REPUBLIC OF SERBIA
MORTGAGE LAW
This English translation has been
generously provided by the
Public Agency Yugoslav Survey
YUGOSLAV SURVEY / JUGOSLOVENSKI PREGLED
www.yusurvey.co.yu
Belgrade, 2006
MORTGAGE LAW
Note: This is a true translation of the original Law,
but it is not legally binding.
Original title:
ZAKON O HIPOTECI
Prepared by: Jugoslovenski pregled (Yugoslav Survey), Dečanska 8/V, Beograd;
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CONTENTS
MORTGAGE LAW
Part One
BASIC PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Part Two
ORIGINATION OF MORTGAGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Part Three
RIGHTS AND DUTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Part Four
SATISFACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Part Five
CESSATION OF MORTGAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Part Six
CENTRAL MORTGAGE RECORDING FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Part Seven
TRANSITIONAL AND CONCLUDING PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
MORTGAGE LAW ∗
Part One
BASIC PROVISIONS
Scope of the Law
Article 1
The present Law shall govern the mortgage for the purpose of securing claims and
provide for the establishment of the Central Mortgage Records.
Concept of Mortgage
Article 2
A mortgage shall mean a lien on real estate, which empowers the creditor in the event
of the debtor’s failure to pay a debt due, to request the collection of debt-claim secured by the
mortgage (hereinafter: the claim) from the real estate value before the ordinary creditors and
before junior mortgage creditors (hereinafter: the mortgagee), regardless of the real estate
actual possession.
Subject of Mortgage
Article 3
The following may be the subject of a mortgage (hereinafter: the subject or real estate):
1) an immovable property (title to land, building and the like);
2) a part of a real estate property, in accordance with the decision on partition;
3) a portion in a common immovable property;
4) a separate part of a building in tenure, and/or some other right containing the right of
disposal (a dwelling, business premises, garage, parking space, etc.);
5) a right to land authorising the free legal disposition, including in particular the right
of construction, right of priority construction or disposition in government and/or social
ownership;
∗ Published in the Službeni glasnik RS, No. 115/05 of 27 December 2005 .
MORTGAGE LAW
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6) a building under construction, as well as a separate part of a building under
construction (a dwelling, business premises, garage, etc.), irrespective of whether completed or
not, provided that a valid building permit has been issued in conformity with the law governing
the building construction.
Joint Mortgage
Article 4
For the purpose of securing a claim, a mortgage may encumber several real estates,
irrespectively of whether they belong to the same or different owners.
In the case specified in paragraph 1 of this Article, the mortgagee may cash the claim
by its own bona fide choice from the value of one or several real estates.
Scope of a Mortgage
Article 5
A mortgage shall include the following elements of a real estate:
1) all integral parts of a real estate, produce not separated from real estate, unless
otherwise stipulated by the mortgage deed;
2) fixtures to a real estate stipulated by the mortgage deed, but not the objects of
property owned by third parties;
3) all improvements in and accretions to the value of real estate occurred after setting
up the mortgage.
Mortgage on Common and Joint Property
Article 6
The owner of an aliquot part of a common real estate may mortgage that aliquot part
without the consent of other co-owners, unless the mortgage being based on an aliquot part of a
building under construction, in which case the consent by all co-owners shall be necessary.
A mortgage on a jointly owned real estate shall be instituted only on the real estate as a
whole, with the consent of all joint owners.
In the case of mortgage referred to in paragraphs 1 and 2 of this Article, the remaining
co-owners or joint owners shall be entitled to pre-emption on the occasion of satisfaction.
Secured Claim
Article 7
Any claim, including a future or conditional claim, as well as a claim denominated in
foreign currency, may be secured by a mortgage.
The claim referred to in paragraph 1 of this Article shall cover the principal, interest
and collection costs.
The part of a claim not secured by mortgage may satisfied only from the mortgagor’s
residual assets.
4
MORTGAGE LAW
Part Two
ORIGINATION OF MORTGAGE
Mode of Origination and Kinds of Mortgage
Article 8
A mortgage shall originate on being entered in the appropriate real estate registry, on
the basis of:
1)
2)
3)
4)
a contract or a judicial settlement (contractual mortgage);
a mortgage bond (unilateral mortgage);
a statute (statutory mortgage);
a court decision (judicial mortgage).
The contractual mortgage rules shall apply respectively to unilateral, statutory and
judicial mortgages, unless otherwise provided by law.
Chapter One
MORTGAGE DEED
Concept
Article 9
A mortgage deed shall mean a contract between a real estate owner and a creditor, by
which the real estate owner undertakes the obligation, should the debt be not paid when due,
entitling the creditor to collect his secured debt from the value of such real estate in the way set
forth by law.
The debt shall come due in conformity with the deed or some other legal ground it
stems from.
A mortgage deed may be an independent one or make an integral part of the contract
covering the claim (loan or credit contract, etc.).
Closing a Deed
Article 10
A mortgage deed shall be closed in writing and the signatures affixed on it shall be
authenticated by court or some other agency authorised to authenticate signatures on the deeds
of real estate conveyance.
A mortgage deed may be closed by the owner or some other person having the right of
disposal, as well as the investor and buyer of a building under construction or a separate part of
a building under construction as referred to in Article 3 of the present Law.
