It is usually put to you late, and casually. The price is agreed, the notary appointment is booked, and the seller — or the agent carrying the message — suggests that the deed record a lower figure, with the difference handed over separately. The reason given is tax. The tone is that this is how things are done here, and that objecting marks you as difficult.
Whether it is common is not the useful question. The useful question is what the arrangement does to the document you are about to sign, and to your position afterwards. In Montenegro the answer is specific, and it is worse for the buyer than for the seller.
The deed is not a formality you can shape around
Two provisions decide the form of a Montenegrin property sale, and they work together.
Under Article 61 of the Law on Obligations (Official Gazette of Montenegro 47/2008, 4/2011, 22/2017 and 123/2024), a contract transferring ownership of immovable property, or establishing another real right over it, must be concluded in written form and certified in accordance with the regulations.
Article 52 of the Law on Notaries then names which transactions must take the form of a notarial record. Paragraph 1 point 6 covers legal transactions whose subject is the transfer or acquisition of ownership or other real rights over immovable property. Paragraph 3 states the consequence: transactions falling under that article which are not drawn up in the form of a notarial record produce no legal effect.
That is the frame. The notarial deed is not the paperwork that follows your agreement — for a property transfer in Montenegro, it is the only version of your agreement that the legal system will look at.
What a two-price arrangement is, in law
The arrangement produces two agreements: a written one at the declared figure, and an unwritten one at the real figure. Montenegrin law has a name for that structure.
Article 59 of the Law on Obligations governs the sham contract (prividan ugovor), in three short paragraphs that decide the whole question:
- A sham contract has no effect between the contracting parties.
- If a sham contract conceals another contract, that other contract is valid if the conditions for its legal validity are met.
- The sham nature of a contract cannot be raised against a third party acting in good faith.
Read those in order against a property sale. The declared-price deed is the sham, and under paragraph 1 it has no effect between you and the seller. Paragraph 2 then asks whether the concealed contract — the real price — is valid. For that, it must meet the conditions for its own validity, and the condition that matters here is form: a transfer of ownership of immovable property must be in a notarial record, or under Article 52(3) it produces no legal effect. The concealed agreement was never put in that form. That is the point of it.
So the structure does not give you a valid contract at the real price. It gives you a deed the law disregards between the parties, and a real agreement that cannot meet the form the law requires of it.
Paragraph 3 is worth reading twice, because it is often mistaken for protection. It shields a good-faith third party — a later buyer, a lender, a creditor — from having the sham raised against them. It does not shield either party from the other. Between you and the seller, the arrangement is fully available as an argument, and the person who benefits from raising it is whoever holds the money.
The argument a buyer would try, and why it is not a plan
There is a provision that buyers reach for once the problem is explained to them. Article 68 of the Law on Obligations provides that a contract requiring written form is treated as valid even though it was not concluded in that form, where the parties have performed the obligations arising from it in whole or in substantial part — unless the purpose for which the form was prescribed clearly requires otherwise.
You paid. The seller handed over the property. On its face, that is substantial performance.
The difficulty is the closing clause. The notarial form for property transfers is not prescribed for the convenience of the parties; it exists so that dealings in land are recorded, verified and registrable, which is why Article 52(3) attaches loss of legal effect rather than some lesser consequence. An argument that performance cures the absence of that form has to overcome the reason the form was imposed. It may be worth running when there is nothing else left. It is not something to build a purchase on, and no one can tell you in advance how a court will resolve it on your documents.
That is the honest position, and it is the reason this page does not offer a workaround. There is no drafting that makes the arrangement safe for the buyer.
The tax assumption is also wrong
The whole proposal rests on the belief that the declared figure sets the tax. Under the Law on Real Estate Transfer Tax (Official Gazette of Montenegro 36/2013, with later amendments) it does not.
Article 9(1) sets the tax base as the market value of the property at the moment of acquisition, and Article 9(2) defines market value as the price achieved, or achievable, on the market at that moment. Article 9(3) provides that this value is established on the basis of the acquisition documents — which is where the declared figure enters, and it enters as evidence, not as the answer.
Article 9(4) and 9(5) go further, and they are the paragraphs that dissolve the plan. Where property is acquired for consideration, the base is the total amount of the consideration paid or given for the transfer. That total expressly includes payment in money, in goods, in services, in assumed debts of the former owner, the cession of other property or rights, or any other giving or payment made by the acquirer or by another person for the acquirer in order to acquire the property. The cash handed over on the side is not outside the base. It is named inside it.
And Article 10 supplies the mechanism. Where the price in the acquisition document is lower than the market price, or is not stated at all, the tax authority determines market value by assessment, at market prices at the time the tax liability arose. Article 10(2) has an authorised officer make that assessment from comparable data on similar property in the same area at the same time; Article 10(3) refers the case to a licensed appraiser appointed by the authority where comparables are unavailable.
