MONTENEGRO Law and Practice Contributed by: Milan Keker, Aleksandra Bujkovic, Ivan Pejovic and Iva Rolovic, Keker, Bujkovic & Pejovic
Any increase in rent generally occurs only upon exten - sion, subject to mutual agreement between the par - ties. Conversely, fixed-term leases with longer dura - tions can include mechanisms for rent adjustments. All rent adjustment terms are subject to the parties’ agreement, as there are no mandatory statutory provi - sions regulating rent changes during the lease term. The practice varies depending on the lease type and commercial considerations. 6.6 Determination of New Rent If the rent is subject to change or increase during the lease term, the new rent is typically determined based on the terms agreed upon by the parties in the lease agreement. Some common methods include indexa - tion clauses, graduated rent, or rent linked to turnover of the tenant. If the lease agreement does not specify the method for adjusting rent, any changes typically require mutual agreement between the landlord and tenant, reached through negotiations that consider the prevailing mar - ket rent for the type of property involved. 6.7 Payment of VAT VAT at 21% generally applies to commercial leases, while residential leases over 60 days, as well as leas - es of agricultural or forest land, are typically exempt. However, VAT applicability may vary based on the lease and parties involved. 6.8 Costs Payable by a Tenant at the Start of a Lease In addition to rent, tenants typically pay a security deposit equal to one to three months’ rent to cov - er damages or unpaid obligations. Notary fees also apply, as lease agreements require notarisation, and these are usually paid by the tenant. 6.9 Payment of Maintenance and Repair The costs of regular maintenance, necessary and urgent repairs on the residential building and the urban plot are borne by the unit owners. Tenants are not automatically liable, but may be contractually obli - gated to cover such expenses if agreed in the lease. In non-residential buildings such costs are typically regulated by lease agreements and are often passed
on to tenants through service charges or similar mech - anisms covering the maintenance of common areas
(eg, parking areas and landscaping). 6.10 Payment of Utilities and Telecommunications
The allocation of costs for shared facilities and com - mon services – such as utilities and telecommunica - tions – can be freely agreed upon between the par - ties in a lease agreement. Nevertheless, it is common practice for tenants occupying business premises to bear these costs. In some high-end multi-tenant commercial buildings, it is generally standard practice for the landlord, as the building owner, to handle service contracts and re-invoice tenants proportionally, ensuring stream - lined billing and centralised management of shared services. 6.11 Payment of Property Taxes The responsibility for real estate taxes related to rent - al properties typically falls on the landlord, as they are the legal owner of the property. This includes the annual property tax and the income tax on rental income. However, if the tenant is a corporate entity and the landlord is a private individual, the tenant may be required to withhold and remit rental income tax on the landlord’s behalf. 6.12 Insurance Issues The allocation of responsibility for insuring leased real estate is not strictly defined by law and is typi - cally determined by the terms of the lease agreement between the landlord and tenant. Landlords typically bear the cost of insuring the real estate while tenants are generally responsible for insuring their own contents and equipment. The basic risks covered by property insurance include fire, explosion, storm, hail, lightning strike, civil dis - turbances and demonstrations, floods and torrents. Additionally, optional coverage can include water leakage from installations, burglary and robbery, glass breakage, installation damage, third-party liability and earthquake.
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