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Registration
Article 11
A contractual mortgage shall be registered at the request of:
1) an owner of the real estate or his/her guardian or legal representative;
2) a mortgagor;
3) a mortgagee.
In a case specified in Article 3, item 3, of the present Law, the contractual mortgage
shall be registered as follows:
1) on the construction site the mortgage is registered on the building under construction
and once the building is entered in the real estate register, the mortgage is registered on the
constructed building or a separate part of the building, ex officio;
2) if the owner has sold to the buyer a building under construction or a separate part of
a building under construction, the buyer’s mortgagee as well may request that a mortgage be
registered on the building under construction or on a separate part of the building, and once a
building is entered in the real estate register, the mortgage on the constructed building or a
separate part of the building shall be registered ex officio.
If the owner of a building is changed in the course of construction, the new owner shall
enter into all of the previous owner’s rights and duties regarding the persons in favour of whom
the mortgage was registered.
For the purposes of the present Law, a building under construction shall also include a
physically completed building or a separate part thereof, which has not been entered in the real
estate register, if the requirements for mortgage registration on a building under construction
have been satisfied.
The risk of demolition of an improperly constructed building on which a mortgage has
been registered shall be borne by the real estate owner, mortgagor and mortgagee, in keeping
with their internal relationships.
Mandatory Provisions
Article 12
A mortgage deed shall include the following in particular:
1) name, surname and permanent or temporary address or business name and head
office of the mortgagee, pledger, as well as mortgagor, should these be different persons;
2) owner’s (pledger’s) unconditional statement of consent to the mortgage on its real
estate being registered by the mortgagee (clausula intabulandi);
3) precise data on the secured debt, currency of accounting and currency of payment,
amount of each instalment and the maturity date, place and method of payment, and data on the
principal claim, interest rate and other elements on the basis of which the interest rate can be
fixed, place and method of payment of interest, as well as the amount of other costs if
stipulated, maturity of claims and way of determining the maturity, if the term has not been
fixed;
4) data on the mortgaged real estate and/or estates, including also the evidence of
ownership and/or some other right referred to in Article 3 of the present Law;
5) data on the real estate elements referred to in Article 5 of the present Law, which are
covered by the mortgage.
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MORTGAGE LAW
Nullity of Provisions
Article 13
Any provision of a mortgage deed on the ground of which, should the debt be not
satisfied on maturity, shall be null and void:
1) a mortgagee may sell the real estate contrary to the provisions of the present Law;
2) the real estate becomes the property of the mortgagee or a third party at an
unspecified price or a price specified in advance.
Any provision of a mortgage contract that accords the mortgagee the right to use the
subject of mortgage or to usufruct from the mortgaged property shall be null and void.
Any provision of a mortgage contract that prevents the owner from alienating the
subject of mortgage or to encumber it by mortgage in favour of a subsequent mortgagee shall be
null and void.
Chapter Two
UNILATERAL MORTGAGE
Concept and Origination
Article 14
A unilateral mortgage shall originate on the basis of a mortgage bond.
The mortgage bond shall mean a document drawn up by the owner committing himself
unilaterally to allow the creditor, should the debt be not paid when due, to collect his/her
secured claim from the value of the real estate in the way provided by law.
In terms of form and content, a mortgage bond shall correspond to a mortgage deed.
A mortgage based on mortgage bond shall be registered at the request of the owner or
mortgagee.
Chapter Three
ENFORCEABLE DOCUMENT
Characteristics and Registration
Article 15
A mortgage deed and/or a mortgage bond drawn up in conformity with the present Law
shall be deemed an enforceable document, provided that it also includes the provisions referred
to in paragraph 3 of this Article.
A mortgage based on an enforceable contract or an enforceable mortgage bond shall be
entered in the real estate registry as an “enforceable extra-judicial mortgage”, and the extrajudicial settlement proceedings shall be conducted in conformity with the provisions of the
present Law.
An enforceable mortgage deed or a mortgage bond shall also include the following:
1) a clearly indicated provision and/or statement whereby the real estate owner
irrevocably empowers the mortgagee, should the debt be not paid when due, to collect the claim
from the proceeds of the sale conducted in accordance with the extra-judicial sale procedure
provided by the present Law, without instituting a lawsuit, as well as agrees that the real estate
be vacated forcibly and put in the buyer’s possession within 15 days from the date of the sales
contract, unless the mortgage is to be registered on a co-owned share.
MORTGAGE LAW
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2) an express provision and/or statement of the owner that he has been cautioned about
the consequences of the failure to satisfy the debt on maturity and that in the awareness of such
consequences, he is agreeable to the possibility of the mortgage deed being executed by selling
his real estate in conformity with the provisions of the present Law governing the extra-judicial
settlement, without the right to litigation, as well as that his real estate shall be vacated forcibly
and put in the buyer’s possession within 15 days from the date of the sales contract, if the
owner fails to hand it over voluntarily, unless the mortgage is to be registered on a co-owned
interest;
3) a clear provision and/or statement made by the owner that he is agreeable to the
mortgagee having access to the real estate, including the right to enter it, irrespectively of who
might be in it (owner, lessee, etc.) for the purpose of checking on its maintenance or for other
valid reasons, as well as that he is bound to cooperate with the mortgagee in the sales
procedure, and particularly to allow access to the mortgaged real estate (entry in a dwelling and
the like);
4) an express statement of a third party, if existent, being in direct possession, but not
the owner of the mortgaged real estate (a lessee, etc.) that it is aware of the consequence the
mortgage deed can produce, including the ejection from real estate and loss of actual
possession of it, as well as that he/she is agreeable to the rights and duties referred to in item 3
of this paragraph.
