|LAW NO.03/L-154 ON PROPERTY AND OTHER REAL RIGHTS|
|e martė , 04 gusht 2009|
LAW NO. 03/L-154
ON PROPERTY AND OTHER REAL RIGHTS
Assembly of Republic of Kosovo,
Based on Article 65 (1) of the Constitution of the Republic of Kosovo,
LAW ON PROPERTY AND OTHER REAL RIGHTS
Scope of the Law
1. This law governs the creation, content, transfer, protection, and termination of real rights.
2. This law regulates ownership and, as limited real rights, possession, real security rights and real rights of use. These limited real rights may be created in ownership and in other suitable real rights.
3. Other real rights can only be created by law. The general provisions and fundamental principles of this law shall also apply to real rights not referred to in paragraph 2 above, unless separate legislation provides otherwise.
4. Ownership and other real rights can only be limited or taken away against the lawful holders' will in accordance with conditions and procedures as defined by the applicable laws.
5. The provisions of this law do not apply to real rights in public or common assets, which are subject to specific legislation, unless specifically provided otherwise in this law.
Holders of Real Rights
1. Any person can acquire real rights, unless otherwise provided by law.
2. The holder of a real right can assert this right against any other person, unless otherwise provided by law.
Priority of Real Rights
If several limited real rights exist in a single asset, their priority is determined in accordance with the time of their creation, unless otherwise provided by law.
Presumption of Good Faith
If the acquisition of a real right depends on the good faith of the transferee, good faith shall be presumed unless proven otherwise.
Limitation of Real Rights
1. Real rights can be restricted by real rights in other assets as determined by this law.
2. Real rights must be exercised in accordance with the nature of the asset and the principles of this law.
Prohibition of Abuse
1. The abuse of a real right is prohibited.
2. A real rights is abused if it is exclusively or patently used to damage other persons or their assets.
Extinction of Real Rights
Real rights are not subject to extinction except by operation of law.
Assets are movable property, immovable property, and intangible rights.
1. Movables are independent corporal objects that are not permanently attached to the ground or a part of the ground, and are generally capable of being moved.
2. Physical objects that are not corporal, such as light or electricity, are intangible movables (untouchable).
1. Immovable property is a part of the earth's surface that is or can be enclosed. Immovable property includes plants enrooted in the ground and buildings firmly connected to the ground, but do not include natural resources in the subsoil.
2. Immovable Property includes:
2.1. a building that belongs to a person other than the owner of the immovable property on which it is built;
2.2. a building unit which is regulated by Articles 57 -62;
2.3. a building right which is regulated by Articles 271-281;
2.4. a leasehold according to the relevant provisions on leaseholds.
3. All other property shall be deemed movable.
Intangible rights are limited real rights and include the claim to demand the performance of a specific act by another person, in particular the payment of money.
1. Common assets, such as air or water, are assets that cannot be the object of ownership or limited real rights of a person, or the subject of legal transactions.
2. Any person may utilize common assets within the limitations prescribed by law.
1. A component part is movable property that is generally regarded as an integral part of other movables (principal movables) or of immovable property.
2. Component parts of immovable property include movables which are not only temporarily attached to the ground, stand on the ground, or extend underneath the ground.
3. A component part has the same legal status as the principal moveable property or immovable property and cannot be the object of separate rights, unless it is separated from the principal movable property or the immovable property.
1. Fixtures are movables that are not component parts, but intended to permanently serve the economic purpose of principal movables or of immovable property, and are for that reason positioned pursuant to such purpose.
2. Fixtures of a farm include cattle, equipments, machines, farm produce and seeds insofar as these are necessary for the continuation of the farming operation until such time when the next crop of the product or seeds can be harvested.
3. Fixtures of immovable property on which handicraft, craft, industrial production, or trade is carried out include machines, tools, and other equipment that is needed and utilized for the purpose of the production or trade.
4. The rights and obligations relating to principal movables also extend to the fixtures unless otherwise provided by law or the parties.
A non-personal right is a transferable right and the value of which can be expressed in money or monetary terms.
Fruits of assets or of a non-personal right are the natural and legal proceeds that directly derive from such asset or non-personal right or from their actual or legal use without diminution of the value of the asset or non-personal right.
Utilisation of assets or of a non-personal right denotes the use of the fruits of the assets and non-personal right and of other advantages provided by the use of such assets or the non-personal right.
1. Ownership is the comprehensive right over a thing. The owner of a thing may, unless it is not contrary to the law or the rights of third parties, deal with the thing in any manner he sees fit , in particular possess and use it, dispose of it and exclude others from any interference.
2. Intellectual property is subject to special rules.
The provisions of this chapter also apply to similar rights regarding other assets that make no reference to a thing, in particular rights of claims and intellectual property, insofar in these rights by their nature those provisions are applicable.
Danger Emanating from Assets
1. No person acts unlawfully if he damages or destroys movable property belonging to another person, in order to ward off from himself or a third person an imminent danger deriving from such movable property, provided that the damage to or destruction of the movable property was necessary to ward off the danger. If the danger was prompted by the person damaging or destroying the movable property or if that person could have avoided the imminent danger but intentionally or negligently failed to do so, this person is liable to compensate the owner of the movable property for the damage caused.
2. The owner of moveable or immovable property is not entitled to prevent others from exercising authority over such property if this is necessary to ward off an imminent danger, provided the danger would cause disproportionate damage compared to the damage caused to the owner. The owner can demand compensation for any damage caused.
ACQUISITION AND TERMINATION OF OWNERSHIP IN MOVABLES
Acquisition of Ownership of Movables
1. For the transfer of ownership in movable property, a valid legal transaction agreement between the owner and the transferee passing ownership and the delivery of the movable property to the transferee are required.
2. If the transferee is in possession of the movable property, a valid agreement passing ownership is sufficient for the transfer of ownership.
3. If the owner is in possession of the movable property, the delivery may be substituted by an agreement between the owner and the transferee by which the transferee obtains indirect possession of the movable property.
4. If a third party is in possession of the movable property, delivery may be substituted by the owner assigning to the transferee the claim against the third party for the delivery of the movable property.
Good Faith Acquisition
1. If moveable property transferred does not belong to the transferor, the transferee nevertheless acquires ownership, unless he is not acting in good faith at the time of the delivery.
2. If moveable property transferred pursuant to Article 21, paragraph 2 does not belong to the transferor, the transferee nevertheless acquires ownership unless he is not acting in good faith at the time he obtains possession.
3. If moveable property transferred pursuant to Article 21, paragraph 3 does not belong to the transferor, the transferee nevertheless acquires ownership at the time when the transferor delivers the property, unless the transferee was not acting in good faith at the time he obtained indirect possession.
4. If moveable property transferred pursuant to Article 21, paragraph 4 does not belong to the transferor, the transferee nevertheless acquires ownership at the time when the transferor assigns the claim, or when the transferee obtains possession from the third party, unless he is not acting in good faith at this time.
5. The transferee is not acting in good faith if he knows, or as a result of gross negligence does not know, that the movable property does not belong to the transferor.
No Good Faith Acquisition of Lost Property on Involuntarily Lost Things
1. No good faith acquisition of ownership pursuant to Article 22 is possible, if the property was stolen from the owner or has been lost in any other way, unless as foreseen in Article 33 of this law.
2. Rule according to paragraph 1 of this law does not apply to money or bearer instruments or movable property that is transferred by way of public auction.
Return of National Cultural Assets
1. National cultural assets are deemed to be things of artistic, historic or archeological value which are found especially in public institutions such as museums, archives, or libraries.
2. National cultural assets which have been illegally removed from the sovereign territory of a member state of the European Union or according to the loan contract have not been returned within the given term, are to be delivered by the possessor to the competent authorities.
3. Paragraph 1 of this article is also applicable on the removal of cultural assets from the territories of other countries on condition that factual reciprocity exists.
Extinction of third parties` rights
1. If a transferred thing is encumbered with a third party's right, this right is extinguished upon acquisition of ownership toward that thing.
2. The right is not extinguished if the acquiring party was not in good faith at the time the ownership is transferred.
Presumption of ownership in favor of the possessor
1. It is presumed in favor of the possessor of a movable thing that he is the owner of the thing. Notwithstanding the foregoing, this is not applicable against a former possessor if the thing was stolen from him, he lost it or otherwise involuntarily lost possession over the thing, except where the thing is either money or bearer instruments.
2. It is presumed in favor of the former possessor that during his possession he was the owner of the thing.
Acquisition of Fruits
1. The fruits of movable property belong to the owner of the property, unless otherwise provided by law or agreement.
2. A person who possesses movable property as owner acquires ownership of the fruits of the property upon separation of the fruit from that property. Acquisition of ownership to the fruits is not possible if the proprietary possessor is not in good faith at the time when he acquires proprietary possession or learns of the defect of his right before the separation of the fruits from the property.
Acquisition by Prescription
1. A person who has a movable property in his proprietary possession for a period of ten (10) uninterrupted years acquires ownership of the property at the end of the ten (10) year period (acquisition by prescription) if, at the beginning of the ten (10) year period, he was not aware that he was not entitled to ownership.
2. Prescription is excluded if the person, on acquiring the proprietary possession, was not in good faith or if he discovers during the ten-year period that he is not entitled to the ownership of the movable property.
