05. Jul 2017
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 2016. The implementation of the Law started on 6 June 2017.
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.
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 license issuing, education and training of licensed appraisers, accreditation of professional associations and other issues regarding the estimation of the real estate value by licensed appraisers.
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 licensed 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 licensed appraiser.
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 licensed appraiser.
Licensed 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 cadaster.
Licensed appraisers and other authorities
Persons authorized for conducting the estimation of the real estate value are licensed appraisers.
The Law specifies the conditions for issuing the license, 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 specialty: “estimation of the construction value of the object, immovable estimation, real estate value estimation or the estimation of the assets value”, may submit a request for license 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 2018. 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 license.
Licensed 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 licensed appraisers 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 appraisers and commission for checking the compliance of licensed appraisers’ performance etc.
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.