Should a mortgage deed or mortgage bond fail to include the provisions referred to in
paragraph 3 of this Article, satsfaction shall be carried out in conformity with the law
governing the enforcement procedure.
Part Three
RIGHTS AND DUTIES
Chapter One
RIGHTS AND DUTIES OF THE REAL ESTATE OWNER
Rights of the Real Estate Owner
Article 16
The owner shall have the following rights even after the mortgage has been placed:
1) to keep the subject of mortgage in his/her possession;
2) to use the subject of mortgage for its usual purpose;
3) to reap the produce or take the income yielded by the subject of mortgage;
4) to dispose of the subject of mortgage and transfer the right to the acquirer, in which
case no changes are made in the mortgagor’s duty and in the secured claim.
Duties of the Real Estate Owner
Article 17
The owner shall not make any physical changes in the subject of mortgage (making
partition-walls, making additions, demolition, joining, partition etc.) without the mortgagee’s
consent in writing, which the mortgagee may not withhold without a valid reason.
8
MORTGAGE LAW
The owner shall look after and maintain the subject of mortgage as expected of a good
housekeeper or a good businessman, so that his/her acts or mistakes will not depreciate the real
estate.
The owner shall insure the subject of mortgage against all of the usual risks prior to
closing the mortgage deed.
The mortgagee shall have the right of access to the real estate, including the entry in the
real estate regardless of who is in it (owner, lessee, etc.), for the purpose of checking on its
maintenance or for other valid reasons, if the mortgage has been taken out in conformity with
the provisions of Article 15 of the present Law or if so is expressly stipulated by the mortgage
deed or mortgage bond.
The owner, lessee and any other actual possessor of the real estate shall cooperate with
the mortgagee in the sale procedure and particularly allow access to the subject of mortgage
(entry in a dwelling and the like), if the mortgage has been placed in conformity with the
provisions of Article 15 of the present Law or if that right is expressly stipulated by the
mortgage deed or mortgage bond.
Where the consent of the person being in actual legal possession of the real estate is not
included in the authentic or enforceable document referred to in Article 15 of the present Law
and/or in the mortgage deed or mortgage bond, the rights and duties specified in paragraphs 3
and 4 of the present Article shall not be exercised without that person’s consent.
Chapter Two
RIGHTS AND DUTIES OF THE MORTGAGEE
Supplementary Security
Article 18
A mortgagee shall have the right to demand supplementary security of a similar degree
of security from the mortgagor in the following cases:
1) If the subject of mortgage has been depreciated by the conduct or acts of the owner
or actual possessor; or
2) If the there is a threat of depreciation of the subject of mortgage because of the
actions intended to be taken by its owner.
The following shall apply in the cases referred to in paragraph 1 of this Article:
1) if the mortgagor fails to provide supplementary security, the mortgagee shall have
the right to demand full payment of the debt from the value of the real estate without any
delay;
2) the depreciation of the real estate subject shall be determined by a court-appointed
expert, at the mortgagee’s request.
Court Prohibition against Damage
Article 19
The mortgagee shall have the right to request of a court to order the owner or actual
possessor to stop acting in a certain way in the following cases:
1) if the subject of mortgage has been depreciated because of such conduct; or
2) if there is hazard of the mortgaged real estate being depreciated because of the acts
he/she intends to perform.
In the cases referred to in paragraph 1 of this Article, the following shall apply:
1) the court may permit the mortgagee to take necessary steps towards preventing the
mortgaged real estate from being depreciated;
MORTGAGE LAW
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2) if no delay is permissible under the circumstances, the mortgagee may take the
necessary steps even before being permitted to do so by the court, if the mortgage has been
placed out in conformity with the provisions of Article 15 of the present Law, or if so has been
expressly stipulated by the mortgage deed or mortgage bond;
3) The mortgagee shall be entitled to request of a court to issue an order for the owner
to reimburse the costs incurred.
The claim for reimbursement of the costs incurred pursuant to this Article shall be
secured without registration and shall enjoy priority in relation to all other registered
encumbrances.
Chapter Three
TRANSFER OF CERTAIN RIGHTS AND DUTIES
Assignment of Claims
Article 20
A claim secured by a mortgage may be assigned under a contract between the
mortgagee and the person to which the claim is being assigned.
A mortgage assignment contract concluded separately from the assignment of claim
shall produce no legal effect.
A contract referred to in paragraph 1 of this Article:
1) shall be concluded in writing and the signatures affixed on it shall be authenticated
by a court or some other duly authorised agency;
2) shall transfer the mortgage to the person to which the claim is being relinquished;
3) shall produce legal effect regarding third parties on the ground of entry in the real
estate register.
