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If you are the enforcement creditor. Or if you are the enforcement debtor.
One thing is certain:
this text will certainly help you learn about real estate enforcement in Croatia that you did not know before.
So – as usual – here is a brief overview of the subheadings:
Does real estate enforcement in Croatia mean being thrown “out on the street”?
Why can initiating real estate enforcement be a very “slippery slope”?
1. More important information on the enforcement debtor’s appeal against the enforcement order
2. Registration of enforcement in the land register? What does this mean?
4. The procedure of selling the real estate at public auction …
IMPRORTANT NOTICE : all texts on lucija.legal – although written by a lawyer with several years of experience — are written in simple, conversational language. Legal terminology is intentionally omitted to make the content easier to understand, and certain legal concepts are described in a very simplified manner — although their meaning has been preserve. All texts and examples are provided for the purpose of educating readers and informing the public. None of the texts contain individualized or specific legal advice. For resolving concrete legal issues, it is expressly recommended that you consult your attorney.
Does real estate enforcement in Croatia mean being thrown “out on the street”?
It does not.
And here’s why …
Most people don’t know that “enforcement against real estate” as a legal concept is different from “enforcement for vacating and delivering real estate”.
Even though it may sound similar — they’re apples and oranges.
Let me clarify — the purpose of enforcement against real estate in Croatia is the sale of real estate at a public auction. The creditor (to whom the owner of the sold real estate owes money) is then paid from the amount obtained.
Enforcement for “vacating and delivering real estate” in Croatia is a completely different story.
This is enforcement carried out with the goal of removing people from the real estate who no longer have the right to be/live there.
In other words — here are both concepts in a single example:
You are the owner of the house you live in and you owe your (non)friend EUR 100,000. He proposes “enforcement against real estate” on your house. Your house is sold at a public auction to some guy from Slovenia. Your (non)friend gets his money. The Slovenian buyer registers as the new owner.
But.
You are still in the house.
If you don’t want to move out voluntarily — the Slovenian buyer must initiate *separate* enforcement, specifically enforcement “for vacating and delivering real estate”, in order to “remove” you from the real estate.
There you go.
Now that you understand the distinction — you know that here I am explaining the procedure of “real estate enforcement in Croatia”, and not “enforcement for vacating and delivering real estate”.
When and why can enforcement on real estate in croatia occur?
Real estate enforcement in Croatia is initiated by filing a motion with the court.
For the court to “approve” that motion, it must include a valid legal basis (a supporting document).
That legal basis must clearly indicate that the debtor owes a debt, as well as the exact amount owed.
In terms of form and content, the legal basis may be, for example:
- an enforceable court decision or settlement;
- an enforceable administrative decision or settlement (e.g., a tax ruling);
- an enforceable notarial decision or instrument (e.g., a notarized contract containing an enforceability clause …);
- (and other similar documents)
However, it is important to understand that the court generally “permits” real estate enforcement only when the creditor has been unable to collect the debt through other available means.
For this reason, a motion for real estate enforcement must often be accompanied by a certificate issued by FINA.
This certificate confirms that a previously attempted “enforcement against bank accounts” was unsuccessful.
Please note that the two paragraphs above should not be taken as absolute rules.
There are, of course, exceptions — as always.
Why can initiating real estate enforcement be a very “slippery slope”?
There is one principle in enforcement proceedings over which “everyone clashes”.
And not just in individual cases — but in court practice in general.
The European Court of Human Rights also plays a significant role in this whole puzzle.
So what is this really about?
It’s about the principle of proportionality.
And what does that mean?
Put simply, it means that the court must assess what matters most in a particular case — and protect that.
In other words, the court must weigh whether it is more important to protect:
- the right of the creditor to recover the debt (to get their money back), or
- the right of the person whose real estate is being enforced upon to keep their home (especially if it is their only real estate and where they live with their family)
And here’s the problem.
It is impossible to establish an “objective standard.”
Why?
Because in every single case, the situation will be completely different.
And each of us — if we were the judge — would probably decide differently (we are only human, after all).
For example: sometimes the debt will be enormous, accumulated due to gambling, but the real estate in question will be the debtor’s only home, where his children also live — perhaps with one of them ill.
In another case, someone may owe money because they were scammed, but they live alone — and besides the apartment they live in, they also own a half-finished farmhouse in the countryside.
Believe me — reality is incredibly complex, and court decisions often depend on small but crucial details.
Unfortunately, cases involving real estate enforcement often include deeply emotional and tragic personal stories.
And not only on the side of those who “live in that real estate,” but also of those “to whom the money is owed.”
In any event, our Enforcement Act (Ovršni zakon) says the following regarding the principle of proportionality (simplified):
- a request for enforcement against real estate must be rejected if the principal debt does not exceed EUR 5,300 (with two exceptions — more here)
- if the principal debt exceeds EUR 5,300, the court may reject the request if it finds that selling the real estate would disturb the fair balance (between the interests of the debtor and the creditor).
- the ratio between the amount of debt and the value of the real estate
- whether previous enforcement attempts were unsuccessful (bank accounts, salary, etc.)
- does the real estate serve as the debtor’s home?
- does the debtor own any other real estate?
- does the creditor have a justified interest in urgent recovery?
- did the debtor previously give written consent (in a statement/contract) allowing the creditor to request the sale of the real estate for repayment?
Ultimately, when it comes to the principle of proportionality, it is impossible to predict what will happen in a case — until it actually happens.
