You’ve found the apartment you want. You’ve agreed on a price. Now comes the moment that many treat as a formality — but which is actually one of the riskiest steps in the entire property buying process: signing the preliminary contract.
Mistakes made at this stage can cost you tens of thousands of euros or months of legal problems. This guide is here to help you understand what you’re signing — and how to protect yourself.
What Is a Preliminary Contract?
A preliminary contract (or promise to sell) is a legal document by which the seller commits to sell, and the buyer commits to purchase, a specific property — under the terms and within the deadline specified in the contract.
Unlike the final sale and purchase agreement, which is notarized and transfers ownership, the preliminary contract prepares the ground for that act. It:
- Reserves the property for the buyer
- Fixes the price and conditions
- Defines the deadline by which the final contract will be signed
- Regulates what happens if either party backs out
A preliminary contract is not legally required — but in practice, it is nearly inevitable in any serious transaction.
The Deposit: The Core of the Preliminary Contract
A preliminary contract almost always comes with a deposit (kapara) — a sum of money paid by the buyer to the seller as a sign of seriousness and as a legal safeguard.
Under Serbian law, the deposit works as follows:
- If the buyer backs out — the deposit is forfeited (the seller keeps it)
- If the seller backs out — the seller must return twice the deposit to the buyer
This is a statutory provision (Law on Obligations, Art. 79–83) that applies regardless of what the contract says — unless explicitly stated otherwise.
How Large Is a Typical Deposit?
In Serbia, the standard deposit is 5 to 10% of the agreed purchase price. For an apartment priced at €80,000, that means €4,000–€8,000.
What Must a Preliminary Contract Contain?
1. Identification of the Parties
- Full name and ID number (JMBG) for individuals
- Tax ID and company registration number for legal entities
2. Precise Description of the Property
- Cadastral parcel number and land registry extract number
- Address, floor, apartment number
- Square footage according to the project and according to the land registry (these sometimes differ!)
- Everything included with the apartment — parking, storage, basement
3. Agreed Price and Payment Terms
- Total amount in EUR or RSD
- Deposit amount and date of payment
- Remaining balance and payment deadline
- Payment method: cash, bank transfer, mortgage
4. Deadline for Signing the Final Contract
This is critical. The deadline must be realistic — long enough for the bank to approve a loan, for documentation to be checked, for all necessary paperwork to be obtained.
Recommended timeframes:
- Cash purchase: 30 to 45 days
- Mortgage purchase: 60 to 90 days
5. Legal Status of the Property on the Date of Signing
- Is the property free of encumbrances? (no mortgage, enforcement orders, etc.)
- Are there tenants who need to vacate — and by when?
- Are utility bills settled?
6. Consequences of Withdrawal
Clearly stated deposit and its consequences.
7. Who Bears the Costs?
- Real estate transfer tax (2.5% of price) — paid by buyer
- Notary fee — paid by buyer (or split)
- Agency commission — defined in a separate contract
Most Common Mistakes Buyers Make
1. Signing Without Checking the Land Registry
Never sign a preliminary contract without having seen the current land registry extract. It shows who the actual owner is, whether there’s a mortgage, and whether the property is legalized.
The land registry extract is available free of charge online through the RGZ website.
2. Too Tight a Deadline for the Final Contract
Buyers financing with a mortgage must account for bank processing times. A 30-day deadline with a mortgage is almost always too short.
3. Vague Definition of What’s Included With the Apartment
Is the fridge staying? Air conditioning? Built-in appliances? If it’s not in the preliminary contract, there’s no legal obligation for the seller to leave it.
4. Paying the Deposit Without Written Confirmation
The deposit must be paid with a written receipt or directly as part of the preliminary contract signed by both parties. Never give a deposit “on your word” or in cash without documentation.
Should You Have the Contract Notarized?
Notarization is not legally required for a preliminary contract, but it doesn’t hurt — especially for higher-value properties. For properties worth over €30,000–€40,000, notarization is recommended.
Deposit vs. Advance Payment
| Characteristic | Deposit (Kapara) | Advance Payment |
|---|---|---|
| If buyer backs out | Loses the deposit | Gets advance back |
| If seller backs out | Returns double deposit | Returns advance |
| Legal nature | Contract security | Partial price payment |
| Recommended for | Serious transactions | Less certain situations |
In practice in Serbia, it is almost always a deposit — but confirm this explicitly in the contract.
Buying With a Mortgage: Special Challenges
Loan Approval Condition
Consider including a suspensive condition in the preliminary contract: the final contract is only signed if the bank approves the loan by a specific date. If the loan is not approved, the deposit is returned to the buyer — without penalty.
Property Valuation
The bank is not required to approve a loan equal to the agreed price — the appraiser may determine a lower value. In that case, the buyer must cover the difference from personal funds or renegotiate the price.
Developer Property With Construction Mortgage
When buying new construction from a developer, the property often has a mortgage registered in favor of the bank that financed construction. The preliminary contract must precisely regulate the deletion of that mortgage before or simultaneously with the transfer of ownership.
The Agency’s Role in the Preliminary Contract Process
If you’re buying through an agency, the agent should:
- Check property documentation before signing
- Alert you to potential legal issues
- Help formulate the preliminary contract or recommend a lawyer
- Be present at signing and ensure the deposit transfer is properly documented
A good agency protects the client’s interests and never pushes for a signature without proper checks.
Conclusion: The Preliminary Contract Is a Serious Step
Follow these rules:
- Never sign without viewing the land registry extract
- Agree on a realistic deadline
- Secure all important details in writing — what comes with the apartment, its legal status, when it will be vacated
- The deposit must always be in written form
- For higher-value properties or complex situations — engage a lawyer
ENERGY-REA is with you at every step of the process — from the first viewing to the signing of the final contract.
Contact us for a free consultation.
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