Super Mortgage
Article 21
A claim secured by a mortgage may be pledged on the ground of a contract between the
mortgagee and a super mortgagee.
A contract referred to in paragraph 1 of this Article:
1) shall be concluded in writing and the signatures affixed on it shall be authenticated
by a court or some other duly authorised agency;
2) shall include the mortgagee’s express and unconditional statement that the super
mortgagee may be entered in the real estate registry in that capacity;
3) shall produce legal effect regarding the mortgagor as of the date of his being notified
in writing of the claim being pledged, from which date the mortgagor may perform his duty
only to the super mortgagee or on his written instructions;
4) shall produce legal effect regarding third parties as of the date of entry in the real
estate register.
10 MORTGAGE LAW
Assumption of Debt
Article 22
A debt to a mortgagee may be transferred under a contract of assumption of debt
secured by a mortgage between the owner and acquirer of the subject of mortgage and/or a
contract between the owner, acquirer of the subject of mortgage and the debtor, if the owner is
not a mortgagor.
The contract referred to in paragraph 1 of this Article:
1) shall be concluded on the occasion of disposal of the subject of mortgage, in the
form of a separate contract or a provision or part of the contract of alienation of the subject of
mortgage;
2) shall produce legal effects subject to the mortgagee’s consent given in writing.
Alienation of a Part of Real Estate
Article 23
If the owner partitions or merges the subject of mortgage with some other real estate
with the mortgagee’s consent, a mortgage shall be placed ex officio on such real estates and
each mortgage shall secure the entire claim, unless otherwise stipulated with the mortgagee.
Part Four
SATISFACTION
Chapter One
GENERAL RULES
Right of Satisfaction
Article 24
In the event of a mortgagor’s failure to pay out the debt on maturity, the mortgagee may
satisfy his/her debt-claim from the value of the mortgaged real estate, regardless of who is the
owner or actual possessor at that moment.
The satisfaction referred to in paragraph 1 of this Article shall be carried out in
conformity with the present Law and/or the law governing the execution procedure, as well as
the law governing the coercive collection of real estate tax debts.
Where a contract drawn up in the form of a credible document or of an enforcement
document referred to in Article 15 of the present Law, the rules of extra-judicial settlement
provided by the present Law shall apply.
Choice of Satisfaction
Article 25
A mortgagee may request that its mature claim be satisfied as follows:
1) Firstly from the value of the mortgaged real estate and then from the mortgagor’s
other property;
MORTGAGE LAW
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2) from the value of mortgaged real estate and the mortgagor’s property at the same
time; or
3) Firstly from the mortgagor’s property and then from the value of mortgaged real
estate.
Time-barred Claim
Article 26
A mortgagee may be satisfied from the value of mortgaged real estate even after the
secured claim was barred due to statute of limitation.
In the case referred to in paragraph 1 of the present Law, interest and other periodical
dues may not be satisfied from the subject of mortgage.
Subsequent Contract
Article 27
A subsequent contract shall mean a separate contract concluded by a mortgagee and a
real estate owner in writing on the maturity of a secured claim, the signatures affixed on it
being subject to authentication by a court or some other duly authorised authority, which may
stipulate the following:
1) a partial or full transfer to the mortgagee, in lieu of the satisfaction of debt, of the
right of ownership or some other law of property right relating to the subject of mortgage;
2) any other transaction conducive to the entry of satisfaction of mortgage on real
estate.
The mortgagee shall notify the mortgagor of the subsequent contract without any delay.
Personal Subrogation
Article 28
If the mortgage debt is paid by a person who is not the mortgagor, that person shall act
in the capacity of a mortgagee in relation to the mortgagor and third parties.
Chapter Two
FORECLOSURE
First Warning
Article 29
In the event of a mortgagor’s failure to pay the debt on maturity, the mortgagee referred
to in the credible document or enforcement document referred to in Article 15 of the present
Law shall serve a notice in writing at the same time to the mortgagor and owner of the subject
of mortgage (if they are different persons), whereby the foreclosure procedure pursuant to the
present Law shall be instituted.
12 MORTGAGE LAW
The notice shall include the following:
1) data on the mortgage deed and mortgaged real estate;
2) description of the breach of mortgage deed on the basis of which the foreclosure is
requested;
3) steps the mortgagor must take towards paying the debt and avoiding the sale of real
estate;
4) deadline for the payment of debt the mortgager has to meet in order to avoid the sale
of real estate;
5) warning that, should the mortgagor fail to take the mentioned steps and thus pay the
debt, the mortgagee will claim the full amount owed and that with the sale of mortgaged
property, he/she shall lose possession of the real estate involved;
6) name of and necessary particulars on the mortgagee’s representative, to whom the
mortgagor may address for more information;
7) other information the mortgagee might deem important.
