The real estate trade in Montenegro is accompanied by a large number of irregularities and problems because there is no special law regulating that area nor who can engage in this business and under what conditions, which is why intermediaries work according to different standards, which creates difficulties for citizens and buyers.
Due to the high participation of the gray economy in this area, the state loses a significant part of money from undeclared commissions, which are mostly in cash and outside the account, which calls into question the control of money flows and taxation.
This is stated, among other things, in the Impact Assessment Analysis Report (RIA) of the proposal of the Law on Intermediation in Traffic and Real Estate Leasing, which the Ministry of Economic Development (MERT) put up for public discussion until the end of this month.
According to the documents, the most important innovation in the proposed law is the creation of a register of those engaged in real estate transactions and the introduction of a mandatory professional exam for intermediaries.
As it is written in the proposal of the Law, a citizen who takes a professional exam must have a place of residence in the territory of Montenegro and at least IV level of qualifications, i.e. secondary or professional education. Taking the exam would be organized once every six months, and it would consist of an oral and a written part, while agents who have not passed that exam would be prohibited from engaging in brokerage work.
"Professional examination ensures that real estate agents or agencies have the appropriate minimum knowledge in the field of the Law on Property-Legal Relations, planning and construction of buildings, state survey and cadastre, notaries, real estate sales tax and other regulations," the Report states.
In addition, the goal is that all interested parties can work under equal conditions, including foreign nationals, who are increasingly on the market and do not know Montenegrin laws enough.
In addition, those who are not registered in the Register of Intermediaries would not be able to deal with real estate transactions. Among the conditions for registration, it is stated that registration in the Central Register of Business Entities and evidence that the intermediary is registered for real estate agency activities, that he has passed a professional exam, suitable business premises and a valid liability insurance contract are required. This would, as it says, register those who meet the requirements for engaging in this business and protect the public, while free and easy access would be provided through the online register.
The plan is to reduce the gray economy and poor service
The key problems that the bill should remove are the high participation of the shadow economy in real estate transactions, poor quality service, lack of liability insurance and professional training for intermediaries, as well as the fact that they currently do not have to present complete documentation for real estate.
In addition, the Report states that the goal is to solve the fact that mediation contracts are rarely concluded in practice, that they do not have all the elements, obligations and responsibilities and that commissions are often not paid through an account but in cash, which calls into question the control of flows money and taxation, with a lack of government data on transactions.
"On such an unregulated market, a large number of buyers are at risk due to the lack of complete information about real estate that is in circulation, as well as the lack of personal responsibility if the sales contract is not implemented," the document states.
According to the Report, registered companies and legal entities are threatened by unfair competition and unregistered ones who have no responsibility for omissions during traffic. It is stated that it is necessary to regulate the market because mediation is often carried out by persons without a license or registration, which causes the state to lose serious income from undeclared commissions, and that the passing of laws is also crucial for abolishing or reducing the gray economy, raising the quality of service and improving the framework for detecting and combating money laundering. money.
Penalties
The application of these regulations will not create costs for citizens and the economy, and there will be no administrative burdens or business barriers, the report says.
"Since the implementation of the regulations does not require the provision of financial resources from the budget, the adoption of by-laws from which financial obligations will arise is not foreseen. The implementation of the regulations will not create revenue in the budget," the document explained.
Additionally, it is emphasized that no external expertise was used for the drafting of the Law, but also that businessmen indicated that it is necessary to create a register, use contracts for cooperation and insurance against financial damage caused by professional omissions or mistakes. According to the document, there are no obstacles to the introduction of regulations, while MERT and the Directorate for Inspection Affairs will be in charge of monitoring and evaluating the application of the law.
The fine for citizens who work and are not registered in the Register or who have not passed a professional exam will be from one thousand to four thousand euros.
Additionally, the draft law states that for the same offense, legal entities will pay from 40 to 12 thousand euros, while entrepreneurs will have to pay from XNUMX to XNUMX thousand euros.
In addition to the fine, for working without registration in the Register, a legal entity, entrepreneur or natural person may be banned from intermediation in real estate transactions for a period of 30 days to six months, as well as the measure of public publication of the decision.
Intermediation is often carried out by persons without a license or registration, which causes the state to lose serious income from undeclared commissions, so the adoption of the law is crucial for abolishing or reducing the gray economy, raising the quality of the service and improving the framework for detecting and combating money laundering.
Damage insurance and agency agreement
The traffic broker must have an insurance contract with the insurance company against liability for damage that he could cause to the client or third parties during the course of the work.
"For damage that the intermediary could cause, the lowest insured sum cannot be less than 20 thousand euros per one harmful event, or 60 thousand euros for all compensation claims in one year of insurance," the document says.
In addition, the introduction of a contract on mediation in traffic is foreseen, in which the mediator undertakes to look for a person in order to negotiate and conclude a deal on real estate, and the principal to pay him a fee if the deal is concluded.
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