New Law on Mediation in the Sale and Lease of Real Estate – What do they bring?

Important changes regarding mediation in the sale and lease of real estate have come into effect. These changes introduce more order, professionalism, and protection for both clients (citizens and companies) and mediators (agents and agencies). Below, we highlight the most important points:

WHO CAN ENGAGE IN MEDIATION?

Only companies and entrepreneurs registered in the Register of Mediators can engage in mediation. To be registered, they must meet certain requirements:

• Be registered with CRPS with the primary activity of mediation.
• Have at least one employed agent who has passed the professional exam.
• Have an appropriate business premises.
• Have professional liability insurance.
• Founders and agents must not have certain criminal convictions longer than three months in prison.

AGENTS AND PROFESSIONAL EXAM

The professional exam is conducted at the Chamber of Commerce. Candidates must have at least Level IV of the national qualifications framework and reside in Montenegro or have approved residency if they are foreigners. Foreigners must also provide a certificate of language proficiency.

INSURANCE AND BUSINESS PREMISES

Mediators are required to have liability insurance for damages – at least 20,000€ per case, or 60,000€ annually.
The Ministry prescribes the conditions that the business premises must meet.

OBLIGATIONS AND RIGHTS OF MEDIATORS

• Each mediator must display general business terms, both in the office and on the website.
• Records of all contracts and mediation cases must be maintained.
• All advertisements must include the mediator’s registration number.
• Mediators can conclude pre-contracts on behalf of the client (with notary authorization) and receive full or partial payments on that basis.
• Fees are earned only when a contract or pre-contract is concluded, except in special cases prescribed by law.
• Exclusive mediation is possible if specifically agreed upon.
• Mediators can open special escrow accounts in banks for clients’ funds.

OBLIGATIONS AND RIGHTS OF CLIENTS

• The client is not obliged to accept negotiations or conclude a legal transaction with a party found by the mediator – contractual provisions imposing this are void.
• The client may remain anonymous until the transaction is concluded.
• Unless otherwise agreed, a contract with the mediator is considered valid for six months.
• If the contract is terminated before a transaction is concluded, the client is liable only for explicitly agreed-upon costs.

PENALTIES, DEADLINES, AND CONTROL

• Changes in business operations must be reported within 15 days.
• Mediators can be removed from the Register ex officio, based on inspection reports or official findings.
• Subordinate regulations must be adopted within 9 months, and mediators have 12 months to align their operations with the new rules.

WHY ARE THESE CHANGES IMPORTANT?

These amendments aim to:

• Increase citizens’ trust in agencies and agents.
• Introduce stricter controls and professional standards.
• Reduce the risk of fraud and abuse.
• Protect both clients and mediators.

The new framework essentially aligns the real estate market with European standards and enhances the reputation of the mediation profession.