Warning on the Sale of Real Estate
Article 30
Should a mortgagor fail to pay the debt within 30 days from receipt of the first
warning, the mortgagee shall send to the mortgagor and the real estate owner a warning on sale
of the real estate, its contents being as follows:
1) data on the mortgage deed and mortgaged real estate;
2) description of the breach of the mortgage deed on the basis of which the foreclosure
is requested;
3) information that the whole debt has fallen due for collection;
4) amount of debt due for collection;
5) steps that the mortgagor or owner must take towards paying the debt and avoiding
the foreclosure on the real estate;
6) deadline for the performance of duties by the mortgagor or owner in order to avoid
the foreclosure on the real estate;
7) warning that in the event of the mortgagor’s or owner’s failure to take the mentioned
steps and thereby pay the debt, the mortgagee shall suspend the possession of the real estate by
having the mortgaged real estate sold;
8) information about the selected mode of having the real estate sold;
9) name and the necessary data on the mortgagee’s representative whom the mortgagor
may address for the purpose of having a meeting;
10) other information the mortgagee might deem important.
Adnotation of Foreclosure
Article 31
The mortgagee shall file with the real estate registry at the same time a request for the
adnotation of foreclosure in favour of the mortgagee, together with the following:
1) a copy of the warning of foreclosure of the real estate;
2) a copy of the mortgage deed;
3) a statement that the mortgagor has failed to satisfy the debt to date;
4) evidence that the first warnining and the foreclosure warning have been sent to the
mortgagor and owner.
The real estate registry shall adnotate the foreclosure warning in favour of the
mortgagee within seven days from receipt of the adnotation request, and send to the mortgagee,
mortgagor and the real estate owner the decision on the adnotation of foreclosure.
The adnotation of foreclosure and the decision on foreclosure shall include the
following:
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1) an express authorisation of the mortgagee to sell the real estate in the capacity of
mortgagee and on his own behalf, in conformity with the provisions of the present Law, as of
the effective date of the decision, but not within less than 30 days from the date of the decision;
2) prohibition against the mortgaged real estate being sold by its owner.
The owner, mortgagor and mortgagee shall be entitled to file a complaint with the
competent authority against the decision on the adnotation of foreclosure, within 15 days from
receipt of the decision.
The competent authority shall render a second-instance decision within 15 days from
the complaint filing date.
The complaint shall be accepted should the mortgagor or owner present to the real
estate registry indisputable evidence in writing of the following:
1) that the claim is non-existent;
2) that the mortgage is non-existent;
3) that the claim has not fallen due;
4) that the debt has been paid.
The second-instance decision referred to in paragraph 5 of this Article shall be final
and enforceable and no lawsuit or legal remedy may apply to it.
Right to a Meeting
Article 32
The mortgagor and/or the real estate owner may demand a meeting with the mortgagee
or his/her representative within 10 days from receipt of the warning of foreclosure of the real
estate, and either of the latter shall see it on its premises during working hours.
The mortgagee’s right to proceed with the sale of mortgaged real estate may not be
restricted or postponed if the parties fail to reach an agreement in the way proposed by the
mortgagor at that meeting.
Communications
Article 33
For the purposes of the present Law, communications (reminders, notices, etc.) shall be
deemed delivered to the mortgagor if they have been sent by registered mail to the address of
the following:
1) mortgaged real estate;
2) mortgagor, as stated in the mortgage deed, if the mortgagor’s address differs from
that of the mortgaged real estate;
3) real estate owner, if the owner is not the mortgagor.
For the purposes of the present Law, a communication shall be deemed delivered to the
mortgagee if it has been sent by registered mail to the mortgagee’s address as stated in the
mortgage deed or to the address stated in the mortgagee’s note requesting the mortgagor’s
reply.
Mortgagee’s Right to Sell
Article 34
Should the mortgager fail to pay the debt by the effective date of the decision on the
warning of foreclosure and 30 days have elapsed from the date of that decision, the mortgagee
may proceed with the sale of the mortgaged property on the basis of that decision, by auction or
direct arrangement.
The selection of either mode of sale shall not preclude the possibility of the other one
being applied, in case the real estate involved remains unsold.
14 MORTGAGE LAW
Before proceeding with sale, the mortgagee shall set an approximate market price of the
real estate fixed by an authorised court-appointed expert.
Sale by Auction
Article 35
The mortgagee may stage the sale by auction of the real estate by himself or entrust it
to a person professionally engaged in these matters.
The announcement of the sale by auction shall be prominently published in a daily
newspaper that is on sale in the region in which the mortgaged property is situated, at least 45
days before the scheduled date of sale.
The announcement shall include the following:
1) description of the real estate;
2) mortgagee’s name and surname or registered name;
3) mode of communication with the mortgagee;
4) opening price at auction;
5) time and place of auction;
6) other information that the mortgagee might deem important.
The mortgagee shall also send to the mortgagor, the real estate owner and third parties
having rights to the mortgaged real estate, the information about the announcement covering the
following:
1) all elements of the announcement;
2) statement indicating the term within which the whole debt may be paid in order to
avoid the sale.
The opening price at auction may not be less than 75% of the estimated value.
If the first auction fails, the opening price at the second auction may not be less than
60% of the estimated value.
Notwithstanding the provisions of paragraphs 5 and 6 of this Article, the mortgagee and
the owner or mortgagor may make an agreement in making arrangements for the staging of
auction, whereby the real estate involved may be sold for less than 75% and 60% of the
estimated price respectively.
The mortgagee may make his/her own bid at the auction.
