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Real estate transactions (part I)

Real estate transactions form an essential part of foreign investments in Albania. Just as in other European countries, in Albania the legal process of acquisition of real estate ownership constitutes two steps: the conclusion of a purchase contract and the registration of the purchase contract with the real estate register.

Real property acquisition

According to the Albanian Civil Code, a real estate property purchase contract must be concluded in the form of a notarial deed (the purchase deed).

The purchase deed is a special form of purchase contract executed by the parties before a notary. As a purchase contract, the purchase deed has to stipulate the essential terms, such as the purchase price and a definition of the object being purchased. A certificate issued by the Real Estate Registration Office, certifying that ownership title to the real property is clear as of the date of the transaction, has to be attached to the purchase deed.

The parties determine the real property handover date. Unless otherwise agreed to, the handover takes place immediately upon obtaining the parties' signatures on the purchase deed, and complete payment of the purchase price.

Regarding the right to acquire real property in Albania as part of an investment, foreigners intending to invest are permitted to acquire construction land if the value of their investment on the land triples the value of that land. Furthermore, this investment will be subject to prior approval.

Necessary permits

In Albania, there is no special land transfer authority exclusively responsible for issues regarding land transfers. In certain cases, the acquisition of real property in Albania requires the approval of competent state administration bodies. In particular, according to Law 7980 On the Acquisition of Construction Land, foreigners intending to purchase construction land in Albania are only allowed to do so upon prior approval.

However, because the Construction Land Acquisition Law states that Albanian persons may freely acquire land for construction without any prior authorization, it can be inferred that, if a foreign investor operates through an Albanian legal entity (that is, a company established and existing under Albanian law, such as a subsidiary), the acquisition of construction land would not be subject to prior approval. This interpretation has also been supported in practice.

If prior approval is required, the application should be filed directly with the respective competent state administration body, which must grant its approval if the investment:

  • represents an investment with an economic interest;
  • triples the value of the land, as certified by the competent authority;
  • is carried out in compliance with the relevant building permit.

After the competent authority has granted its approval, the parties can enter into the relevant purchase deed.

The real estate register

The registration of real estate is regulated by Law 7843 on registration of real estate.

The competent authority for registering real estate is the Real Estate Registration Office, a separate authority subordinate to the Council of Ministers, and established on the basis of the Real Estate Registration Law.

The Real Estate Registration Office consists of departments responsible for:

  • real estate registers, in which tables of public and private real estate ownership are stored;
  • maps of real property situated in an administrative area;
  • filed contracts on ownership transfers, tribunal decisions, mortgage deeds, inheritance deeds, registration indices, and other legal acts affecting rights to real estate.

Upon payment of a fee, any information contained in the real estate registers will be available to any interested person who requires it. The information that is available to the public is only general information concerning the title and location of the property. All documents affecting ownership rights (sole ownership or co-ownership) are the legal basis for registering relevant rights and must be entered into the Real Estate Register.

Until 1992, real property in Albania was completely state-owned and it is only since 1994 that private real properties have been registered in the real estate register. Therefore, in Albania, there are still some properties that have not yet been registered.

Claim on reliability of registry information

Pursuant the Real Estate Registration Law, any interested party may file a claim for indemnification with the immovable property registration office in relation to any damage caused from receiving incorrect information on any property registered with this office.

Enyal Shuke and Sven Hollmann

This briefing is the first in a two-part series. Part II will appear in the October edition of IFLR

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