Neither your attorney, nor any legal expert, nor your friend who happens to be a judge can tell you with 100% certainty what the outcome will be.
Not even with 80%. Because these decisions depend on so many real-life details, court outcomes concerning the principle of proportionality are completely unpredictable.
Sometimes the outcome surprises everyone; sometimes it’s exactly what we expected; and sometimes it is exactly what we hoped would not happen.
What happens when enforcement on real estate in Croatia “starts”
If the request for real estate enforcement in Croatia is approved, the procedure unfolds in several distinct steps/stages.
Here they are:
- the debtor is served with the enforcement order (and has the right to file an appeal);
- registration of the enforcement in the land registry;
- determination of the value of the real estate;
- sale of the real estate;
- satisfaction of the creditor from the amount obtained through the sale.
Below is a brief explanation and commentary for each of these steps.
1. More important information on the enforcement debtor’s appeal against the enforcement order
The debtor has the right to file an appeal against the enforcement order.
And very often that appeal is lodged precisely on the grounds of the “principle of proportionality” (which I explained earlier).
In fact — only once the court receives the appeal can it assess the “proportionality”, because until that moment the court has had no full picture of the debtor’s personal circumstances.
Besides proportionality, the debtor may have dozens of other reasons for an appeal.
In any case — people who find themselves in the position of a debtor facing real estate enforcement in Croatia usually seek a lawyer immediately.
After all, the deadline to file an appeal is very short, and the stakes are often significant.
GOOD TO KNOW: an appeal by the debtor alone does not automatically suspend the enforcement, although in practice courts are often reluctant to proceed further while the appeal is pending (even though they may do so).
GOOD TO KNOW 2: together with the appeal you can also submit a request to stay/suspend the enforcement for specific reasons, but you must support that request with a thorough explanation and evidence.
2. Registration of enforcement in the land register? What does this mean?
When the court orders real estate enforcement, it sends this information to the land registry court.
The land registry court then literally records this information in the land register entry where that real estate is registered.
This entry is called a record of enforcement.
The consequence of this entry is that the enforcement becomes “public.”
Meaning — anyone who accesses that land register entry for any reason — for example potential buyers, landlords, other creditors, state authorities — can immediately see that enforcement proceedings are underway with the intention of selling the real estate.
GOOD TO KNOW: Once the record of enforcement is entered in the land registry — even if the debtor sells the real estate — the enforcement continues against the new owner.
3. How is the value of the real estate determined?
Since no one except a qualified expert can accurately assess the market value of real estate, the next stage of enforcement is the assessment of its market value.
In practice, this means that the court will appoint an expert and instruct them to determine the market value of the specific real estate.
The creditor is required to pay the advance for this expert assessment.
The expert must complete the valuation and submit their expert report within the deadline set by the court.
And although the law states that “the court determines the value of the real estate by its own free assessment (…)” — in practice, courts almost always adopt the exact value established by the expert.
Not a cent more, not a cent less.
4. The procedure of selling the real estate at public auction …
Under the old enforcement laws, the sale of real estate did not take place online — it was conducted in the courtroom as an auction.
Today, that is no longer the case.
Now everything is done online, through FINA’s platform e-Dražba.
I wrote more about purchasing real estate through FINA’s auction here:
In this text, I won’t go into the technical details of buying real estate at a public auction — instead, I will highlight only the essential things everyone must know.
When real estate is sold through FINA’s public auction system, there may be up to two auctions.
A second auction will take place if the first one is unsuccessful — meaning if the property is not sold in the first round.
In any case, the starting price at the first public auction is 4/5 of the established market value. At the second auction, the starting price is 3/5.
What does this mean?
It means that if the expert determines in the valuation report that the property is worth EUR 200,000, then the starting price at the first auction will be EUR 160,000. At the second auction it will be EUR 120,000.
The court will also determine the “bid increment amount”.
And it will set the deadline for paying the participation deposit.
Why is this important?
Because only persons who have paid the participation deposit may take part in the public auction — which remains open for two weeks. No one else can participate.
In practice, this means that if you are the only one who has paid the deposit, you will be able to buy the property for the starting price.
If you submit the highest bid for that real estate, the court will issue a decision awarding the property to you.
In that decision, the court will set the deadline within which you must pay the remaining purchase price (the deposit you previously paid is included in that amount).
If you do not offer the highest bid, the court will return your deposit.
GOOD TO KNOW: In the decision awarding the real estate to the buyer, the court will order the deletion of all encumbrances and notes previously registered on the property. In other words — the buyer receives a “clean title.” Except in rare, exceptional cases.
In any event — once the buyer pays the purchase price into the account designated by the court, the court will issue a conclusion on the transfer/delivery of the real estate to the buyer.
In conclusion - is it over?
In theory, that’s how it should be.
In practice, it often isn’t.
Why?
Because debtors often live in the real estate, refuse to leave it, and/or refuse to remove their belongings.
In such cases, the buyer must initiate enforcement for vacating and delivering the real estate in order to have the remaining persons and belongings removed through the court.
Unfortunately — these proceedings can also move very slowly.
Even though one might reasonably expect such a procedure to be “finished” within a month, it often stretches over several months.
In the worst-case scenario — even a year, two, or three.
P.S.
Please keep in mind that this is a highly simplified overview of the process of real estate enforcement, covering only the essential steps and notes.
For more detailed information, exceptions, rules, and legal guidance — please consult a lawyer you trust.