Sale by Direct Deal
Article 36
Based on the effective decision on the adnotation of foreclosure and after 30 days from
the date of rendering that decision, the mortgagee may sell on his own behalf the real estate by
direct deal for a price that approximately corresponds to the market one.
For the purposes of the present Law, market price shall mean the usual price that can be
fetched in good faith for that real estate at the time of foreclosure.
The mortgagee may sell the real estate independently or by using the services of a
practicing lawyer or a real estate agency.
If the sale is made by a practicing lawyer or a real estate agency, the usual commission
or fee may be included in the sales price.
At least 15 days before closing the real estate sales contract, the mortgagee shall notify
the sale to the mortgagor, the real estate owner and persons holding other rights to that real
estate, which notification shall include the following:
1) amount of the whole debt;
2) estimated value of the real estate;
3) essential terms and conditions of the real estate sales contract;
4) expected date of conclusion of the sales contract;
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5) mode of distribution of the sales proceeds;
6) date on which the real estate is to be vacated;
7) statement concerning the term within which the whole debt can be paid in order to
avoid the sale of the real estate involved.
Obstruction of the Extra-judicial Settlement
Article 37
In the course of the extra-judicial settlement procedure, the competent interior affairs
authority shall give the mortgagee or his/her representative all assistance necessary for the
conduct of the extra-judicial settlement procedure, should the owner or some other actual
possessor of the real estate fail to allow the access to the real estate in the procedure for its sale
or refuse to vacate the real estate voluntarily, within the term specified in Article 15, paragraph
3, item 1, of the present Law, unless a longer term is stipulated by the sales contract.
The competent interior affairs authority shall render the assistance referred to in
paragraph 1 of this Article after having an insight in the decision on the entry of the adnotation
of foreclosure or the real estate sales contract.
Sales Price Falling Short of the Debt
Article 38
If the price fetched at auction or by direct deal falls short of the mortgagee’s total
claim, the mortgagor shall remain in debt to the mortgagee for the difference between the total
claim and the price fetched.
The residual debt referred to in paragraph 1 of this Article shall be reduced by the
difference between 75% of the estimated price of real estate and the price fetched, if the price
fetched is less than 75% of the estimated price, in the both modes of sale.
If the mortgagee is settled by acquiring the title to the mortgaged real estate, the claim
shall be deemed settled at the moment of acquisition of that title.
If the price fetched for the mortgaged real estate at auction or by direct deal is higher
than the claim made, the mortgagee shall pay the balance to the mortgagor.
Chapter Three
SATISFACTION WHEN THE SUBJECT OF MORTGAGE IS
A BUILDING UNDER CONSTRUCTION
Assignment of a Building Permit
Article 39
If the subject of mortgage is a building under construction, its sale for the sake of
settlement shall be effected by assigning the right to build provided by an effective building
permit against a charge, and selling the things incorporated in the building under construction.
At the request by the buyer of a building under construction, the authority that has
issued the building permit shall issue to the buyer, without any delay, an identical building
permit in his/her name and cancel the old building permit.
In the case referred to in paragraph 2 of this Article, the buyer shall acquire by the
operation of law all of the seller’s rights and duties based on the permit even before the permit
is issued to the buyer.
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Chapter Four
ORDER OF SATISFACTION
Order of Satisfaction of Mortgagees
Article 40
Should a single subject of mortgage be pledged to several mortgagees, the order in
which their claims are to be satisfied out of the proceeds of sale of the subject of mortgage shall
be determined in accordance with the day, hour and minute of the origin of mortgage, counting
from the first registered mortgage.
Distribution of Funds Obtained by Extra-judicial
Sale of Real Estate
Article 41
The mortgagee shall cover the following in the following order within seven days from
collecting the sales price:
1) sale costs, including the costs and fees of third parties;
2) mortgagee’s claim;
3) claims of a junior mortgagee or some other creditor in the same security order;
4) anything left over shall belong to the mortgagor.
The mortgagee shall present the final account of the distribution of funds to the
mortgagor and all third parties holding a right to the real estate involved, within seven days
from the date of distribution of funds.
Bankruptcy
Article 42
If the subject of a mortgage is subjected to bankruptcy proceedings, the mortgagee shall
have the right to separate satisfaction out of the proceeds of the real estate.
Part Five
CESSATION OF MORTGAGE
Chapter One
WIPING OUT
Article 43
A mortgage shall cease to exist with its being wiped out of the real estate registry it was
entered into in conformity with law (hereinafter: the mortgage wiping out).
The mortgage wiping out may be carried out at the request of the mortgagor, owner or
mortgagee, if the secured claim ceases to exist in the way permitted by law.
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Wiping Out at Owner’s Request
Article 44
The mortgage wiping out at the owner’s request may be carried out only if the debt has
been satisfied fully.
The request referred to in paragraph 1 of this Article shall include the following:
1) mortgagee’s written statement of agreement with the mortgage being wiped out; or
2) enforceable court decision establishing that the mortgagee’s claim has been
terminated.
The mortgagee shall allow the mortgage to be wiped out if his/her claim has been paid
in full.
