, the rules for lease do not substantially differ according to the type of property, however, there is a certain categorization in the Civil Code that makes a distinction between the real estate used for agricultural purposes and other real estate used for different purpose, such as residential purpose and/or commercial purpose. 

    On the other hand, there are few mandatory provisions in a commercial lease that cannot be contractually excluded. One of these cases relates to the maximum duration of the commercial lease which cannot exceed 30 years. In this case, should the parties agree on a different and longer lease duration, such provision will be considered ineffective, and the maximum duration of the lease shall be in any case the maximum duration provided by the Civil Code.

    6.3 Registration of Leases

    Pursuant to Article 197 of the Civil Code, all the lease agreements for real estate properties, entered into for a period of more than nine years must be registered in the State Cadaster Agency. The latter registers documents (in this case the Lease Agreement) only in notarial form, which means that it is mandatory to be executed in front of a public notary in Albania. This registration is performed in the relevant section of the real estate register, according to the provisions of Law no. 111/2018 On the Cadaster.

    It is important to note that, such registration is a mere condition of publicity of the lease agreement and not a requirement for its validity. The lease agreement will be in any case valid, but its registration is required for its opposition to third parties that may acquire in the meantime the leased property. 

    6.4 Termination of Leases and Renewals

    The lease agreement may contain a specific term of validity, or the parties may not stipulate any term at all. The lease agreement with a determined term, automatically terminates at the end of the expiration period, without the need that any of the parties notify in advance the counterparty of their intent for termination. On the other hand, the lease agreement which does not contain a validity term can be terminated at any moment by one of the parties. In any case, the lease agreement cannot have a longer duration than five years for the residential lease and 30 years for the commercial lease. If the parties have not provided for a lease term, the lease agreement is considered concluded for the duration of the legal term.

    One of the main obligations of a lessor in a lease agreement is to ensure the free and quiet enjoyment of the immovable property to the lessee, and the latter can terminate the lease agreement in case such enjoyment has not occurred. On the other hand, the major obligation of a lessee in a lease agreement is to pay the lease price and not intentionally damage the immovable property, and the lessor can terminate the lease agreement in case the lessee does not fulfill such obligations.

    In addition to the Civil Code’s chapter which specifically regulates the lease agreement, the general termination provisions which apply to all the contracts are also applicable to the lease agreement. More specifically, in these general provisions is stipulated that when one of the contracting parties fails to fulfill its contractual obligations, the other contracting party, may either request the fulfillment of the obligation, or the termination of the contract, in addition to the claims for compensation. The contracting party may notify in writing the other party that has failed to fulfill the obligation, asking for its fulfillment within an appropriate period, stating that, if after this period the breach is not remedied, the lease agreement will be considered terminated.

    Regarding the renewal of the lease agreement, the Civil Code provides for an automatic legal renewal option, in case after the expiration of the lease term, the lessee is allowed to use the leased property without any objections from the lessor. The automatically renewed lease agreement is regulated under the same terms and conditions as the previous one, but its duration is set as for fixed-term leases.

    6.5 Rent Regulations and Rent Reviews

    The Civil Code, in the framework of rent regulations and reviews, focuses on the object of the lease, its handing over to the lessee and vice versa at the end of the lease agreement, maintenance, and the behavior of the parties regarding their rights and obligations in connection with the leased property.

    Pursuant to such principles the lessor must:

    1. deliver the item to the lessee on time and in a position to allow the usage for which the parties have agreed in the contract;

    2. maintain and keep the leased property in the same condition;

    3. guarantee peaceful enjoyment during the rental period;

    While the lessee has the following rights and obligations:

    1. receive and use the leased property for the purpose provided in the contract and in the case, this is not specifically regulated, use it in accordance with the nature of the leased property;

    2. effectuate the lease the payment on time;

    3. is liable for the loss and damage of the leased property which might occur during the lease term of the lease;

    4. hand over the leased property to the lessor in the same condition that was handed over to him/her and in accordance with the description made by the parties in the lease agreement, except for damages deriving from wear and tear.

    6.6 Services To Be Provided Together With the Lease

    In our jurisdiction, there is no specific regulation on the services rendered together with the lease. On the other hand, the legislator leaves it to the discretion of the parties to insert any provisions in the lease agreement as they deem fit and/or necessary for the regulation of their commercial relationship.

    6.7 Fit-Out Works and Their Regulation

    The Civil Code regulates the relationship between the lessee and the lessor in the cases when the leased property needs fit-out works in order to adapt it to the requirements of the lessee or there is a need for maintenance during the lease term.

    When the leased property needs repairs which could be classified as usual maintenance, such expenses must be covered by the lessee. In the cases when the repairs are substantial, the lessee is obliged to notify the lessor.

    In the cases of urgent repairs, the lessee can perform the investment directly and such costs are borne by the lessor, the latter is immediately notified. On the other hand, the lessee should collaborate with the lessor in the cases of necessary urgent repairs. If the leased property is not repaired within a reasonable time by the lessor, the lessee is entitled to a proportional reduction of the rent.

    Further, Article 816 of the Civil Code stipulates that the lessee should not be compensated for the improvement (fit-out works) of the leased property unless this is specifically performed with the consent of the lessor. In this scenario, the lessor is obliged to compensate the lessee with whichever is less, the investment value or the value of the useful result (i.e., in the case such investment can be exploited by the lessor), at the handing over moment.

    The lessee who has made additions to the leased property has the right to remove them at the end of the lease, when this is possible without damaging the leased property, except when the lessor agrees to keep the additions himself. In this case, he must pay the lessee compensation equal to the minimum amount between the costs and the value of the surcharges at the handing over time.

