The legal system of Socialist Federal Republic of Yugoslavia recognized, besides private and social ownership, also a legal category of tenants’ right. Citizens of former SFRJ acquired this right without any mayor problems regarding the apartments in social ownership, in order to resolve their housing issue. A tenant’s right was a personal and a nontransferable right, appearing, by its characteristics, more like an ownership than a lease.

            After Yugoslavia ceased to exist, in the Republic of Croatia, by the operation of law, social ownership and tenants’ right ceased to exist as well. Natural persons whose apartments were formerly nationalized, initiated the procedure of regaining their assets, and therefore again became the owners of those apartments. The problem arose after 1990, when natural persons again became owners of those apartments, since the persons who had had tenants’ right earlier, now became, by the operation of law, the protected lessees.

The Republic of Croatia provided to the former tenants’ right holders, and now protected lessees, far greater rights than those handed to regular lessees. The amount of the protected rent is determined by law, and not by the market rules, and is therefore regularly 10 to 20 times lower than the usual rent.

            Accordingly, the Law on Lease has made it difficult to cancel the contract of lease to protected lessees, and has therefore put the owners of those apartments in a position where, although they are owners, they have no practical use of these apartments; they are commercially worthless since the owners cannot use them nor rent them under the market conditions.

            The Constitutional court has, by its decision No: U-I-762/1996 from March 31st 1998, abolished the provision of article 40, paragraph 2 of the Law on Lease which had foreseen that the lessor must, when he/she cancels the contract of lease entered into for an undetermined time period, secure another habitable apartment for the lessee under the same or better conditions. This decision of the Constitutional court also determined that the abolished article seized to apply 6 months after this decision is published in the Official Gazette. This decision has been published in the „OG“No 48 from 6th of April 1998.

Therefore, the owner of the apartment is now entitled to cancel the contract of lease to the protected lessee when:

– the lessee or other apartment users do not use the apartment according to the law or the contract of lease,

– the owner intends to move into this apartment himself or he/she intends to move in his/her descendants, parents or other persons he/she is obligated to support by the law,

– he/she hasn´t resolved the housing issue for himself or his/her family, or is above 60.

The abolished articles are not yet replaced by the new corresponding provisions, so there is now a legal gap which causes contradictory decisions of the courts in the RC, and this gap is usually resolved by the decision of the Constitutional court of the RC which postpones the enforcement of the eviction of protected lessees in hope that the Parliament of the RC shall soon vote new changes and amendments of the Law on lease and shall therefore fill the current legal gap.