3. Upon the acquisition of ownership by prescription, all third-party rights in the movable property which arose prior to the acquisition by proprietary possession are extinguished, unless the proprietary possessor is not in good faith with regard to these rights while acquiring proprietary possession.
Joining of Movables
1. If movables that belong to different owners are joined in such a way that they become component parts of a single movable property, the previous owners become co-owners of that property. Their shares are determined in relation to the value of the original movables at the time when these were joined.
2. If one of the movables can be determined to be the main movable property, its owner acquires sole ownership of the new single property. The previous owners whose ownership ceases to exist are entitled to compensation from the new owner in an amount equal to the value of their movables.
3. Cessation of ownership rights in a movable property causes the cessation of all other rights in that property. This does not apply if the owner of an encumbered property becomes the owner or a joint owner of the new single property.
Mixing of Properties
If movables of different owners are mixed or mingled in a way that they cannot be separated or such separation would entail disproportionately high cost, the provisions of Article 29 of this law apply mutatis mutandis.
1. A person who creates new moveable property through processing or transformation his own materials acquires ownership of the processed or transformed property.
2. A person who creates new movables property through processing or transformation materials of other persons acquires ownership of the new movable property created, unless the value of the processing or transformation activity is substantially less than the value of the materials used to create the new movable property.
3. If the value of the processing or transformation activity is exactly equal to the materials used, the parties involved shall acquire joint ownership over the newly created movable property in equal proportions.
4. The activity of processing includes writing, drawing, painting, printing, engraving or any similar processing of the surface.
5. On the acquisition of ownership of the new movable property, all existing rights in the materials cease. The owner of the new property is obliged to compensate any third parties for the loss of their rights.
Acquisition of Ownership of Ownerless Movables
1. A person who takes proprietary possession of ownerless movable property acquires ownership of that property unless the acquisition is prohibited by law.
2. Movable property becomes ownerless if the owner, with the intention of abandoning his ownership rights, gives up the possession of the property.
3. A domestic animal becomes ownerless if it gives up the habit of returning to the place provided for it.
4. A swarm of bees become ownerless if it lives in the wild and the owner fails to pursue it within forty eight (48) hours, and the new whereabouts are not marked.
1. A person who finds lost moveable property and takes possession of it must notify the person who lost the property or the owner of that property without undue delay.
2. If the finder does not know the identity or whereabouts of the owner or the person who lost the property, the finder must notify the competent authority without undue delay of the find together with the related circumstances. If the property is not valued more than ten (10) Euros, no notification is necessary.
3. The finder has a duty to keep the property in safe custody. If it is feared that the property will decay, or if keeping the property in safe custody entails disproportionately great costs, the finder is obliged to deliver the property to the competent authorities for public auction.
4. Upon the expiration of one year after notifying the competent authorities of the find, the finder acquires ownership of the property, unless the person entitled to receive the property has before this time become known to the finder or notified the competent authorities of his right. On the acquisition of ownership, all other rights in the property are ceased to exist.
5. The finder may demand a finder's reward from the person entitled to receive the property. The finder's reward is five percent of the value of the property up to five hundred (500) Euros, three percent upon this value and three percent (3%) in the case of animals. If the property has a value only for the person entitled to receive it, the finder's reward shall be determined as appears equitable. No claim for a reward can be made, if the finder violates the duty of notification or conceals the find on being questioned.
1. If a property of exceptional value that was hidden for such a long time that the owner can no longer be ascertained (treasure) is found, than the ownership over that property is acquired according to the following division, 1/3 by the discoverer, 1/3 by the owner of the immovable property on which the treasure was hidden and 1/3 belongs to the state.
2. If the property is of exceptional historic, cultural, archaeological or artistic value, the acquisition of ownership shall be determined by a separate law.
Abandonment of Ownership
Movable property is deemed abandoned if the owner unambiguously expresses his intention to irrevocably renounce his ownership over the property.
ACQUISITION AND TERMINATION OF OWNERSHIP IN IMMOVABLE PROPERTY
Acquisition of Immovable Property
1. The transfer of ownership of an immovable property requires a valid contract between the transferor and the transferee as a legal ground and the registration of the change of ownership in the immovable property rights register.
2. The contract for the transfer of ownership of an immovable property must be concluded in written in the presence of both parties before a competent court or a notary public.
Scope of Application
The transfer of ownership of an immovable property includes the transfer of the area above the immovable property and the area below the original surface, but only if there is an interest for its performance and if by specific legislation and rights of third parties do not provide otherwise.
The transfer of ownership of an immovable property includes the transfer of movables that have become component parts thereof.
Upon the transfer of an immovable property, it is presumed that its fixtures are acquired at the same time.
Acquisition by Prescription
1. A proprietary possessor acquires ownership of an immovable property, or a part thereof, after twenty (20) years of uninterrupted possession.
2. A proprietary possessor acquires ownership of an immovable property, or a part thereof, after ten (10) years of uninterrupted possession and if he is registered as the proprietary possessor in the immovable property rights register and no objection against this registration is filed during this period.
Acquisition by Prescription Following Registration
A person who without having acquired ownership is registered as the owner of an immovable property in the immovable property rights register, acquires ownership of that property if the registration has existed for twenty (20) years and the person has the immovable property unit in proprietary possession during this period. The expiry of the term is suspended for as long as an objection to the accuracy of the registration is entered in the immovable property rights register.
Relinquishment of Ownership
1. Ownership of an immovable property may be abandoned, if the owner declares to the competent authorities that he wishes to abandon the immovable property and such declaration is registered in the immovable property rights register.
2. The right to appropriate the abandoned immovable property belongs to the competent public body in the territory where the immovable property is located. The competent public body acquires ownership by registering itself in the immovable property rights register as owner.
Joint and Collective Ownership of Immovable Property
The provisions of this law on ownership of an immovable property are also applicable to joint ownership and collective ownership of immovable property.
RIGHT OF PRE-EMPTION
Concept of the Right of Pre-emption
1. An immovable property (or joint ownership over an immovable property) may be encumbered in such a manner that a person has a right of pre-emption.
2. The right of pre-emption can be established by law or by contract. The contractual right of pre-emption is established by agreement between the owner of the immovable property and the person entitled to the pre-emption. The right of pre-emption becomes effective against third parties once it is entered into the immovable property rights register.
3. The right of pre-emption may be granted for one or more instances of purchase, but is restricted to the sale by the owner who owned the immovable property at the time of the granting of the right of pre-emption, or by his heirs.
Notification and Exercise of Right of Pre-emption
1. The relevant provisions of the Law on Obligations or any other applicable law are applicable if the right of preemption is exercised.
2. The right of preemption is exercised by notifying the person obliged by the preemption right. The exercise of this preemption right has to comply with the formal requirement of a contract for the transfer of immovable property units.
Effect of a Right of Pre-emption
1. In exercising the right of pre-emption, a contract is concluded between the person exercising the right of pre-emption and the person obligated under this right in accordance with the terms agreed between the person obligated and the purchaser.
2. Against third parties the right of pre-emption has the effect of a priority notice given for the purpose of securing a claim for the transfer of ownership of the immovable property.
Payment of the Purchase Price
1. The person entitled to the right of pre-emption must pay the purchase price to the seller.
2. If the buyer or his legal successor is registered as the owner, the holder of the right of pre-emption must reimburse the buyer for the purchase price he paid to the seller.
Release of Pre-emption Right Holder
1. To the extent that the holder of the right of pre-emption is required to pay the purchase price to the buyer or the buyer's legal successor, the holder of the right of pre-emption is released from his obligation to pay the purchase price owed under the pre-emption.
2. If the buyer or his legal successor loses ownership as a result of the exercise of the right of pre-emption, the buyer shall be released from his obligation to pay the purchase price owed by him. The buyer cannot demand restitution or the repayment of a purchase price already paid by him.
Preclusion of Unknown Holder of a Right of Pre-emption
If a holder of a right of pre-emption is unknown, he may be precluded from exercising his right, in the same manner as an unknown holder of a priority notice can be precluded from exercising his right pursuant to Article 124.
Applicability of Provision for Pre-emptive Purchase
The relevant provisions of legislation on obligations are applicable to this Chapter on the right of pre-emption.
OWNERSHIP OF SEVERAL PERSONS
1. If several persons are sharing ownership in an immovable property or movable property, these persons are joint owners.
2. If the shares of the joint owners are not specified, it is presumed that they are equal.
Rights of Joint Owners
1. A joint owner is entitled to possess and use movable or immovable property in proportion to his share.
2. The fruits of immovable property are divided between the joint owners according to their shares. If the fruits are not divisible, the joint owners acquire joint ownership over the fruits.
3. A joint owner may dispose of his share without the consent of the other joint owners.
4. If immovable property is the object of joint ownership each joint owner is entitled to a right of pre-emption. If more than one joint owner chooses to exercise the right of pre-emption, each joint owner exercising this right shall be entitled to a portion of the property which is determined by the size of his share in the immovable property. The right of pre-emption persist even if a court orders the sale of the shares at a public auction. There is no right of pre-emption if a joint owner sells his shares to his heirs.
Administration of Joint Ownership
1. Joint owners shall jointly administer the movable or immovable property that is the object of their joint ownership.
2. Ordinary acts taken in the course of administration of joint property are void without the consent of joint owners whose shares jointly amount to more than fifty percent (50%).