The mortgagee shall issue to the mortgagor and the owner of mortgaged real estate a
certificate of satisfaction of debt, without any delay upon the payment of debt and agree to the
mortgage being wiped out.
Ruination of Real Estate
Article 45
A mortgage shall also cease to exist if the subject of mortgage gets ruined completely
and the owner may request the mortgage to be wiped out.
A mortgage may be renewed if the owner restores the subject of mortgage and its reregistration may be carried out pursuant to law.
A mortgage shall be limited to the residual part, if the subject of mortgage has been
ruined partly and the correction shall be registered by virtue of law.
Article 46
In the case of complete or partial ruination of a subject of mortgage, the mortgagee
shall acquire by virtue of law a lien on the claim for insurance indemnity or on the paid out
indemnity.
The funds obtained pursuant to paragraph 1 of this Article shall be distributed among
the mortgagees in the order of registration of their mortgage rights.
Public Interest
Article 47
A mortgage shall also cease to exist when the title to the subject of mortgage is
transferred to a third party in public interest (expropriation and the like), in conformity with law
and by decision of a competent authority.
In the case referred to in paragraph 1 of this Article, the following shall apply:
1) the wiping out shall be carried out at the request of the new real estate owner;
2) the mortgagee shall acquire a lien on the claimed indemnity or the indemnity paid
out and shall register the mortgage on the real estate the title to which was transferred to the
owner instead of the real estate that was expropriated in public interest.
The indemnity referred to in paragraph 2, item 2), of this Article shall be distributed
among the mortgagees in the order of registration of their mortgage rights.
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Executory Public Sale
Article 48
A mortgage shall also cease to exist in the event of an executiry public sale of the
subject of mortgage.
In the case referred to in paragraph 1 of this Article, the wiping out shall be carried out
on the basis of an enforceable court decision on the satisfaction of mortgages.
Extra-judiciary Sale and Subsequent Contract
Article 49
A mortgage shall also cease to exist if the subject of mortgage has been sold in the
extra-judiciary mode on the basis of a duly authenticated document or enforcement document
and in conformity with the present Law, and when the mortgagee has been satisfied, or when
the mortgagee has been satisfied on the basis of a subsequent contract pursuant to the present
Law.
In the case referred to in paragraph 1 of this Article, the following shall apply:
1) the wiping out shall be carried out at the request of buyer of the subject of mortgage;
2) the rights of subsequent mortgagees shall remain reserved.
Confusion and Consolidation
Article 50
A mortgage shall cease to exist by being wiped out also in the following cases:
1) should one and the same person become both a mortgagee and a mortgagor; or
2) should a mortgagee acquire the title to mortgaged real estate.
In the case referred to in paragraph 1 of this Article, the wiping out shall be carried
out at the request of the owner, mortgagor or mortgagee.
Renunciation of Mortgage
Article 51
A mortgage may also cease to exist on the basis of a unilateral declaration of intention
made by a mortgagee in writing, where the latter’s signature is authenticated by a court or some
other duly authorised agency.
In the case referred to in paragraph 1 of this Article, the wiping out shall be effeced at
the owner’s request to which the declaration referred to in paragraph 1 of this Article is
attached.
Amortisation of Secured Claims
Article 52
A mortgage may also cease to exist on the basis of an enforceable court decision
establishing the amortisation in conformity with law, at the proposal of the owner, co-owner or
holder of title to joint property in the following cases:
1) if twenty years have elapsed from maturity of the secured claim (old mortgage);
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2) if the registered mortgagee is no longer existent or cannot be found, or if that is the
case with his/her heirs (universal successors) or the persons who were subsequently registered
as transferees of the claim secured by mortgage;
3) if the registered mortgagee has not requested or received in the past either the
principal claim or interest, or if that has not been requested by any authorised person which is
entered in the real estate registry.
In the case referred to in paragraph 1 of this Article, the wiping out shall be carried
out at the request of the owners, co-owners or joint owners.
Chapter Two
PLACING A NEW MORTGAGE
Disposition of an Unwiped Out Mortgage
Article 53
If a secured claim has ceased to exist, an unwiped out mortgage may be transferred to a
new mortgagee within 3 years from the date of cessation of the claim or, for the purpose of
securing another claim, to the old mortgagee, up to the amount of the claim that is secured by
the unwiped out mortgage.
In the case specified in paragraph 1 of this Article, the transfer may be carried out at the
owner’s request, which is to be filed together with evidence of cessation of the claim.
Article 54
The owner’s renunciation of the right of disposition of an unwiped out mortgage shall
produce no legal effect, unless:
1) the owner gives a contractual undertaking to a third party, particularly a mortgagee
holding a junior mortgage, to request in the latter’s favour the wiping out of a mortgage;
2) the duty in connection with that mortgage is adnoted in the real estate register.
The following shall apply to junior mortgagees:
1) they may not object to a new mortgagee being registered in the vacated position of
an unwiped out mortgage;
2) retain the position in which their mortgages exist.
Adnotation of the Priority Order
Article 55
The owner of the mortgage involved may request together with the request for wiping
out also the adnotation of the order of priority with regard to the entry of a new mortgage:
1) up to the amount of claim secured by the old (earlier) mortgage;
2) at the position held by the old (earlier) mortgage;
3) within three years from the date on which the adnotation was permitted.
