LAW ON LICENSED APPRAISERS ON THE REAL ESTATE VALUE

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1 LAW ON LICENSED APPRAISERS ON THE REAL ESTATE VALUE

2 The National Assembly of the Republic of Serbia passed the new Law on Licensed Appraisers on the Real Estate Value (Official Gazette of the Republic of Serbia, no. 108/2016) (hereinafter: the Law), which came into force on 6 January The implementation of the Law started on 6 June Relevant authorities highlighted compliance with the EU directives, maintenance of financial stability and avoidance of system risks, improvement of fund accessibility, and urgent measures for overcoming difficult situations faced by banks and their clients, as the main reasons for passing this Law. Subject matter The subject Law, inter alia, stipulates for which contracts and procedures the real estate value estimation is mandatory, who and under which conditions may become licensed appraiser, the procedure of licence issuing, education and training of licenced appraisers, accreditation of professional associations and other issues regarding the estimation of the real estate value by licenced appreisors. Implementation The Law stipulates that the residence appraisal is conducted for the following needs: Conclusion of the loan agreements secured with mortgage and conclusion of other business of financial institutions secured with mortgage, Determination of the real estate value in bankruptcy procedure, in line with relevant bankruptcy law, Sale of the real estate in the procedure of extra-judicial settlement, in line with the relevant mortgage law. Conclusion of the agreements in bankruptcy procedure, as well as conclusion of the agreements regarding the real estate sale in the process of extra-judicial settlement, in which the real estate value has not been estimated on behalf of the licenced appraiser, as a consequence have the nullity of the agreement. Unlike the aforementioned agreements, we would like to note that the Law does not envisage the consequence of nullity when it comes to the conclusion of loan agreements secured with mortgage and conclusion of other activities of financial institutions secured with mortgage, in the case the value of the real estate had not been estimated on behalf of licenced appraiser.

3 Also, we would like to highlight the duty of public notaries and other bodies authorized by law for the performance of document verification, to reject to perform asked official duty if the estimation of the real estate value had not been previously performed on behalf of licenced appraiser. Licenced appraisers may perform the estimation of real estate value which is the subject of the enforcement proceeding, or evaluation of the real estate value, as well as data verification from the register of real estate prices in the process of mass estimation of the real estate value in line with law and bylaws which regulate the determination of the market value registered in the real estate cadastre. Licenced appraisers and other authorities Persons authorized for conducting the estimation of the real estate value are licenced appraisers. The Law specifies the conditions for issuing the licence, which is being issued for the period of three years and which may be extended. The Law specifies the exemptions, in terms of certain categories of persons, from the fulfillment of all requirements envisaged for licenced appraisers. Namely, specific requirements are envisaged for the persons who possess valid certificate for performing the activities of the appraiser, issued by internationally acknowledged professional organization for appraisers. Persons with the title of PhD in science held on the date 31 December 2015 and who were registered in the Ministry of Justice s register of expert witnesses of certain profession in line with the provisions of Law on expert witnesses with registered speciality: estimation of the construction value of the object, immovables estimation, real estate value estimation or the estimation of the assets value, may submit a request for licence issuing, by providing specific evidence, within 90 days from the day of the implementation of the Law. In addition, the exemption of the requirements prescribed by this Law also applies to persons who performed the real estate estimation value on 6 January 2017, i.e. the date when this Law came into force, as being the expert witnesses of relevant specialty in accordance with the Law on expert witnesses. Namely, these persons may continue with performing the estimation of real estate value in line with this Law, not later than 18 months from the date when this Law came into force, namely 6 July Upon the expiration of the above mentioned date these persons may continue with the performance of real estate evaluation activities in line with the Law, provided they obtain requested licence. Licenced appraisers are required to enroll one of the accredited associations, as well as to submit the evidence on membership in one of the registered associations to the Ministry of finance. The Ministry is obliged to keep the directory of licenced appraisors and other directories in line with the Law. Besides the Ministry of Finance, certain competencies are prescribed by this Law for the Expert Committee established by the competent ministry, as well as professional associations of appraisors and commission for checking the compliance of licenced appraisers performance etc.

4 Conclusion Taking into consideration the provisions of the new Law, there is an evident intention of the legislator to control this specific area in order to reduce the potential risk which may occur mainly in the credit operations, bankruptcy activities, and extra-judicial settlements. However, as this is the new regulation, only in the future may we expect the effects of the new Law provisions in practice, and possible occurrence of legal loopholes along.

5 CONTACT US Aleksandar Jokić Attorney at Law Mobile Phone Aleksandar graduated from Faculty of Law, University of Belgrade. He has over 5 years of experience in legal consulting and provision of all legal services. Aleksandar has been involved in different projects for clients in Serbia, Bosnia and Herzegovina and Montenegro and has worked on performing different legal due diligence projects and other legal consultancy engagements for various foreign investors. He is experienced in consultancy related to the corporate and labor law issues. Aleksandar has worked on various private equity, bankruptcy and liquidation projects. He has worked mostly for clients in the area of real estate, sports and public enterprises. In Marjanovic Law office Aleksandar is responsible for Real Estate team, and he is also specialized for corporate law, reorganization and liquidation of companies, labor issues, as well as for legal disputes.

6 Filip Kostić Associate Mobile Phone Filip earned his law degree from the Faculty of Law of the University of Belgrade. He has over a year of experience in legal affairs working in corporate sector and legal industry. Before joining Marjanovic Law team, Filip worked for one of the biggest fashion and tourist company in Serbia, where he provided services mostly in the areas of labor and contractual law. Filip s previous professional engagement also includes providing commercial and trade law services, and writing various decisions and agreements.