3. Extraordinary acts of administration, in particular the encumbrance of the joint property and the appointment of an administrator, require the consent of all joint owners.
4. Decisions taken by joint owners are binding upon a legal successor of a joint owner.
Claims by Joint Owners
If the joint owners of an immovable property unit have settled the administration and the use of their immovable property unit or barred the termination of their community permanently or for a certain period of time, then this provision is only binding against the singular successor of a joint owner if it is entered into the immovable property rights register.
Sole Successor of Joint Owner
If joint owners of immovable property have permanently or for a limited period of time settled the administration and the use of their immovable property or excluded the termination of their joint ownership, then this agreement is binding against a sole successor of a joint owner only if it is registered in the immovable property rights register.
Termination of Joint Ownership
1. Joint ownership may be terminated in one of the following ways: severance, one or more of the joint owners acquiring the entire property, disposal of the movable property, or an auction of the immovable property.
2. If all of the joint owners deem the transfer to a third party inappropriate, the property may be sold at a public auction and the proceeds shall be allocated to the joint owners according to their shares.
3. If the termination of joint ownership takes place through severance or by one or more of the joint owners acquiring the entire property, the value is determined by an officially appointed appraiser, unless all joint owners wave their right to the official appraisal.
4. If joint owners cannot agree on how to proceed with the termination of their joint ownership, a movable property shall be disposed of in accordance with the rules on the disposal of pledged property, and immovable property shall be disposed of through a compulsory auction with the proceeds allocated to the joint owners in accordance with their shares. If an attempt to transfer ownership is unsuccessful, a joint owner may request that an additional attempt to be made, provided that he covers the expenses if this attempt is unsuccessful.
OWNERSHIP OF BUILDING UNITS
Ownership of a Building Unit
1. Ownership of a separate part of a building (building unit) is the separate ownership of a flat, an office, or a garage parking space together with a share of joint ownership of the immovable property in which the building unit is located.
2. Joint ownership exists for the immovable property on which the building is erected as well as all pertinent parts, installations and equipment unless owned separately and or owned by a third party.
3. Separate ownership of a building unit shall only be established if the flat, office, or garage parking space is self-contained.
4. The share of joint ownership of the immovable property cannot be separated from the respective separate ownership of the building unit.
Creation of Ownership Right
1. Ownership of a building unit can be created by contract (in accordance with paragraph 2) or division (in accordance with paragraph 3).
2. Joint ownership of immovable property can be contractually limited by an agreement among the joint owners to the extent that each joint owner is allocated ownership of a specific flat, office or garage parking space in a building that is erected or to be erected on the jointly owned immovable property.
3. The owner of an immovable property can divide the property into shares of joint ownership by officially declaring at the immovable property rights registry that together with each share in the joint ownership of the property separate ownership is established over a certain flat or room in a building that is erected or to be erected on the immovable property.
Encumbrance with a Mortgage
1. If, in the case of Article 57, paragraph 3, the immovable property, or in the case of Article 58, paragraph 2, the jointly owned immovable property, is encumbered with a mortgage, the division of the property is subject to the mortgagee's consent.
2. Mortgages are transferred to the ownership of the building unit.
Object of Separate Ownership
1. Separate ownership may also include specified rooms as well as component parts of the building belonging to these rooms which can be modified, removed or added without the joint ownership or separate ownership of third parties being impaired beyond an acceptable extent and without affecting the outward appearance of the building.
2. Separate ownership cannot be transferred or encumbered without the share of joint ownership connected to it.
Provisions in respect of the form
1. The grant or termination of separate ownership requires a valid contract on the alteration of the original rights as well as the registration of the rights in the immovable property rights registry.
2. The contract must comply with the formal requirements set out in Article 36, paragraph 2.
Immovable Property Rights Register
1. The grant of consent for an entry into the immovable property rights register by the owner or joint owner in accordance with Article 58, paragraphs 2 and 3 of this law must be supplemented with:
1.1. a construction drawing signed by the building authority showing the partition of the building as well as the location and size of the building units over which separate or joint ownership exists (building plans);
1.2. a certificate issued by the building authority stating that the requirements of self-containment are satisfied.
2. The severance takes effect when entered into the immovable property rights register.
COMMUNITY OF BUILDING UNITS` OWNERS
1. The legal relationship amongst the owners of building units is determined by the provisions of this law. Unless otherwise provided by this law, the owners of building units by the agreement can adjust mutual relations.
2. Agreements by which the owners of building units deviate from this law or from such agreements are only binding against the legal successor of a separate ownership over if they are entered into the immovable property rights register as content of the separate ownership.
3. Legal actions in affairs which according to this law or to agreement can be taken by majority vote, are also binding against the owners of building units who did not consent to the decision or who were absent from the decision making.
4. In order to be effective, particularly against creditors and other third persons, decisions are not required to be entered into the immovable property rights register.
Prohibition of Termination
The owner of a building unit can only demand the termination of joint ownership if the building is completely or partially destroyed and there is no obligation to rebuild.
Rights of Owners of Building Units
1. Except where the rights of third parties are affected, each owner of a building unit may dispose of the parts comprising the separate ownership within the framework of the law as he see fit and exclude others from any interference.
2. It may be agreed that the content of the separate ownership of a building unit contain the restriction that the separate owner should only be allowed to dispose of his separate ownership of a building unit if the other owners building units or a third party agree. The consent may only be refused for an important reason. Such limitation only becomes effective upon registration in the immovable property rights register.
Liability of Owners of Building Units
1. Each owner of a building unit shall:
1.1. maintain that part of the building which is in his separate ownership and use the building part which is in his separate and joint ownership in such a manner that no other owner of a building unit suffers disadvantage;
1.2. allow others to enter and use those parts of the building in his separate ownership
1.3. if it is necessary to maintain and repair joint property bear the charges and pay the maintenance cost of the joint property in relation to his share of joint ownership of the property.
Right of Exclusion
1. If an owner of a building unit repeatedly breaches his obligations toward other owners of building units in a way that they cannot reasonably be expected to continue the joint ownership with him, the other owners are entitled to adopt a resolution which requires that the owners in repeated breach dispose of his ownership over the building unit.
2. The resolution requires the vote of more than half of the owners.
3. The provisions in paragraph 1 and 2 are binding. Any contract or agreement to the contrary is void.
4. If the owner of a building unit does not participate in necessary measures for improvement of the joint property, the proportional expense related to his building unit will be calculated when the purchase price for this building unit is determined.
Right of Pre-emption
When the ownership of a building unit is transferred, other owners of building units in the same building have the right of pre-emption. The provisions regarding pre-emption in the case of joint property in Article 52, paragraph 4, apply accordingly.
1. Unless otherwise provided by this law or by agreement of the owners over a building unit, the owners of a building unit are jointly entitled to the administration of their joint property.
2. If the regular administration is not settled by agreement, the owners of building units may decide by majority of votes.
3. Regular administration in the interest of the owners of a building unit as a whole comprises in particular:
3.1. the ordinary repair and maintenance of joint property, the conclusion of the necessary insurances against fire as well as building and property insurances,
3.2. the accumulation of an appropriate financial provision for repairs,
3.3. the inducement and toleration of all measures that are in particular necessary for the building's connection to the regular supplies, especially water, sewage and power, telephone and telecommunication installations,
3.4. the establishing of an economic plan, and
3.5. making the rules of the house known.
1. Structural alterations and investments that exceed measures of regular administration require decision by unanimity amongst the owners of the building units.
2. If more than half of the building is destroyed and the reconstruction is not covered by insurance or other means, reconstruction can only be decided upon unanimously.
Appointment, Dismissal, Rights and Liabilities of the Administrator
1. The appointment of an administrator is decided upon by majority vote of the owners of the building units. The duration of the appointment may not exceed five (5) years. An extension is permissible.
2. The appointment of an administrator is also then required if the community of building owners comprises only two parties.
3. In particular, the administrator is entitled and obliged to execute decisions of the owners of a building unit, to arrange for regular maintenance of the joint property and administer joint funds.
4. In particular, the administrator is authorized to assert and to receive, judicially and extra judicially, all payments and performances and legal declarations regarding the joint property.
5. The administrator's duties and powers as stated in Paragraphs 2 and 3 may not be limited by an agreement of the owners of the building units.
The owners of a building unit may establish an advisory board with the majority of their votes consisting of a chairperson and deputy chairperson. The advisory board supports the administrator taking care of the property and, in particular, audits the economic plan and its calculations and cost estimates.
Assembly of Building Owners
1. The assembly of owners of building units is established on the matters on which, according to his law or another agreement of the owners of a building unit, a decision by it can be made.
2. The assembly is summoned at least once a year by the administrator and when a member of the advisory board or a quarter of owners of building units so demand. If there is no administrator or if he refuses to summon the meeting with no just cause, the chairperson of the advisory board can also summon the meeting.
3. In order for a resolution to be valid its subject must have been mentioned in the summons and the latter must have been effected ten days prior to the assembly. A resolution is also valid without an assembly summoned, if all owners of a building unit declare their consent thereto in writing.
4. The decisions agreed upon at the assembly are to be recorded in minutes. Each owner of a building unit has the right to inspect the minutes and to request a copy.