In the case of transfer of title to the subject of mortgage, the adnotation of reservation
of the right of priority order shall produce legal effect in favour of the new title holder.
This Article shall also apply mutatis mutandis when a new mortgage is intended to
replace two or more mortgages running one after another in the order of priority.
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Prenotation of a New Mortgage
Article 56
At the owner’s request, a new mortgage may be registered in the place of an already
registered mortgage, in the same order of priority and up to the amount of the claim that is
secured by the already registered mortgage.
In the case referred to in paragraph 1 of this Article, the following shall apply:
1) the registration shall produce legal effect if the old mortgage gets wiped out within a
year from the date on which the registration of the new mortgage was permitted;
2) the old mortgage shall be wiped out at the request of the owner or creditor in whose
favour the new mortgage is registered.
A new mortgage shall be registered by virtue of law if the old mortgage is not wiped
out within the term referred to in paragraph 2, item 1), of this Article.
If a senior mortgage is based on an old mortgage, the new mortgage shall produce legal
effect in the following cases:
1) if the senior mortgage is also wiped out; or
2) should the senior mortgagee and the mortgagee in whose favour the new mortgage is
to be registered agree to the senior mortgage being transferred to the new mortgage.
If an old mortgage is based on several real estates (simultaneous mortgage), the new
mortgage shall produce legal effect only if the old one is wiped out from all of the real estate
registries.
The provisions of this Article shall also apply mutatis mutandis when a new mortgage
is intended to replace two or more mortgages running one after another in the order of priority.
Part Six
CENTRAL MORTGAGE RECORDING FACILITY
General Provisions
Article 57
The central mortgage recording facility (hereinafter: the Central Mortgage Recording
Facility) shall mean a central public electronic database in which the mortgages entered in the
corresponding registers of real estate have to be entered, for searching and collection of
information on mortgages.
The Republic Institute of Geodesy Real estate Registry shall not be answerable for the
correctness and completeness of the data entered in the Central Mortgage Recording Facility.
Competence
Article 58
The Central Mortgage Recording Facility shall be kept by the Republic Institute of
Geodesy Real estate Registry (hereinafter: the Real Estate Registry) in compliance with law.
The duties of the Real Estate Registry shall be as follows:
1) seeing to the Central Mortgage Recording Facility being kept lawfully,
systematically and promptly;
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2) prescribing the form of the reports that the competent registries have to present to
the Real Estate Registry without delay;
3) taking such other action and steps as are necessary for trouble-free and proper
operation of the Central Mortgage Recording Facility, in conformity with law.
Data to be Entered
Article 59
The Real Estate Registry shall do the following ex officio:
1) enter the mortgages that have been entered in the corresponding real estate registry;
2) enter other data on the mortgages entered in the corresponding real estate registry;
3) enter any change in or deletion of the data referred to in items 1) and 2) of this
paragraphs made in the corresponding real estate registry.
The Real Estate Registry may regulate the details of the entry of data referred to in
paragraph 1 of this Article.
In entering the data, the Real Estate Registry shall act directly on the ground of
information and it shall not issue special documents.
Accessibility and Transparency
Article 60
The Central Mortgage Recording Facility shall be accessible to everybody, without any
limitations, for the purpose of searching or collecting information, at any time during the Real
Estate Registry working hours or by Internet outside the working hours, without any charge.
Anyone shall have the right of access to the data entered in the Central Mortgage
Recording facility.
The Fee
Article 61
A fee shall be payable for the entry of data in the Central Mortgage Recording Facility.
The fee referred to in paragraph 1 of this Article shall be paid on filing the application
for entry in or deletion from the appropriate real estate registry.
The amount of the fee referred to in paragraph 1 of this Article shall be fixed by the
Real Estate Registry, subject to the Government’s approval.
Funding
Article 62
The funds required for the establishment and start up of the Central Mortgage
Recording Facility shall be provided from the Republic of Serbia Budget.
The funds required for the maintenance of the Central Mortgage Recording Facility
shall come from the collected mortgage registration fees and other income of the Real Estate
Registry, in conformity with law.
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Part Seven
TRANSITIONAL AND CONCLUDING PROVISIONS
Cessation of Other Regulations
Article 63
The validity of the provisions of Articles 63 through 69 of the Law on Elements of
Property Right Relations (Official Gazette of the SFRY, Nos. 6/80 and 36/90 and Official
Gazette of the FRY, No. 29/96) shall cease as of the starting date of application of the present
Law.
Application of the Law
Article 64
The present Law shall not apply to the mortgages placed prior to its effective date,
unless otherwise agreed on by contracting parties.
The appropriate registries shall present to the Real Estate Registry, within three months
from the starting date of application of the present Law, all data on the mortgages placed prior
to the starting date of application of the present Law, which are to be entered in the Central
Mortgage Recording facility pursuant to the present Law.
The Real Estate Registry shall enter the data presented pursuant to paragraph 2 of this
Article, within four months from receipt thereof.
Coming into Force
Article 65
The present Law shall come into force on the eighth day upon its publication in the
“Službeni glasnik Republike Srbije” and shall apply as of the sixtieth day upon its publication.
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