Deposit when buying an apartment: how much should you pay and what should you know beforehand?

You have found an apartment, agreed on the price and the seller has accepted your offer. The next step is often the deposit.

This is usually the point at which buying a property stops being just a verbal agreement and becomes a serious transaction. A deposit should therefore not be treated simply as a way of “reserving an apartment”.

Before paying it, you should understand how much you are paying, what legal document the payment is based on, what happens if the transaction is not completed, and whether any specific conditions need to be included in the preliminary agreement.

What is a deposit?

Under Serbian contract law, a deposit — kapara — is an amount given by one party to another as evidence that an agreement has been concluded.

If the transaction is successfully completed, the deposit must either be returned or, as is much more common when purchasing property, counted towards the total purchase price.

For example, suppose an apartment costs €200,000 and the buyer pays a €20,000 deposit.

If the transaction proceeds as agreed, the remaining amount to be paid is €180,000.

What makes the deposit particularly important, however, is not only the amount of money involved but what happens if one of the parties fails to complete the transaction.

How much is usually paid as a deposit?

Serbian law does not prescribe a mandatory percentage of the property's value.

The amount is agreed between the buyer and the seller.

In Serbian real estate practice, around 10% of the purchase price is common, although the amount may be lower or higher depending on the transaction.

For an apartment priced at €150,000, a 10% deposit would therefore amount to €15,000.

However, 10% should not be treated as an automatic rule for every purchase.

The larger the deposit, the larger the potential financial exposure if the transaction does not proceed as planned. The amount should therefore always be considered together with the contractual conditions governing the transaction.

What happens if the buyer does not complete the purchase?

This is often simplified into:

“If the buyer walks away, they lose the deposit.”

The legal position can be more nuanced.

Under the general rules on a deposit, if the party that paid the deposit is responsible for non-performance, the other party may, depending on the circumstances, seek performance of the agreement, damages or retain the deposit.

Serbian law also recognises a deposit combined with a contractual right to withdraw.

Where such a right has expressly been agreed, the party that paid the deposit may withdraw and lose it, while the party that received it may withdraw by returning twice the amount.

This is why simply seeing the word kapara in a document is not enough.

The exact wording of the agreement matters.

What happens if the seller does not complete the sale?

If the seller who received the deposit is responsible for non-performance, Serbian contract law gives the buyer several possible remedies, including, in applicable circumstances, a claim for twice the amount of the deposit.

Where the deposit has been expressly agreed as a withdrawal deposit, the principle is simpler: if the seller exercises the agreed right to withdraw, the seller returns twice the deposit.

The deposit therefore does not exist solely to protect the seller.

It can also protect a buyer against a situation in which the seller accepts an agreement and later decides to sell the property to someone else.

A deposit and an advance payment are not the same thing

This distinction is important.

An advance payment is simply part of the price paid in advance.

A deposit may also ultimately count towards the purchase price, but it can carry specific legal consequences if the agreement is not performed.

It therefore matters whether the document describes the payment as an advance, a deposit, or a deposit combined with a right to withdraw.

More importantly, the actual wording governing the rights and obligations of the parties matters.

When should you pay the deposit?

Paying a deposit should not be the immediate next step after saying:

“I like the apartment.”

Before taking on a significant financial commitment, the buyer should check the basic legal and factual position of the property and the seller.

Among other things, this means establishing:

• who owns the property;
• what is registered in the cadastre;
• whether there are mortgages, notices or other encumbrances;
• whether the registered information corresponds to the actual apartment;
• whether the documents required to complete the sale are available;
• what has been agreed regarding price, deadlines, moving out and handover;
• how the remaining purchase price will be financed.

The principle is simple: verification should come before payment.

Should the deposit be paid under a preliminary agreement?

In practice, deposits are frequently connected with a preliminary sale and purchase agreement.

A preliminary agreement is not simply a piece of paper confirming that money has changed hands. It obliges the parties to subsequently enter into the main agreement.

Serbian contract law also provides that where a particular legal form is required for the main agreement, the same form requirements apply to the preliminary agreement.

Contracts transferring ownership of real estate in Serbia must be executed in the legally prescribed notarial form.

A proper preliminary property agreement should therefore not be confused with an informal document that merely says that an apartment has been “reserved”.

What if you are buying with a mortgage?

This is one of the situations in which the deposit needs particularly careful consideration.

A buyer may expect to qualify for a mortgage, but the bank may later decline the application or determine that the particular property is not eligible for financing.

The question then becomes:

What happens to the deposit?

Do not assume that it will automatically be returned simply because the bank did not approve the mortgage.

For this reason, preliminary agreements for mortgage-financed purchases can specifically regulate what happens if financing is declined. Depending on what the parties agree, this may involve a full refund, retention of part of the amount or another arrangement.

If your purchase depends on bank financing, this issue should be resolved before you pay the deposit, not after the loan has been rejected.

A deposit is not the same as your mortgage down payment

The two concepts often appear in the same transaction, but they are not identical.

The deposit regulates the contractual relationship between the buyer and seller.

The mortgage down payment or equity contribution refers to the portion of the purchase price that the buyer finances from their own funds within the financing structure agreed with the bank.

A deposit already paid may form part of the buyer's own funds in a particular transaction, but the structure should be checked with the bank in advance.

What should be agreed before you transfer any money?

What you have agreed is much more important than whether the deposit happens to be 5%, 10% or another percentage.

Before transferring the money, the documentation should clearly address:

• the exact property being purchased;
• the total purchase price;
• the exact amount of the deposit;
• whether the deposit counts towards the purchase price;
• the deadline for entering into the final agreement;
• how and when the remainder of the price will be paid;
• what happens if the buyer does not complete the purchase;
• what happens if the seller does not complete the sale;
• what happens if mortgage financing is declined;
• when and how possession of the property will be handed over;
• any other conditions relevant to the particular transaction.

A poorly drafted sentence can eventually cost considerably more than ensuring that the transaction is properly structured before payment is made.

Should you pay immediately because “someone else might buy it”?

A good apartment may attract several serious buyers, and there is nothing unusual about needing to move quickly.

But moving quickly does not have to mean proceeding without checks.

If you are asked to transfer a significant amount immediately because “there are five other buyers waiting”, that is not a reason to skip basic due diligence.

A well-managed transaction should move quickly enough not to lose a genuine opportunity while still giving the buyer a clear understanding of what they are signing and where their money is going.

Conclusion

In Serbian real estate transactions, a deposit is commonly around 10% of the purchase price, but there is no statutory percentage that applies to every transaction. The amount is agreed between the buyer and seller.

More important than the percentage itself is understanding the conditions under which the money is being paid and what happens if the transaction is not completed.

This is particularly important for mortgage buyers. The consequences of the bank declining financing should be addressed in advance.

A deposit should be the result of a properly structured agreement, not a tool used to pressure a buyer into committing before the property has been checked.

At Urbani Agent, we approach the buying process in the same way: understand the property and the transaction first, then take on the financial commitment.

Note: This article is for informational purposes only and does not constitute legal advice. Rights and obligations relating to a deposit depend on the wording of the specific agreement or preliminary agreement and the circumstances of each transaction.