1. The assembly only reaches a quorum if the present owners of the building units represent more than half of the shares of the joint ownership calculated according to the building's area.
2. Every building unit is represented by one vote. If a building unit belongs to several owners, its vote must be unanimous.
3. Owners not entitled to vote, if the subject of this vote is agreement or a litigation with the other owners.
Solution of disputes from the court
The Court decides, on the application of the person affected, upon the duties and rights of the owners over building units, upon the administrator's duties and powers regarding the administration of joint property, upon the appointment of an administrator and upon the validity of decisions taken by the assembly meeting.
Implementation of provisions for administration of building units
Provisions of Articles 69 until 75 are applicable unless otherwise foreseen by separate law.
1. If several persons are entitled to the ownership over movable property in such manner that no shares are determined then they are common owners.
2. Common ownership can be established by law or agreement. An agreement creating common ownership may only be concluded if expressly permitted by law.
3. Common owners must dispose of their property collectively and are collectively accountable for its liabilities.
4. A common owner may request partition or sale of common property, but not at an inconvenient time.
5. The provisions on joint ownership apply to common ownership unless otherwise provided by law.
Duty of Care
1. Owners of adjoining immovable property units are obligated to take the rights and interests of their neighbours into consideration and to exercise their right in a manner which does not impede the rights of their neighbours.
2. The duty of care and all other provisions of this Chapter on a neighbour relationship apply to the relations between the owner of an immovable property and the owner of a building erected thereupon if, by their nature, they are applicable to this relationship.
Confusion of Boundaries
If, in the case of a confusion of boundaries, the true boundary cannot be established, the relevant provisions of the Law on Cadastre are applicable.
Boundary Markings and Boundary Structures
1. Owners of neighbouring immovable properties are required to cooperate in erecting fixed boundary marks and, if a boundary mark has moved or become unrecognizable, in the restoration of such marks.
2. The costs of boundary markings are to be borne by the parties in equal parts, unless an existing legal relationship between the neighbours leads to another result.
3. If a boundary structure (in particular a wall, fence, hedge, ditch, earth wall or stone sign) is situated on the boundary between two adjoining immovable properties, it is deemed that the structure is jointly owned.
4. If a boundary structure is on one of the immovable properties, it is deemed to be owned by the person who owns the immovable property upon which it is built.
5. The type of markings and the procedure for maintaining such markings are determined in accordance with the common practice in the location of the properties concerned.
6. If a third party suffers damage due to the lack of maintenance of boundary marks, the owners are obliged to compensate for the damage caused.
Tree on the Boundary
1. If a tree is standing on a boundary between immovable properties, the fruits from the tree and the tree itself belong to the neighbours in equal shares.
2. Each of the neighbours may require the tree to be removed. The cost of the removal shall be borne by the neighbours in equal shares. The neighbour who demands the removal, however, must bear the cost alone if the other neighbour waives his right to the tree. The claim to removal is excluded if the tree serves as a boundary mark and, in view of the circumstances, cannot be replaced by another appropriate boundary mark.
3. These provisions also apply to a bush and other plants standing on the boundary between immovable properties.
1. The owner of an immovable property may not prohibit the introduction of gases, steam, smells, smoke, soot, heat, noise, vibrations and similar interference emanating from another immovable property to the extent that the interference does not materially or completely impede the use of his immovable property. Interference is generally not considered material if the limits or targets laid down in applicable law and regulations are not exceeded.
2. The same applies to a material interference caused by the use of an immovable property which is customary in the location and which cannot be prevented by measures that are financially reasonable for users of this kind.
Fruit that fall from a tree or a bush onto a neighbouring immovable property are deemed to be the fruit of the owner of the neighbouring immovable property at the time the fruits separate from the tree.
Branches and Roots
1. The owner of an immovable property is entitled to cut off branches of a tree or a bush intruding over the boundary from a neighbouring immovable property if the owner has set a reasonable period for the possessor of the neighbouring immovable property to remove such branches and the removal is not effected within the period set. The owner is not entitled to such right if the boundary is in a forest.
2. The owner of an immovable property may only cut roots growing from a neighbouring property if the roots threaten to destroy or endanger, a structure, a building or a culture of plants on his own property.
Access to Retrieve Animals
1. Household or farm animals may be pursued by their owners onto neighbouring immovable properties. This also applies to a swarm of bees.
2. The owner of the immovable property on which the animals are loitering may deny access if he immediately turns over the animals to their owner.
1. The necessary passage over an immovable property must be tolerated if the neighbouring immovable property has no other access way to a public road, or the connection to a public road involves a significant detour, provided that the benefit to the neighbouring property exceeds the disadvantage caused to the immovable property on which the passage occurs.
2. The direction of the necessary passage and the scope of its use are determined by the manner in which the least obstruction is imposed on the neighbour granting the passage, and the manner in which the greatest convenience is given to the person requesting it.
3. The neighbour over whose immovable property the necessary passage occurs must be compensated with periodic payments for the use of the property and for any damage that may be caused by the passage.
4. The right of passage is terminated when the necessity ends.
5. This Article also applies to the affixing of supply lines.
Right of Passage for Buildings
The provisions of Article 78 also apply to an owner of a building who requires the necessary passage over the immovable property surrounding it.
Temporary use of a Neighbouring Immovable Property
1. The owner of an immovable property can demand from the owner of a neighbouring property that temporary access is granted to the neighbouring property in order to carry out work provided that the work cannot be carried out in any other manner or otherwise only at a disproportionately high cost. The work must be announced with a proper notice period prior to its commencement.
2. After using the neighbouring immovable property, it must be restored to its former condition.
3. The owner who allows the use of his immovable property may require payment of a reasonable fee as compensation for the use. The claim for such compensation expires six (6) months after the work is completed.
Collapse of a Building
If there is a serious risk that a building or a part thereof could collapse and endanger a neighbouring or surrounding immovable property, the owner of the immovable property that is at risk may require the owner of the building to take all action necessary to ward off such danger.
Building over Boundary Lines
1. If the owner of an immovable property constructs a building over a boundary line, the owner of the neighbouring property does not have to endure such construction.
2. The neighbour shall be indemnified by payment of a rent, provided he objects in writing to the owner of the building that infringes the boundary line. The objection must be made no later than one year after the neighbour learns of the infringement and no later than five years after the infringement. The rent shall be paid after the objection is made.
3. The neighbour whose immovable property was infringed may demand from the owner of the building:
3.1. that ownership of the building be divided taking into account the boundary line;
3.2. that the owner of the building remove such part of the building which is located on the neighbour's immovable property; or
3.3. that the owner purchase the immovable property that has been covered by the infringing part of the building.
4. The neighbour shall exercise any one of the rights provided under sub-paragraph 3.1. and 3.2. above within one year of the objection. Until the right is exercised and the respective action under sub-paragraph 3.1. through 3.3., is completed by the owner of the infringing building, the rent under paragraph 2 of this article must be paid.
There may not be any excavation on an immovable property which may cause the ground of a neighbouring immovable property to lose its necessary support, unless care has been taken to provide sufficient reinforcement of another kind.
The owner of an immovable property may not change the watercourse or the amount or quality of a body of water flowing through his immovable property if this would be detrimental to a neighbouring property.
Claim for delivery
The owner may demand the delivery of the thing determined from anyone who is not entitled to possess it.
Objections of the Possessor
1. The possessor may refuse the delivery of the thing, if he or the indirect possessor from whom his right of possession derives, is entitled to the possession.
2. If the indirect possessor is not entitled to possession as against the owner, the owner may request the direct possessor to deliver the thing to the indirect possessor, or, if the indirect possessor does not or cannot take possession of the thing, to himself (owner).
Claims against the Possessor in Good Faith
1. The owner may demand delivery of the fruits as well as of other advantages which the use of the thing affords from the bona fide possessor.
2. A person who is obliged to deliver the fruits taken to the owner may demand compensation for his reasonable expenses he incurred in the production or collection of the fruits, but not for a higher sum than the value of the fruits he had to deliver.
3. The claim for return of fruits and compensation of expenses are prescribed three years after return of the thing to the owner.
Claims of bona fide Possessor
1. The bona fide possessor is entitled to demand compensation for necessary and useful expenditure insofar as the value of the thing has been increased by the expenditure.
2. A necessary expenditure is an expense which, at the moment of its incurrence, was, according to objective standards, essential to maintain or run the thing.
3. A useful expenditure is any expense that, according to objective standards, leads to the increase in the value of the thing.
4. The bona fide possessor is entitled to retain the thing until the owner has compensated him for the necessary and useful expenditures.
5. The claim for compensation of expenditure prescribes three (3) years after delivery of the thing.
1. A possessor is not bona fide if he or his possessory servant knew or should have known that he was not entitled to possession.
2. The bona fide possessor is to be treated as a possessor in bad faith from the moment at which either the claim for delivery or the claim prescribed under Article 95 of this law has been served on him.
Claims against the mala fide Possessor
1. The mala fide possessor is liable to deliver the proceeds of the thing to its possessor as well as compensation for proceeds if he no longer has them or refrained from obtaining them.
2. The mala fide possessor is responsible to the owner for the damage caused which due to his fault led to the deterioration or destruction or another reason for which he is unable to deliver the thing.
