Montenegro's Property Legalisation Law 2026: Why January's Amendments Matter

When Montenegro's government submitted urgent amendments to the property legalisation law on 20th January 2026, it wasn't an academic exercise in legislative refinement. It was a direct response to what's been happening in Montenegro's real estate market since August 2025: deals stuck, notaries refusing transactions, and property owners—many with perfectly good buildings—unable to sell.

The amendments, now working through parliament under urgent procedure, propose introducing flexibility where the original framework created gridlock for those with properties requiring legalisation.

Why Montenegro's 2025 Legalisation Law Created Market Issues

The Law on Legalisation of Illegal Buildings entered force on 14th August 2025, giving property owners six months to initiate cadastral registration of unauthorised construction. The Real Estate Administration (Uprava za nekretnine) published clear instructions in September: buildings not visible on July 2025 satellite imagery cannot be registered, and submissions after the six-month deadline will be refused.

But the real market impact came from Article 33's restrictions on property transactions. Article 33 of the current law treats buildings without legalisation status as non-transferable, which in practice has led many notaries to proceed cautiously or refuse transfers where legalisation-related annotations appear in the Montenegro cadastre. Ministry guidance and the law's wording have reinforced a strict reading of transaction restrictions for unauthorised buildings.

This affected far more properties than purely illegal construction. A significant category caught in the restrictions: buildings constructed correctly according to valid building permits but never issued their final upotrebna dozvola (usage/occupancy permit). These aren't rogue developments. They're properties that followed the rules through construction but never completed the final administrative step—often because it wasn't deemed necessary at the time, or because developers moved on before commissioning was complete.

The result was a market pause affecting a specific segment of Montenegro real estate. NT Realty had a strong 2025, so for us these restrictions didn't affect the market and properties with clean documentation actually benefited as buyers gravitated towards certainty. But for owners of buildings with legalisation annotations—including quality properties built correctly but administratively incomplete—the situation created genuine obstacles.

Montenegro's 2026 Legalisation Amendments: Key Proposed Changes

The government's draft amendments address the market blockages systematically.

Extended timeline: The draft amendments propose extending the six-month window to twelve months, which—if adopted—would shift the practical cut-off from mid-February 2026 to around mid-August 2026.

Transaction flexibility: The draft explicitly lists certain legal actions—such as leases, mortgages and inheritance—as potentially permitted despite legalisation annotations, subject to conditions.

The proposed leasing provision matters significantly for owners. A gorgeous, fully furnished apartment built five years ago and until recently occupied by long-term tenants in Tivat could continue generating income whilst the process continues—important for those who depend on that revenue and for buyers considering quality buildings suitable for business use.

The usage permit provision: Perhaps most importantly for coastal property markets, the draft amendments introduce a potential pathway to sell buildings carrying "no usage permit" annotations, provided the building was constructed in accordance with a valid building permit. The Ministry would still need to define the verification procedure.

This wouldn't legalise non-permitted buildings. It would help properties that are essentially built correctly but stuck because the final commissioning step wasn't completed. For owners of such properties—and for those considering Montenegro property who've walked away from otherwise sound purchases because of these annotations—this could represent meaningful change.

Alternative proof for satellite imagery gaps: The draft amendments propose allowing owners to prove existence through surveys, expert reports and supporting evidence where July 2025 imagery is inconclusive. This would address real buildings that don't photograph clearly due to tree cover or image quality—though this affects far fewer properties than the usage permit issue, particularly on the coast.

Technical requirement reductions: The government's proposal would remove certain geodetic documentation requirements about distances from neighbouring parcel boundaries and regulation lines. Where neighbour consent has created insurmountable obstacles for decades-old buildings, the path forward may become clearer, subject to implementation.

Context: EU Alignment and Montenegro Property Law Reform

Montenegro's property legalisation isn't happening in isolation. It's part of the country's alignment with European Union standards as accession negotiations progress towards a stated 2028 target. The framework needed updating regardless of immediate market pressures.

The previous legalisation attempt in 2017 processed barely 5.5% of applications—just over 3,200 decisions from more than 60,000 submissions. Maša and I succeeded in legalising a house of ours in Luštica through that framework. The building had been constructed within regulations, but the process was arduous. Requirements evolved during implementation—structural reports, architectural documentation, additional surveys that weren't clear (or thought of) at the outset. Many owners failed, thinking application for legalisation was all that was needed, but it was just the beginning.

The 2025 law attempted to fix this with clearer criteria and streamlined procedures. But in tightening the framework, it created new problems—particularly the transaction restrictions. The January 2026 draft amendments represent the government recognising that rigidity created unintended consequences and that flexibility is needed whilst maintaining core objectives.

For Property Owners Facing Legalisation: Act Now

If you own property requiring legalisation, the proposed amendments don't change your immediate obligations. Don't wait for legislative clarity—starting the cadastre registration process now avoids the risk of missing deadlines regardless of which version passes. Geodetic surveys require scheduling with limited licensed organisations, and technical documentation takes time to prepare. Waiting until summer 2026—even if deadline extensions are adopted—risks getting caught in the last-minute surge when surveyors are overbooked and municipal queues stretch for weeks.

For properties built correctly but lacking usage permits, the draft amendments propose a route to market that doesn't currently exist. The Ministry would still need to prescribe the verification procedure, but the principle may be embedded in the framework once adopted and applied in practice. For current transactions, notaries remain bound by existing law until amendments are formally adopted and enter force.

These proposed amendments signal something more significant than legislative housekeeping. The government has acknowledged the difference between genuinely problematic unauthorised construction and properties caught by administrative technicalities—and is proposing pathways for the latter whilst maintaining enforcement for the former. For property owners with usage permit issues, leasing could become viable once adopted. For those considering sales, the Ministry's proposed verification procedure may open possibilities that are closed under the current framework.

Montenegro's property market is maturing from frontier conditions towards systems compatible with European integration. The journey requires course corrections like these proposed amendments, but the direction remains consistent: transparency, proper documentation, and market function that serves both property rights and public interest. The January 2026 amendments demonstrate that the government will adapt when necessary—precisely the pragmatism needed to make the legalisation framework work in practice, not just in principle.

Peter Flynn moved to Montenegro in 2005 and began working in the country's property market as a private speculator. He established New Territory DOO in 2006 to formalise his operations after the country gained independence. With two decades of experience guiding international buyers through Montenegro's property market and residency processes, he specialises in the Tivat and Bay of Kotor area. Working alongside business partner Maša Flynn, NT Realty (which takes its name from the New Territory holding company) has helped hundreds of buyers from the US, UK, Australia, and beyond navigate Montenegro's evolving legal and regulatory landscape. Peter maintains close working relationships with local lawyers, notaries, and government officials, providing clients with current, practical guidance rooted in on-the-ground experience.