The declared price does not bind the authority. It only records, in a signed instrument, that the parties stated a figure the authority may find to be below market.
What each party is actually holding
| Stage | What the buyer is told | What the law does | Who carries it |
|---|---|---|---|
| Signature | The deed figure is a formality; the real deal is understood | The deed is the only transfer with legal effect (Notaries Act Art. 52(1)(6), 52(3)) | Buyer |
| The side payment | Paid in cash, outside the deed | No document of legal effect records it; the concealed contract lacks the required form (Obligations Act Art. 59(2)) | Buyer |
| Tax | The lower figure sets the tax | Base is total consideration including any other payment for the acquirer (Transfer Tax Act Art. 9(4), 9(5)); authority may assess (Art. 10) | Both, on assessment |
| Registration | Title is registered, so the matter is closed | The register records the transaction as documented; the deed is the acquisition instrument | Buyer |
| If the deal unwinds | The real price would be recognised | Between the parties the sham has no effect; restitution is argued from documents that state less | Buyer |
The asymmetry is the point. The seller receives money and gives up the property either way. The buyer receives a document that understates what they paid and then relies on that document for everything that follows — registration, any later claim against the seller, and the evidence of acquisition cost if the property is sold on. When a purchase is later unwound, or a dispute arises about what was owed, the buyer's claim is measured against the file, and the file is the one the buyer agreed to make incomplete.
The related exposures people do not price in
The side payment has to physically happen, which raises its own questions about how funds are moved and recorded — our note on paying for property in Montenegro and the AML checks covers the reporting side of transfers.
There is also the question of who is proposing it. A seller has an interest in the arrangement; so, in a different way, does an intermediary whose fee closes with the sale. We set out where those interests sit in buying property in Montenegro without an agent, and what a notary does and does not check for you in what the notary checks on a Montenegrin property purchase. Under Article 51 of the Law on Notaries the record includes a declaration that the participants understood the content of the transaction and agree with the record the notary drew up. That declaration is about comprehension of the document, not endorsement of the price behind it.
What to do when it is proposed
Say no, in writing, and keep the exchange. A refusal recorded in correspondence is useful later; a refusal given only in a meeting is not.
Then read the rest of the file, because the proposal rarely arrives alone. Check that the deed figure matches every other document in the transaction — the preliminary contract and any deposit already paid (what a deposit does in Montenegro), the payment instructions, and the tax filing. Check the register entry against the contract before signature, using a current extract (how to read a Montenegrin title extract). And if the transfer tax treatment is what is actually worrying the seller, that is a question with a documented answer: see our Montenegro property transfer tax and VAT guide.
If the seller will not proceed at the real price on the deed, that is information about the transaction, and it belongs in your decision rather than in a side agreement. The wider question of what makes a Montenegrin purchase sound is treated in is it safe to buy property in Montenegro.
Whose side we are on, and how we are paid
The people around a property transaction are mostly paid by the transaction. An agent's commission depends on the sale closing. A developer's sales team works for the developer. A notary's duty runs to the instrument and to its correctness — not to you as against the other party, and in a bilateral transaction the notary is not anyone's exclusive representative.
We take no commission from sellers, developers, agents or intermediaries — not in any form and not on any file. Our only income is the fee you pay us, and it does not increase if you sign. Telling you not to proceed costs us nothing.
In practice that means we pull the register entries ourselves rather than accepting what the seller's side forwards, we read the contract against your position rather than against the completion date, we put "this should not proceed" in writing when that is the answer, and where a defect can be cured we tell you how long that takes before your money is committed.
One boundary, and it is not negotiable: we are lawyers, not licensed investment advisers. We do not give personal advice on financial instruments and we do not tell you whether an asset will make money. What we protect is your legal position — title, contract, registration, status, and the deadlines that decide all four. That is independent legal advice, paid by fee rather than by commission, which is what keeps our interest aligned with you rather than with the transaction.
Before you sign anything
If a lower declared price has been proposed to you, send us the draft contract, the preliminary contract and the current register extract before you sign or transfer anything, and we will tell you what the documents commit you to and what the file will prove afterwards. Where a deadline is already running, say so when you write. Our Montenegro property practice reads the register against the contract before either is signed.
Statutory provisions are stated as at September 2026. The Law on Real Estate Transfer Tax has been amended since its 2013 text and rates in particular have changed; the tax base and assessment provisions cited above are structural, but confirm the chain as it stands on the day you rely on it. This page is general information on a statutory regime, not advice on a specific transaction.