Claims of the mala fide Possessor
1. The mala fide possessor is entitled to demand compensation for necessary expenditure made.
2. He is not entitled to retain the thing on the grounds of this claim.
Liability of the Wrongful Possessor
If the possessor has taken possession by an unlawful interference or by a criminal offense, he is liable to the owner pursuant to the provisions concerning damages for delicts.
The claims of owner and possessor against each other as provided for in Articles 93 - 100 exclude any other claims.
Claim for Removal and Injunction
1. If ownership is interfered with by removing or retaining possession of movable property, the owner may require that such interference with his right ceases forthwith. If further interference is feared, the owner may seek an injunction against such interference.
2. A claim against interference with an owner's rights can not be brought if the owner is obliged to tolerate such interference.
A person exercising material control over movable property is a direct possessor.
Acquisition of Possession
Possession of movable property is acquired by obtaining material control over such property. An agreement between a previous possessor and a transferee is sufficient for acquiring possession if the transferee is in a position to exercise control over the property at the time of the agreement.
Agent in Possession
A person exercising material control over movable property on behalf another person, in another person's household or in the business of another person or in a similar relationship that requires the person to follow instructions from another person relating to the property, is not deemed possessor.
Upon the death of a possessor, possession passes to the heirs.
End of Possession
1. Possession comes to an end as a result of the possessor giving up material control over the property or losing material control in any other way.
2. Possession does not end as a result of the possessor being prevented from exercising control in a way that is temporary in nature.
If several persons have joint possession of movable property, one person's right to use the property in relation to the others, and the individual possessor's protection of his possession, is limited by the right of the other persons to use the property as it was intended to be used.
1. A person granting possession of movable property based on a pledge, a lease, a depository or similar agreement or legal relationship that entitles another person to the possession of such property for a period of time is an indirect possessor.
1. If the indirect possessor derives indirect possession from a legal relationship of the nature set out in paragraph 1 above with a third party, the third party is also an indirect possessor.
A person possessing movable property that is owned by that person is a proprietary possessor.
Unlawful Interference with Possession
1. A person depriving the possessor of possession or interfering with the possessor's possession against the will of the possessor acts unlawfully, except where the deprivation or the interference is expressly permitted by law.
2. Possession obtained as a result of unlawful interference is defective. The successor in such possession must allow the lawful possessor to asserted possession against him if the possessor knew about the defective possession of his predecessor at the time the possessor acquired possession or if the defective possession was passed to the possessor by inheritance.
Self-Help by the Possessor
1. The possessor may use reasonable force as defence against unlawful interference with his possession, provided that the interference is concrete and adequate measures of defence are taken immediately upon occurrence of the interference.
2. If movable property is taken away from the possessor by acts of unlawful interference, the possessor may use reasonable force to retrieve the property if the interferer is caught in the act or in pursuit.
3. The rights of a possessor under subsections above may also be exercised by an agent in possession pursuant to Article 105 of this law.
Claim against Interference with Possession
1. If a possessor is deprived of his possession by unlawful interference, the possessor may require that his possession is restored by the interferer in defective possession as against the deprived possessor.
2. If a possessor is disturbed in his possession by unlawful interference, the possessor may require the disturber to remove the interference. If further disturbances are feared, the possessor may seek an injunction against such disturbances.
3. A claim against interferences is excluded if the possessor possesses the property defectively in relation to the disturber or the predecessor in title of the disturber.
Exclusion of Claims to Possession
The claim can only be asserted within thirty (30) days after the possessor became aware of either the deprivation or of the disturbance of his possession. The claim expires one year after the deprivation or disturbance of the possession.
SUBSTANTIVE PROVISIONS ON IMMOVABLE PROPERTY RIGHTS REGISTRATION
Acquisition, Modification and Termination of a Right
1. Acquisition, variation, transfer and termination of ownership, a right of pre-emption or a limited right relating to immovable property require a legally valid contract and registration of the relevant transaction in the immovable property rights register.
2. Registration of entries in the immovable property rights register remains subject to the requirements in Law on the Establishment of the Immovable Property Rights Register no. 2002/5 and the Law no. 2003/13 on Amendment and Supplementation of the Law no. 2002/5.
Subsequent Limitation of Disposal
If a holder of a right to immovable property submits an application to acquire, vary, or terminate the right, the application remains valid even if the entitlement to the right becomes restricted after submission of the application.
Third Party Rights
If a right over immovable property is encumbered with the right of a third party, termination of the encumbrance requires the consent of the third party. If the right to be terminated is held by the owner of another immovable property that is encumbered with the right of a third party, the third party must consent to the termination if the termination affects any of its rights.
Ranking of Rights
1. The ranking of several rights encumbering the same immovable property shall be determined according to their date of entry into the register. Rights that were registered on the same day and at the same time have equal ranking.
2. Registration of a right also determines its ranking if the transaction necessary for the acquisition of the right is completed only after the registration.
Changing the Order of Ranks
1. A change in the order of ranking of rights requires an agreement between the holder of the rights that are affected by the ranking change and registration in the immovable property rights register.
2. If a mortgage is to be lowered in ranking, the consent of the owner of the immovable property is required in addition to the registration. This consent is irrevocable.
3. If a right that is to be ranked lower was encumbered with the right of a third party, the consent of the third party is also required.
4. Other rights ranking between the rights that are changed in ranking are not affected by that change.
Reservation of Priority Ranking
1. The owner of an immovable property when registering an encumbrance on such property may make a reservation that grants authority to have a different, clearly defined right registered with priority ranking over the encumbrance.
2. Reservations of priority rankings must be registered in the immovable property rights register next to the registrations for the rights that are be lowered in ranking.
3. If a right with a reservation of priority ranking is registered for an immovable property that is already encumbered with another right free of any ranking reservation, the reservation of priority ranking is only effective on the pre-registered right to the extent that this right is not encumbered beyond the lower ranking it will take as a result of the new priority ranking reservation.
Registration of Reservations
1. A reservation may be entered in the immovable property rights register for securing a claim of a right to or for encumbering immovable property or varying the contents or the ranking of such rights. The registration of a reservation is admissible for securing future or conditional claims.
2. The registration of a reservation can also be effected on the basis of a preliminary injunction, as enforcement of a judgment or in the course of insolvency procedures.
3. A transaction made after the registration of a reservation in respect of immovable property or a right to the property, is without effect to the extent that the transaction would adversely affect the claim secured by the reservation. This also applies if the transaction is effected as enforcement of a judgment, by way of preliminary injunction or in the course of insolvency procedures.
Effect of Reservations
1. A claimant secured by reservation is entitled to demand from any third party acquiring ownership or another right to the immovable property without validity against the secured claimant that the third party consents to any change in the register necessary for the realization of the right secured by the reservation.
2. The ranking of rights to immovable properties secured by reservations registered in the immovable property rights register is determined by the entry of the respective reservations in the register.
3. If a reservation is registered to secure a claim arising in the event of death, the heirs are liable to the person whose claim is secured by the reservation.
Removal of Reservation for Barred Claims
1. If the assertion of the claim, which is secured by the priority notice, is permanently precluded, the obliged party may demand the removal of the priority notice from the creditor.
2. If the creditor, whose claim is secured by the priority notice, is unknown, he may be precluded by means of public notice if ten (10) years since the last entry regarding the priority notice in the register have passed and if the obliged party has not acknowledged the claim in this period of time.
1. If a right has been registered in the immovable property rights register for the benefit of a person, it is presumed that such person is entitled to the right so registered.
2. If a registered right is deleted from the immovable property rights register, it is presumed that such right does not exist any more.
1. A proprietary security right entitles the secured creditor ("Secured Party"), to obtain payment of the secured claim and of interest and costs from the encumbered assets with priority before the other creditors of the party granting security ("Security Grantor"), if the contractually agreed or legally prescribed conditions have occurred, in particular upon maturity of the secured claim.
2. The Security Grantor can create a security right in order to secure a personal debt or as a surety to secure the debt of another person.
Security rights over immovable property units and movable property can be created only pursuant to the provisions of law.
Scope of Application
1. The provisions of this part apply to all legal transactions and dispositions, regardless of their form, which have the purpose of creating a proprietary security right. The provisions of this law also apply in particular to:
1.1. a contract through which the seller transfers the sold assets for use to the buyer but subjects the transfer of ownership to the buyer on the condition that the buyer pays the purchase price for the assets acquired ("Pledge for Purchase Price"); and
1.2. a lease contract, respectively a leasing contract (financial lease), by which the lessor as owner of the assets leased, respectively given for leasing, transfers these assets to the lessee, respectively financial lessee, for use and subsequent acquisition.
1. The provisions of this law do not apply to:
1.1. the creation of a security right in the salary claims of an employee; and
1.2. the sale of pecuniary claims in the context of the sale of a business enterprise.
1. By means of a security agreement, the Security Grantor assumes the obligation to grant a proprietary security right to the secured creditor.
2. The security agreement can be an independent contract or can be included in another contract, in particular in a credit agreement.
3. The Security Grantor may be the debtor of the secured claim or a third party.
1. An agreement, entered into before the secured claim has matured, is void if it provides that upon non-payment after maturity of the secured claim the encumbered assets are to become or to be transferred into the ownership of the secured creditor or the encumbered assets are to be sold at a fixed price.
2. After maturity of the secured claim, the agreements mentioned in the preceding paragraph can validly be concluded.
A proprietary security right can be granted for securing present, future and conditional claims.