    Regarding the tax implications of investments made by the lessee, there are no specific provisions that regulate this matter; however, such expenses are usually recognized as deductible expenses by the tax authorities.

    6.8 Transfer of Leases and Leased Assets

    The transfer of leases and leased assets is allowed in Albanian jurisdiction through a sublease agreement or when the ownership of the leased property is transferred to a third party.

    Except otherwise agreed in the lease agreement, the lessee has the right to sublease the property, but cannot assign the contract to a third party without obtaining first the written consent of the lessor.

    In the case of assignment of the lease agreement the lessor is entitled to initiate legal action claiming the payment of the rent from the lessee also from the sublessee and to oblige the sublessee to fulfill any pending other obligations arising from the sublease agreement.

    The contractual provisions regulating the annulment of the lease agreement or its termination, apply also to the sublessee, and the decision was taken between the lessor and the lessee also applies to him.

    When the leased asset is acquired by a third party, the lease agreement continues to be in force and the buyer has the obligation to observe its provisions in the case the lease agreement is entered into before the sale of the property.

    7 Zoning and Planning

    7.1 How Are Use, Planning, and Zoning Restrictions on Real Estate Regulated?

    The Albanian system does not provide proper usage restrictions on real estate. There are no usage restrictions of individual properties legally enforceable. There is only the possibility to assign a certain destination to the common areas of a condominium, which can be enforced also on third-party buyers of an individual immovable property. However, such restrictions are not commonly used in practice.

    On the other hand, the Albanian system does regulate zoning and planning. Such regulation is mainly contained in Law No. 107/2014, On Territorial Planning, and the regulation issued in its execution, mainly CMD No. 408/2015, The Regulation on Territorial Planning. Such a set of legislation provides the possibility of different zoning of the territory of the Republic of Albania, providing distinct rules and regulations on the development of real estate, depending on the type of development, i.e., tourism, economic zones, arkeological areas, etc. 

    With reference to commercial and residential developments, the most relevant type of zoning refers to the General Local Zoning, which provides in general the type of development to which a specific area shall undergo, i.e., residential, commercial, or mixed, and the intensity to which a specific territory shall be developed.

    In accordance with the General Local Zoning, the Detailed Local Zoning, provides in detail the development conditions of a specific area of the General Local Zoning, providing for example, distances between constructions, their height, the provision of recreational areas, public roads, etc.

    In conformity with the Detailed Local Zoning of a specific area, the specific planning documentation for specific developments provides the specific details of the construction and other environmental and structural details of each building.

    7.2 Can a Planning/Zoning Decision Be Appealed?

    A planning/zoning decision can be appealed before the competent administrative authority/court in case it is in contradiction with the rules and regulations of territorial planning and violates the rights and legal interests of the real estate owner.

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    Editor’s Note: After this article was published, CEE Legal Matters learned that Njord, working with Herbert Smith Freehils, reportedly advised Sumitomo.

  • Changes in Hungary’s Regulation of Solar Power Plants

    A new proposal could eliminate the requirement for remote control regulation in solar power plants with a capacity of less than 5 megawatts (MW).

    The automatic Frequency Restoration Reserve (aFRR) accreditation system was introduced in Hungary in 2022, requiring weather-dependent energy producers to have automatic balancing energy regulation capabilities. The Hungarian transmission system operator, MAVIR maintains balancing reserves to ensure grid stability in case of imbalance. However, this regulation allows MAVIR to disconnect non-residential solar power systems at any time to maintain the electricity grid’s balance.

    Under the proposed amendment, the obligation to enable remote control regulation would remain only for solar power plants with a capacity exceeding 5 MW, while plants below this threshold would be fully exempt. This change would affect the range of obligated entities, including solar power investors and operators, as well as companies specializing in aFRR compliance. Furthermore, its impact would be felt across the entire Hungarian electricity grid’s security of supply.

    While balancing costs in Hungary have generally decreased from their peak levels of one or two years ago, they remain high compared to regional benchmarks. From a national economic perspective, it is crucial to keep MAVIR’s balancing costs (the expenses related to maintaining regulatory reserves necessary for grid stability) as low as possible while ensuring that a sufficient number of assets remain controllable.

    Considering these factors, although it is not official yet, independent aggregators are expected to set the aFRR accreditation requirement at 400 kilowatts (kW) instead of MAVIR’s suggested 5 MW. A 400 kW threshold is considered large enough to justify separate accounting, making it a viable business model without causing negative cash flow or significant additional costs. While raising the size threshold to 400 kW would reduce the number of affected power plants, the overall controllable capacity would decrease at a much lower rate. Although market participants largely agree on the need to raise the size limit for remote-controlled regulation, they do not support the proposed increase to 5 MW.

    By Eszter Kamocsay-Berta, Managing Partner, KCG Partners Law Firm

  • Filip & Company and PNSA Advise on Adrem’s Sale of 20% of Shares to ROCA Investments

    Filip & Company has advised the Adrem group on the sale of 20% of the shares in Adrem Energy Solutions to ROCA Investments. Popovici, Nitu & Asociatii advised ROCA Investments.

    According to Filip & Company, the transaction marks a strategic step in strengthening Adrem’s position in the energy services market by facilitating access to additional resources and expertise for future development.

    The Filip & Company team included Partners Alexandru Birsan and Monica Statescu and Senior Associate Andreea Banica.

    The PNSA team included Partner Silviu Stoica, Managing Associates Vlad Ambrozie and Laura Ambrozie, and Senior Associate Vanessa Nistor.