Will it be possible to take out a mortgage on real estate registered under the new law on legalization?

According to banking practice and laws in Serbia, only legalized real estate (apartment or house) can be used as collateral for a mortgage loan.

However, since the new “Law on Special Conditions for Recording and Registration of Rights to Real Estate” is not a classic legalization of a property, the question arises whether citizens could face obstacles when taking out a mortgage on such real estate.

Let us remind that the new Law only requires the registration of the ownership right, or the owner, in the cadaster, while legalization means that the property has both a building permit and a use permit.

The sources of the Danas daily say that it will theoretically be possible for a bank to register a mortgage on real estate that does not have a building permit and a use permit and for citizens to receive a loan, but they point out that this poses a risk for the bank and that it will very likely reject such cases.

They point out that each bank assesses the risk of the property before approving the mortgage, and that in this case, too, the decision will be up to each bank individually, emphasizing that they will probably, in these cases, require additional collateral.

On the other hand, the National Bank of Serbia (NBS) expects that the properties that are registered in the legalization process will enter the market offer, as well as that banks will accept them as collateral.

This was stated last week by Zeljko Jovic, Vice Governor of the NBS, who said that those properties would meet the criteria to be collateral for bank loans. However, the NBS also expects that there will be “uncertainty.”

– If there is uncertainty, we are ready to talk with banks to define the method of accepting this collateral, in order to protect both banks and clients who take out these loans – said Jovic at the presentation of the Inflation Report.

Narodna banka Srbije Beograd

BBA-Beogradska Bankarska Akademija

Željko Jović

Vladimir Vasić

Zoran Grubišić

mortgage

mortgage registration

legalization