Mortgage as security for a claim

A loan often enables larger investments such as buying a house or an apartment. Such loans are almost always secured by a mortgage on real estate. The mortgage also serves as security for another claim against the debtor.

Croatian law recognizes only a mortgage on real estate as a lien right. The mortgage can be registered voluntarily, judicially, or as a lien right.

Creation and registration of a mortgage

The mortgage is established by entry in the land register. The establishment of a mortgage does not transfer ownership, and the creditor does not have the right to use the real estate burdened by the mortgage. Therefore, the mortgage contract is valid only if it is concluded in writing. Additionally, it must have specific qualities prescribed by the Law on Land Registers. Failure to adhere to the rules of land registry law may lead to refusal of registration. The timing of registration is also crucial, as the mortgage obtains its rank according to the time of registration.

This contract must specifically state the accurate details of the property and the explicit permission of the owner for the mortgage creditor to be authorized to obtain registration of the mortgage on their property (tabular statement).

If a private mortgage contract is confirmed by a notary as a notarial deed, it may be useful to add a so-called clausula exequendi to the contract for easier enforcement of the claim later on. This clause means that the debtor agrees for execution to be carried out directly. If the creditor does not have a notarial deed, they must sue the owner of the real estate and obtain a judgment. This so-called mortgage lawsuit must be filed with the court competent to decide on the real estate. This means that the Croatian court not only decides on the mortgage lawsuit but also on enforcement. In this case, the judgment is a prerequisite for enforcement on the real estate. The final and enforceable judgment will then serve as an enforcement order.

The same property may be burdened with multiple mortgages. Their mutual relationship depends on their rank. On the other hand, several properties may be burdened with the same mortgage (so-called simultaneous/common mortgage). The mortgage burdens the entire property or the ideal co-ownership share, and it may also encumber building rights.

If a property is divided, the mortgage may burden its individual parts (e.g., floor or apartment). If a property is sold, and a new owner is registered, the mortgage remains unaffected. It is important to note that the mortgage is regulated by several provisions of Croatian law. Therefore, creditors cannot enforce their rights without legal assistance through statutory means.

Difference compared to Germany

In Croatian law, the mortgage is of an accessory nature, meaning it exists due to securing a claim and thus depends on the existence and validity of that claim. In Croatian law, the existence of a lien right without the claim it secures is not possible, whereas German law recognizes an institute known as Grundschuld. The peculiarity of this institute of lien right is that it can exist even without the claim it secures.

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