The mortgage as a security of your claim

Die Hypothek als Sicherung Ihrer Forderung

A loan often allows you to make a larger investment such as the purchase of a house or an apartment. Such loans are almost always secured by a mortgage on the property. The mortgage also allows the securing of another claim against the debtor. This article shows how the mortgage is regulated in Croatian law and how a creditor can secure his claim through the mortgage in Croatia.

The Croatian law recognizes as a lien only the mortgage on a property. The mortgage can be registered as a voluntary, court or legal lien. A mortgage is granted only with the entry in the land register. With the mortgage there is no transfer of ownership and the creditor has no right to use the mortgaged property. Therefore, the mortgage contract is effective only if it is concluded  in the written form. In addition, it must have special qualities prescribed in the Law on land registers. If the rules of land register law are not taken into account, this may lead to the refusal of registration. The time of registration is also important because the mortgage gets its rank subject to the time of entry.

Such a contract must specify, in particular, the exact marks of the property and the express permission of the owner that the registration of the mortgage is authorized to the detriment of his property.

If a private mortgage contract is confirmed by the notary as a notarial deed, it may be useful for later easier enforcement of the claim, to add the so-called clausula exequendi  to the contract. This clausula means that the debtor submits to immediate foreclosure. On the basis of such a contract, which has been confirmed by the notary, foreclosure can be applied for and executed immediately after the due date of the debt. If the creditor does not have a notarial deed, he must sue the owner of the property and obtain a judgment. This so-called mortgage lawsuit must be filed with the court that is competent to decide about the property. This means that the Croatian court is not only competent to decide about the mortgage lawsuit but also about foreclosure. In this case, the judgment is the prerequisite for the foreclosure of the property. The final and enforceable judgment will then constitute an enforcement order.

The same property may be burdened with multiple mortgages. Their mutual relationship depends on the rank. On the other hand, several real estate with the same mortgage may be charged (so-called common mortgage). The mortgage burdens the entire property or an ideal co-ownership share and it can also burden the building right. If the property is divided, the mortgage may burden its individual shares (for example, a floor or an apartment). Should the property be sold and a new owner registered, the mortgage will remain unaffected.

It is important to point out that the mortgage is governed by several provisions in Croatian law. Therefore, creditors can not lawfully enforce their rights without legal assistance. It would be advisable to have this legal transaction handled by a lawyer.