Extinctive prescription of a secured claim
A proprietary security right can be exercised even if the period of extinctive prescription for the secured claim has expired.
1. "Pledge" means the creation by agreement or by law of an interest in movable property or over a right, which gives the pledge holder the right to take possession of such property or exploit such right for the purpose of satisfying an existing and sufficiently identifiable obligation that is secured by the pledge.
2. The pledge agreement may deviate from the provisions of this Chapter. It may in particular provide for a pledge to secure an obligation that will only come into existence after the conclusion of the pledge agreement.
Types of pledge
1. Unless the pledgor and the pledge holder agree in the pledge agreement that the pledge is possessory, the pledgor retains the right to possess, use and otherwise enjoy all rights in the pledge item.
2. A Possessory pledge is effective against third parties at the time the pledge agreement is signed and the pledged item has come into the possession of the pledge holder or the pledge holder`s designated agent.
3. A non-possessory pledge is effective against third parties at the time a notification statement is filed in accordance with this law.
4. The creation of a pledge over a right requires the registration of a pledge in the pledge register.
1. The following provisions also apply to a pledge over a movable item which is created by operation of the law (statutory pledge).
2. The statutory pledge is effective against third parties at the time a notification statement is filed in accordance with this law.
3. Unless otherwise agreed between the parties, a landlord's statutory pledge becomes effective at the time a pledged item comes into the possession of a landlord.
1. The validity of a pledge agreement requires a written document containing the following particulars:
1.1. the name and address of the pledgor and if the pledgor is a person other than the debtor;
1.2. a description of the obligation to be secured;
1.3. a description of the pledged item;
1.4. a statement that the purpose of the agreement is to create a pledge in favor of the pledge holder;
1.5. the signatures of the parties to the agreement; and
1.6. the date on which the pledgor signs the pledge agreement.
2. If the pledge agreement is signed by a person who acts on behalf of the pledgor, the pledge is only valid if the person signing the pledge agreement is independent from the pledge holder.
Specification of the Agreement
A pledge agreement may, in addition to the particulars required by the preceding article, also contain agreements of the parties with respect to their reciprocal rights and obligations, subject to mandatory provisions. The agreement may be supplemented, modified or terminated at any time.
1. Any movable item or right that is legally transferable can be pledged.
2. Subsoil minerals and hydro-carbons and rights to subsoil minerals and hydro-carbons can be pledged in accordance with the provisions for the transfer and encumbrance of subsoil minerals and hydro-carbons or such rights in the applicable law.
Authority to Dispose the Pledged item
1. The pledgor must be the owner of the pledged item at the time the pledge becomes effective. It the pledger is not the owner of the pledged item, he must have the legal authority to pledge the item.
2. Property that is jointly or commonly owned may be pledged only if all joint or common owners consent the pledge.
3. A person who owns a partial interest in movable property may pledge that interest without the consent of other holders of a partial interest.
Acquisition of Possessory Pledge in Good Faith
1. If the pledgor is not the owner of the pledged item or does not otherwise have legal authority to pledge the item, the pledge holder acquires the pledge only if at the time the pledge becomes effective the pledgor is in possession of the pledged item and the pledge holder could assume in good faith that the pledgor is the owner or has legal authority to pledge the item.
1. If the pledged item is encumbered with the right of a third party, the pledge holder acquires the pledge unencumbered only if the pledgor is in possession of the pledged item at the time the pledge becomes effective and the pledge holder could assume in good faith that the pledge is unencumbered.
Pledge over mixed generic things
1. In the case of a non-possessory pledge over generic things, if the pledgor mixes them inseparably with generic things of the same kind and quality, the pledgor must objectively assess the entire quantity at the time of the pledge and communicate this to the pledgee.
2. The pledge then consists of a quota in the entire quantity which changes respectively with every change of the entire quantity.
3. The pledgor is obliged to keep account of the additions to and reductions of the entire quantity and keep the evidence for verification.
4. The preceding rules apply mutatis mutandis to a possessory pledge.
Pledge of Future Items and Inventory
1. A pledge can extend to such items as identified in the pledge agreement which comes into the ownership or otherwise under the legal authority of the pledgor after the conclusion of the pledge agreement.
2. A pledge can be crated over an inventory or changeable items if the location and content of the inventory are sufficiently clear described in the pledge agreement. Each item added to the inventory over which a pledge is created becomes subject to the pledge from the time it is added to the inventory.
A pledge is only valid and enforceable if the obligation to be secured by the pledge is valid and enforceable.
Scope of Secured Obligation
A pledge secures the entire amount of an obligation, including any unpaid principal and interest, penalties, the costs of enforcement, maintenance and sale of the pledged item.
Change of Pledged Item or Increase of the Secured Obligation
Subsequent to the creation of a pledge, the pledgor and the pledge holder may agree to increase the secured obligation, or to add to the pledged item. Any addition that is not permanently attached or connected to the pledged item is to be treated as the creation of a new pledge.
1. The pledge holder may demand additional or adequate security, if the pledged item does not offer sufficient security for the secured obligation and a pledge holder could not be aware of this at the time the pledge agreement was concluded.
2. If the pledgor does not grant additional or adequate security, the pledge holder ma y demand immediate fulfillment of the secured obligation.
Right to Inspection
In the case of a non-possessory pledge the pledge holder has the right upon reasonable notice to the pledgor to inspect the pledged item. In the case of a possessory pledge the pledgor has the right upon reasonable notice to the pledge holder to inspect he pledged item.
Rights and Duties of a pledge Holder
1. In the case of a possessory pledge the pledge holder must not use and has to prudently maintain the pledged item. The pledge holder is entitled to the fruit from the pledged item. In case of a non-possessory pledge the pledgor has to use the pledged item in a manner consistent with the ordinary use of such items of property.
2. Unless otherwise agreed between the parties, the pledge holder may re-pledge the pledged item if he can ensure that the pledged item will be returned to the pledgor in accordance with the terms of the pledge agreement. The pledge holder is liable to the pledgor for any damage to, the loss or a delay in the return of the pledged item.
PLEDGE AND THIRD PARTY RIGHTS
Pledge over Claim for Money
1. If a claim for money is pledged, the debtor of such claim ("Third Party Debtor") may discharge the claim according to the agreement with the pledgor. If the pledgor or the pledge holder has notified the Third Party Debtor of the pledge, the third party debtor has to effect payment to the pledge holder once the pledged claim falls due.
2. The notification to the Third Party Debtor must be in writing, contain the names of the pledgor and the pledge holder identify the claim secured by the pledge and give precise instructions for payment to the pledge holder.
Objections of the Third Party Debtor
The third Party Debtor is entitled to the same objections against a payment demand from the pledge holder which he has against the pledgor as the initial creditor of the pledged claim.
Set-Off of the Claims
1. After receiving payment from the Third Party Debtor, the pledge holder is entitled to set off from this payment any amount due to him under the obligation secured by the pledged claim. Until the secured obligation falls due the pledge holder has to hold payment received from the third party debtor including any interest accruing thereon as agent on behalf of the pledgor.
2. If the amount paid by the Third Party Debtor to the pledge holder exceeds the amount due under the secured obligation, the pledge holder has to pay the surplus amount to the plegdor without delay.
3. Third Party Debtor who is required to make payment to the pledge holder has to be notified by the pledge holder if the secured obligation has been discharged before the payment to the pledge holder falls due.
Application of the Provisions for Pledge over Claim for Money
The provisions for a pledge over a claim for money are also applicable for pledges over other rights.
Right of Pledge over Securities
1. A right of pledge over securities which have been issued to a holder, is deemed to be a right of pledge over a thing.
2. The right of pledge over a negotiable instrument to order or over an endorsable security to a named beneficiary is created by endorsing and delivering the security to the pledgee. The endorsement must explicitly state that it is an endorsement for a pledge (pledge endorsement).
3. If the pledged security is in the name of the debtor, the right of pledge is created if the pledgor notifies the debtor that the claim deriving from the security has been pledged to the pledgee.
4. The right of pledge over un-certificated securities is created by registration of the right of pledge in the register of the institution in whose register the account for the pledged securities is kept.
Applicable Provisions for the Right of Pledge over Securities
In all other respects, the provisions regarding the right of pledge over a claim apply mutatis mutandis.
Priority of Several Pledges
1. Unless otherwise agreed, a pledgor can grant more than one pledge over the same item of property or a same right.
2. Unless this law provides otherwise more than one pledge created over the same item of property or the same right are ranked according to the time at which each pledge becomes effective against a third party.
3. A pledge that is effective against a third party always has priority over a pledge that is effective only between the pledgor and the pledge holder. Several pledges that are not effective against third parties are ranked according to the time at which the pledges become effective against the pledgor.
Special rules regarding the priority of pledges
1. A possessory pledge over money, over transferable securities over shares of companies, over rights to goods or rights to monetary payment has priority over every other right of pledge over these assets.
2. A right of pledge to secure a claim for the purchase price (purchase money pledge) has priority over every other right of pledge the pledgor has granted over the same thing, if
2.1. it is effective against third persons; and
2.2. the pledgee notifies previous pledgees of his acquisition of a right of purchase money pledge and its priority, and at the latest, after the pledgor takes possession of the pledged asset. The purchase money pledgee must state in the notification that he has such a right of pledge or that he shall acquire it in the near future. In addition, the notification must contain a precise description of the pledged asset over which there exists or shall exist a purchase money pledge.
