Selling a property is one of the most important financial decisions in life, so it is crucial to approach it thoughtfully. The process can be demanding and full of legal and administrative hurdles, making it essential to be well-prepared. In this article, we will outline the steps for a successful property sale and offer useful tips to avoid potential complications.
When selling a property, we recommend involving a real estate agent, lawyer, or other legal expert, especially in drafting the contract and completing tax forms. This can reduce risks and ensure a smooth sales process.
1. Checking the Land Registry Status
Before selling a property, it is necessary to check the data recorded in the land registry. The land registry is a public register intended for recording and publicly disclosing ownership information, as well as other rights and legal facts related to real estate. By reviewing the land registry status of the property, any interested buyer who has the identification details of the property can verify the following:
• Whether the seller is the actual owner of the property,
• Whether the property is subject to any encumbrances such as mortgages or easements, or obligations such as preemptive or lease rights,
• Whether there are any legal restrictions on transferring ownership (e.g., prohibition of alienation).
Reviewing the land registry status is important not only to determine the real market value of the property but also for the legal protection of the buyer and safeguarding their interests when purchasing the property. The Land Registry Act (ZZK-1) defines one of the most important principles in real estate transactions, namely the principle of trust in the land registry. This principle states that anyone who acts in good faith and relies on the recorded rights in the land registry should not suffer harmful consequences.
2. Checking Property Permits
Before selling or purchasing a property, it is necessary to verify the existence of a valid building and occupancy permit, the validity of the energy performance certificate, any preemptive rights that could affect the sale, and other relevant factors.
For the sale of land, additional information on land use designation, spatial limitations for construction, and the status of agricultural or otherwise protected land must be obtained. This information can be accessed through the local municipality or the competent administrative unit, or it can be obtained by a lawyer authorized to collect the necessary documents.
Building and Occupancy Permit
When purchasing a property, it is crucial to check whether the building has a valid building and occupancy permit. The building permit confirms that the structure was built in accordance with legal and spatial regulations, while the occupancy permit certifies that the building is suitable for living or use. Both permits are mandatory for new constructions and renovated buildings. If these permits are missing or the buildings were constructed unlawfully, it can lead to serious legal and financial consequences, including administrative procedures or, in extreme cases, the demolition of the structure.
If a building does not have the necessary permits, the owner can initiate the legalization process. This process is handled by a certified architect or civil engineer and begins with submitting an application for legalization. However, legalization is only possible if the building meets certain criteria; otherwise, the process cannot proceed.
According to the Building Act, the owner of a structure must keep documentation related to the building permit, project documentation, and safety certifications of the building. For newer buildings, the building permit can be checked in the spatial information system, while for older ones, inquiries must be directed to the relevant administrative unit. In multi-apartment buildings, this responsibility is typically handled by the property manager.
Although procedures for older buildings (built before 1967) are simplified, purchasing new constructions without valid permits carries significant risks. A property with both a building and an occupancy permit is the safest choice, as it minimizes potential problems with financing, insurance, and property use. This documentation is particularly important if the purchase is financed through a loan, as banks usually require an occupancy permit as a condition for approving the mortgage to protect themselves against potential issues if the buyer defaults on payments. Additional costs may also arise if the buyer intends to renovate the building, as they would first need to obtain an occupancy permit, leading to delays and extra expenses.
3. Advertising and Viewings
Once all necessary documents are prepared, the property can be advertised. It is important to be transparent about the property’s condition and not conceal any defects, as this can lead to legal complications later on.
4. Drafting and Signing the Sales Contract
The most crucial stage in selling a property is signing the sales contract, which formalizes the agreement between the seller and buyer. The key elements of the sales contract include:
• Definition of the subject of sale,
• Purchase price and payment terms,
• Land registry authorization,
• Deadline and conditions for property handover,
• Allocation of costs (taxes, notary fees, etc.).
The sales contract must be legally sound, as errors can lead to delays and financial losses.
5. Payment of Taxes
After signing, the contract must be submitted to the Financial Administration of the Republic of Slovenia (FURS) for tax assessment. The seller is responsible for paying the real estate transaction tax, which amounts to 2% of the sales price, and in some cases, capital gains tax.
Capital gains tax applies if the property is sold within fifteen years of ownership, with the taxable amount depending on the profit made from the sale.
6. Notarial Certification and Property Handover
Once taxes are paid, the seller must have their signature notarized on the sales contract. This step is necessary for transferring ownership rights in the land registry. It is advisable to keep a notarized copy of the contract with a notary, lawyer, or real estate agency until the full purchase price is paid.
The handover of the property is also outlined in the sales contract. Both parties should be aware of the conditions required for the transfer. The handover should be documented with a handover report, which details the exact condition of the property.
7. Registration of Ownership in the Land Registry
For the buyer to become the legal owner of the property, ownership rights must be registered in the land registry. The application for registration can be submitted through a notary, and the land registry court will process the request and execute the registration.
8. Conclusion
Selling a property is a complex process that requires thorough preparation. By taking the right approach and possibly seeking professional assistance, you can ensure that the transaction proceeds smoothly and without unexpected complications.
