Limitations on enforcement on real estate in Croatia
A review of the e-auctions register of real estate and movable property maintained by FINA shows that, in the Republic of Croatia, there are around 600–700 enforcement proceedings against real estate on a daily basis.
A significant number of motions for enforcement against real estate are dismissed in the preliminary proceedings, as both individuals and entrepreneurs are often unaware of certain important limitations on enforcement against real estate.
Special conditions for ordering enforcement against real estate
(1) The court shall dismiss a motion for enforcement against real estate if the principal claim for which enforcement is sought does not exceed 5.300,00 EUR , unless the motion has been filed for the compulsory collection of a claim for statutory maintenance or a claim for compensation of damage caused by a criminal offence.
(2) If the principal claim for which enforcement is sought exceeds 5.300,00 EUR, the court may still dismiss the motion for enforcement against real estate if it finds that the sale of the real estate would disturb the fair balance between the interests of the debtor and those of the creditor.
(3) When assessing whether the fair balance referred to in paragraph 2 has been disturbed, the court shall take into account the circumstances of the case, and in particular:
– whether the value of the claim being enforced is disproportionately small compared to the value of the real estate on which enforcement is proposed,
– whether the creditor has made it plausible that enforcement on other assets has been unsuccessful, or that there are no other suitable means for the claim to be collected in whole or in substantial part,
– whether the real estate serves as the debtor’s residence and to meet their basic living needs, and whether the debtor owns other real estate or has other means to meet those needs,
– whether the creditor has a particularly justified interest in urgent collection of the claim for the purpose of their own maintenance or for other important reasons,
– whether the debtor, by a declaration contained in a public document or an authenticated private document, has expressly agreed that the creditor may seek satisfaction of a specific claim through the sale of a specific real estate.
Therefore it is evident that the mere fact that a debtor owns valuable real estate does not necessarily mean that creditors will be permitted to enforce against such property. This is particularly problematic with debtors who are foreign nationals and who do not possess any other assets in Croatia besides, for example, a single real estate property.
Consequently, before entering into any legal transaction in Croatia, it is crucial to examine the possible means of securing a claim for each individual transaction.