3. If a new right of pledge is granted according to Article 152 this does not continue the priority of the previous right of pledge.
Preserving priority after a Change in the Form of Pledge
1. If, in the case of a possessory pledge, the pledged asset is returned to the pledgor, the right of pledge only preserves its priority if, at the latest when the pledged asset is returned, the conditions for the effectiveness of the non-possessory pledge as against third persons are fulfilled.
2. If the possession of the pledged asset over which an effective non-possessory right of pledge exists, is handed over to the pledgee, the possessory pledge preserves the same priority as the already existing non-possessory pledge.
Change in the order of priority
1. For a change in the order of priority, the provisions of Article 119 apply mutatis mutandis.
2. Notwithstanding the foregoing, the signatures of the participating parties do not require certification and instead of the registration in the immovable property rights register, the registration in the pledge registry is required.
Acquisition of Pledged Item by Third Party
1. Subject to the provisions of this law a pledged item can only be encumbered or acquired by a third party subject to an existing pledge. A pledged item is acquired free of any pledge, if:
1.1. the pledged item is sold in the ordinary course of the pledgor`s business;
1.2. the pledged item is sold with the written consent of all pledge holder having a pledge over the item;
1.3. the pledged item is a share, debt, or security instrument quoted on a recognized market, a negotiable instrument or document of title, or cash; or
1.4. the buyer could assume in good faith at the time of the purchase that the pledged item is not encumbered with a pledge.
2. Items from the inventory sold in the pledgor`s ordinary course of business can be acquired free of any pledge, even if the buyer had knowledge of the pledge.
Transfer of the Secured Obligation
1. The transfer of a secured obligation by the pledge holder is deemed a transfer of the pledge securing this obligation. The pledge holder shall notify the pledgor of the transfer.
2. If the pledge holder transfers only part of a secured obligation, the transferee becomes entitled to the pledge jointly with the pledge holder and up to the amount of the secured obligation that was transferred.
3. The pledgor is entitled to the same rights against the new pledge holder which he had against the initial pledge holder.
Termination of a Pledge
1. A pledge terminates when:
1.1. the pledgor and the pledge holder so agree;
1.2. the secured obligation is satisfied or otherwise ceases to exist;
1.3. the pledged item or right or any surrogate replacing it ceases to exist;
1.4. the pledged item or right is changed or incorporated with another item or right such that it ceases to exist in an identifiable or separable form;
1.5. when the pledge holder becomes owner of the pledged item or right;
1.6. in the case of a possessory pledge, the pledge holder's possession of the pledged item ceases;
1.7. the obligation secured by the pledge is transferred, but the transfer does not extend to the pledge;
1.8. a third party validly acquires the pledged item or right pursuant to the provisions of this law; or
2. The pledge holder shall return the pledged item to the pledgor upon termination of a possessory pledge.
SUB CHAPTER 3
REGISTRATION OF A NON-POSSESSORY PLEDGE
Filing of a Notification Statement
1. The registration of a non-possessory pledge in the Pledge register is effected by filing a Notification Statement with the office of the pledge registry. A Notification Statement shall include:
1.1. a clear identification of the pledgor, the person owing the secured obligation (if not a pledgor) and the pledge holder;
1.2. a specific or general identification of the nature of the secured obligation;
1.3. the maximum value of the secured obligation expressed in money terms;
1.4. a specific or general identification of the pledged item;
1.5. a signature by or on behalf of the pledgor; and
1.6. the date of the pledge agreement.
2. A pledge shall be deemed to be filed in the pledge register when the Notification Statement is presented to the office of the Pledge Registry in prescribed form and accompanied by payment of the prescribed fee.
Duration of Registration and Extension
1. A registration in the Pledge Register is valid for three (3) years from the time of registration.
2. Upon expiry of the three (3) year term the non-possessory pledge becomes ineffective against the third parties, unless the registration is extended or non-possessory pledge is transformed into a possesssory pledge
Termination of Registration
1. If a pledge terminates the pledge holder must within a month of the termination register the termination in the Pledge Register by submitting a Termination Statement to the office of the Pledge Registry.
2. Termination Statement shall contain the pledge holder`s signature and a statement that the pledge holder no longer claims a pledge over an item or right as indicated in the Notification Statement, which shall be identified by its document number. A Termination Statement that is signed by person other than the pledge holder shall be accompanied by a written authorization duly executed by the pledge holder before it may be filed.
3. A pledge holder who does not or not within the prescribed time file a Termination Statement is liable to the pledgor for the damages caused by delayed or failure to register the termination of the pledge.
Establishment of the Pledge Registry Office
1. The Pledge Registry is established by separate legislation.
2. The Pledge Registry shall ensure that index and registration documents are open to the public for at least five (5) hours business day.
3. With the law on establishment of the pledge registry office is regulated the inner functioning of the Registry Office.
SUB CHAPTER 4
ENFORCEMENT OF THE PLEDGE
Delivery of the Pledged item to Pledge Holder
1. Of the pledgor or the debtor of the secured obligation, if he is not identical with the pledgor defaults on the secured obligation or the pledge agreement, the pledge holder of a non-possessory pledge can demand delivery of the pledged item from the pledgor.
2. If the pledgor of a non-possessory pledge fails to deliver the pledged item, the pledge holder can take possession of the pledged item with the help of a competent court.
Judicial Enforcement of the Claim for Possession
1. The pledge holder of a non-possessory pledge may file an application with the competent court to issue an order, ex parte and without notice to the pledgor authorizing the pledged item to be sequestrated and delivered to the pledge holder pursuant. Such application shall be adjudicated by the competent court not later than five (5) business days after the date of filing the application.
2. The pledgor, or the debtor of the secured obligation, if he is not identical with the pledgor, can file a request with the competent court to issue a declaration that the pledge is partially or totally invalid. If the court issues such declaration, it shall at the same time determine weather to revoke or change any order issued pursuant to paragraph 1 of this article, and if it decides to do so, weather and to what extend the pledge holder is liable for damages caused by the decision to sequestrate and delivery of pledged tem to the pledge holder.
Disposal of Pledged Item
1. Upon default, a pledge holder may sell, ease or otherwise dispose the pledged item. A sale of a pledged item can be effected by public auction or in any other suitable manner. The pledge holder shall endeavor to achieve a fair market value while disposing the pledged item.
2. The pledge holder must notify the pledgor at least fourteen (14) days prior to the sale of the pledged item of the time and place of such sale. The notification shall also be communicated to the debtor of the secured obligation, if he is not identical with the pledgor and to all other holders of a pledge over the same pledged item.
3. The proceeds of any disposition of the pledged item shall be applied in the following order:
3.1. to the reasonable expenses incurred by the pledge holder in connection with any enforcement of his right of possession to end disposing of the pledged item;
3.2. to the discharge of the secured obligation;
3.3. to the discharge of any lower ranking pledge holder for the same pledged item, if written demand is made by the holder of such pledge prior to the disposition; and
3.4. the remains shall be paid to the pledgor.
4. The pledgor remains liable for any deficiency in the amount obtained through the disposal of the pledged item.
Restriction to Acquire Pledged Item
The pledge holder may purchase the pledged item only at a public sale or a private sale if the pledge item is sold in a recognized market, or in cases where commonly known standard prices exist for the pledged item.
Acceptance of Pledged Item
1. A pledge holder may offer to the pledgor to accept the pledged item in full or partial discharge of the secured obligation. The offer becomes binding, if the pledgor agrees in writing and the debtor of the secured obligation, if he is not identical with the pledgor, or any other party with legal interest to fulfill the secured obligation does not object in writing within fourteen (14) days after the offer is received.
2. The pledgor, or the debtor of the secured claim, if he is not identical with the pledgor or any other party with a legal interest to fulfill the secured obligation, can redeem the pledged item after having discharged the secured obligation entirely.
3. The redemption may be made at any time before the pledge holder disposes off or accepts the pledged item as partial or total discharge of the secured obligation.
Equality of foreign security rights
1. A foreign security right of any form or denomination which has been validly acquired and is still valid according to right of foreign country, has the effect of a valid and effective right of pledge, if the thing encumbered by the security right is brought on the territory of Kosovo.
2. From the time in which the pledged asset is located on the territory of Kosovo, the effect of this security right is determined by the applicable laws of Kosovo.
2. The Registry Office must be notified of a non-possessory right of pledge within three (3) months of the entry of the encumbered asset into the territory of Kosovo. The necessary information provided for in Article 146 must be submitted in certified translations into the official languages of Kosovo as is prescribed by law.
"Mortgage" means the creation by agreement or by law of an interest in immovable property, which gives the mortgage creditor (mortgagee) the right to initiate foreclosure proceedings for such immovable property for the purpose of satisfying sufficiently identifiable obligation that is secured by the mortgage and has fallen due.
CREATION OF THE MORTAGE
Creation of mortgage with contract
A mortgage is created by an agreement between the owner of an immovable property unit and the mortgage creditor and by entry into the immovable property rights register.
1. The mortgage agreement must be in writing. The signature of the owner of the immovable property unit and of the mortgage creditor need to be certified in accordance with the rules applicable to other legal agreements over immovable property units.
2. The mortgage agreement must contain at least the following:
2.1. names and addresses of the owner of the immovable property unit and of the mortgage creditor as well as of the debtor of the secured claim, unless he is the same person as the owner of the mortgaged immovable property unit;
2.2. the exact description of the immovable property unit which is to be encumbered, containing its location, full address or
2.3. other exact particulars regarding the location and cadastral number;
2.4. a certificate of possession and, if necessary, a certificate regarding the use of the immovable property unit;
2.5. the amount of the claim secured by the mortgage, including the rate of interest; if applicable, the maximum amount agreed upon;
2.6. a warning in written with capital bold letters, that in the case of delayed payment or occurrence of the other stipulations agreed upon the mortgage creditor may initiate an enforcement process which might result in the loss of ownership over the mortgaged immovable property unit or in eviction from it or the house on it;
2.7. further agreements amongst the parties if this law or other laws require so;
2.8. further agreements as far as other mandatory requirements allow;
2.9. the date the agreement was signed;
2.10. certified signatures both of the owner of the immovable property unit as well as of the mortgage creditor.
1. Apart from those agreements mentioned in Article 130, an agreement is also void if it is made before the maturity of the secured claim and if it allows the creditor to use the immovable property unit.
2. Furthermore, an agreement committing the owner of the immovable property unit to neither sell nor to further encumber the immovable property unit is void.
Encumbered Immovable Property Unit
1. The mortgage encumbers all parts of the immovable property unit, including the buildings thereupon that are firmly attached to the ground.
2. Other than is provided for in Paragraph 1, a separate mortgage may be established over a building unit as defined in Article 10 paragraph 2 sub-paragraphs 2.1. and 2.2. pf this law, that does not extend to other parts of the immovable property unit.
Extent of Mortgage on Fixture
1. The mortgage covers all component parts and natural fruits of the immovable property unit as long as the latter are not separated from the principal thing.
2. The mortgage also covers all fixtures belonging to the owner of the immovable property unit.
3. Liability for the mortgage terminates if component parts, products or fixtures are sold and removed from the immovable property unit before having been sequestrated in favor of the mortgage creditor. If a party acquiring the things, removes these from the immovable property unit after the mortgage creditor has sequestrated them, the sequestration is only valid against the acquiring party if it was aware or should have been aware of the sequestration when removing the things from the immovable property unit.
Leased Immovable Property Unit
1. If the immovable property unit is leased, the mortgage also covers the rental claim of the owner.
2. As far as the claim has matured it is freed from this liability twelve (12) months after maturity, unless the mortgage creditor sequestrated it prior to this.
Immovable Property Unit belonging to several persons
A share of joint or collective ownership can be encumbered with a mortgage without the consent of the other joint or collective owners of the immovable property unit.
A mortgage can be created for the same claim over several immovable property units belonging to the same owner or to different owners (aggregate mortgage). Each immovable property unit is liable for the entire claim.
Articles 143 and 144 are applicable mutatis mutandis to the mortgage.
Maximum Amount Mortgage
1. A mortgage may be created as security of a specific maximum amount (maximum amount mortgage).
2. The maximum amount mortgage can secure an individual claim or all claims deriving from a particular contractual relationship.
3. Interest and expenses of the secured claim or claims are only covered within the maximum amount.
Duties of the Owner of an Encumbered Immovable Property Unit
1. The owner has to administer and take care as is usual of the encumbered immovable property unit as well as the buildings erected upon it and its fixtures, to the extent necessary for its regular maintenance and conservation of value.
2. At the request of the mortgage creditor, the owner of the immovable property unit has to insure the items mentioned above at his own expense.
3. The owner of the immovable property unit has to allow the mortgage creditor or a third party authorized by the latter to inspect the encumbered immovable property unit, if due notice is given prior to the visit.
Depreciation of the Encumbered Immovable Property Unit
1. If the immovable property unit has a defect which the mortgage creditor did not notice when concluding the mortgage contract and if the immovable property unit therefore does not offer sufficient security for the secured claim, the mortgage creditor may request an additional security or grant reasonable time for the owner to repair the defect.
2. If the encumbered immovable property unit for whatever reason loses value after having been encumbered, Paragraph 1 applies mutatis mutandis.
3. If after the time granted by the mortgage creditor the defect or depreciation mentioned in previous paragraph of this Article still exists, and if the owner of the immovable property unit has not provided additional adequate security, the mortgage creditor may demand immediate payment of the secured claim according to the provisions of sub-chapter 5 of this law.
Prevention of danger through the court
1. If due to acts or omissions of the owner of the encumbered immovable property unit or of a third party, a depreciation of the immovable property unit has taken place or threatens to do so, the mortgage creditor may file an action for forbearance.
2. If acts or omissions of the owner of an encumbered immovable property unit threaten to lead to a depreciation, the court may, if the mortgage creditor so applies, order measures to prevent the threat.
Depreciation of Fixtures
Provisions of Articles 184 and 185 apply mutatis mutandis if the value of the fixtures belonging to the encumbered immovable property unit depreciates or if they are removed from there contrary to the rules regarding regular maintenance.
Objections Against the Secured Claim
1. The owner of the immovable property unit is entitled to raise all objections against the mortgage creditor that a debtor is entitled to raise against a creditor as far as they concern the secured claim.
2. The owner of the encumbered immovable property unit also is entitled to raise all objections which a guarantor may raise against a creditor of a secured claim.
3. If the owner of the encumbered immovable property unit is not the debtor of the secured claim, he may raise an objection that the debtor would have been entitled to, even if the debtor renounced his right to do so.
4. He may not claim that after the death of the debtor the latter's heir has merely limited liability for the secured claim.
Indivisibility of the Mortgage
1. The mortgage secures the secured claim until it is completely paid off. A partial payment does not affect the mortgage.
2. If the immovable property unit is divided, an aggregate mortgage is created which encumbers the immovable property units created by the division according to Article 180.
Termination of the Mortgage by notification
1. If the maturity of the secured claim is dependent on a notice of termination, the notice of termination is, if the owner of the encumbered immovable property unit is not the same person as the debtor of the secured claim, only effective if it is declared by the creditor to the owner of the encumbered property unit or by the owner to the creditor.
2. If the owner of the encumbered immovable property unit is not resident in Kosovo, or if the person giving notice of termination is unaware of the whereabouts of the person who has to receive the notice, then the court, in whose district the immovable property unit is located, shall, upon application of the creditor, appoint a representative, to whom the creditor's notice can be served.
Owner's Right to Satisfy the Debt
The owner of an encumbered immovable property unit is entitled to satisfy the creditor if the claim against the former has matured or if the personal debtor is entitled to perform.
Transfer of Claim
1. If the owner who is not the personal debtor to the claim satisfies the mortgage creditor, the secured claim is transferred to him insofar as he satisfied the creditor.
2. The transfer may not be asserted to the disadvantage of the creditor. Objections based on a contractual relationship between the debtor and the owner of the immovable property unit remains unaffected.
3. If a claim is secured by an aggregate mortgage, then the provisions of Article 202 of this law are applicable to it.
Satisfaction through one Owner in Case of Aggregate Mortgage
1. The owner of an immovable property unit that is encumbered together with further immovable property units by an aggregate mortgage (in accordance with the provisions of Article 180) may satisfy the mortgage creditor once the secured claim has matured.
2. If the owner mentioned in Paragraph 1 can claim compensation from the owner of one of the other immovable property units, the mortgage encumbering this immovable property unit is transferred to him.
3. Paragraph 2 is applicable mutatis mutandis if the owner mentioned in Paragraph 1 is entitled to claims against several owners of the other immovable property units which were encumbered with an aggregate mortgage.
Extinction of the Mortgage
1. The mortgage becomes extinct by deleting the entry in the immovable property rights register.
2. Extinction may be applied for if:
2.1. the debtor of a secured claim has satisfied this by payment or in any other way;
2.2. the secured claim ceases to exist for other reasons;
2.3. the mortgage creditor renounces the mortgage in writing and with certified signature;
2.4. the mortgage creditor and the owner of the encumbered immovable property unit are the same person or come to be the same person;
2.5. the encumbered immovable property unit is sold in order to satisfy the secured claim.
RELATIONSHIP TO THIRD PARTIES
Effectiveness of the Mortgage
1. A mortgage must be entered into the immovable property rights register in order to be effective.
2. Procedures and effects of registration are based on law on establishing a registry for immovable rights (immovable property rights register).
Priority of Mortgages
1. If not otherwise provided for in this law, the priority of several mortgages is based on the time of their registration in the immovable property rights register.
3. For an amendment of the priorities, the provisions of Article 119 of this law apply.
Transfer of mortgaged immovable property unit
A mortgage is also valid against a person who acquires the mortgaged immovable property unit.
Transfer of the Secured Claim
1. With the transfer of the secured claim, the mortgage is also transferred to the new creditor, unless the parties have agreed to the contrary.
2. The transfer of the mortgage is not effective until entered into the immovable property rights register.
3. If the owner of the immovable property unit dies and the encumbered immovable property unit is transferred to several heirs, an aggregate mortgage is created according to Article 192 of this law.
4. Otherwise, the provisions of the relevant provisions of the Law on Obligations or any future applicable law.
|Last Updated ( e martė , 04 gusht 2009 )|