1 Real Estate Law
1.1 Please briefly describe the main laws that govern real estate in Slovenia. Laws relating to leases of business premises should be listed in response to question 10.1. Those relating to zoning and environmental should be listed in response to question 11.1.
The grounds of real estate law are defined in the Constitution. The main law that governs real estate is the Rights in Rem Act. It defines basic principles, possession and rights in rem (as well as the method of their acquisition, transfer, protection and extinguishment). The Land Registry Act is primarily procedural law. Other notable laws include the Agricultural Land Act, the Forest Act, the Water Act, the Housing Act, the Protection of Buyers of Apartments and Single Occupancy Buildings Act, the Act on Reciprocity and the Registering of Real Estate Act.
1.2 What is the impact (if any) on real estate of local common law in Slovenia?
Slovenia belongs to the Roman law based countries. Therefore, the common law has a rather insignificant impact.
1.3 Are international laws relevant to real estate in Slovenia?
Please ignore EU legislation enacted locally in EU countries. International laws are not relevant as concerns real estate law in Slovenia, except for the issue of reciprocity (please see the information given under question 2.1 below).
2 Ownership
2.1 Are there legal restrictions on ownership of real estate by particular classes of persons (e.g. non-resident persons)?
Real estate may be owned by individuals and legal entities. Foreigners may acquire ownership rights to real estate under the conditions provided by law or a treaty ratified by the Parliament. Currently, the only foreigners that can purchase real estate in Slovenia under the same conditions as Slovenians are citizens of the EEA, the OECD and the US. Also persons with the status of Slovenians without Slovenian citizenship can acquire the title to real estate under the same conditions as citizens of Slovenia. On a reciprocal basis, foreigners from an EU candidate country are also entitled to purchase real estate in Slovenia.
3 Real Estate Rights
3.1 What are the types of rights over land recognised in Slovenia? Are any of them purely contractual between the parties?
Apart from rights in rem (ownership, mortgage, land debt, easement, right of encumbrance and building right), obligatory rights are recognised. Obligatory rights on real estate are, inter alia, the right to prohibit alienation or encumbrance, the right to lease or rent, a contractual pre-emption or redemption right and a special right to use a public asset.
3.2 Are there any scenarios where the right to a real estate diverges from the right to a building constructed thereon?
Divided co-ownership (condominium) and building right are the only rights in rem where the principle of superficies solo cedit is not followed.
4 System of Registration
4.1 Is all land in Slovenia required to be registered? What land (or rights) are unregistered?
All real estate is required to be registered. All land is registered. Rights in rem must be registered. Obligatory rights do not need to be registered.
4.2 Is there a state guarantee of title? What does it guarantee?
With regard to the Slovenian Land Registry, the principle of good faith applies. This means that any person acting in good faith in relation to legal transactions and relying on the information entered in the Land Registry regarding rights shall not suffer any detrimental consequences for doing so. There is no state guarantee or insurance for title.
4.3 What rights in land are compulsory registrable? What (if any) is the consequence of non-registration?
Rights in rem must be registered in order to come into the existence. With respect to real estate not yet entered in the Land Registry (some cases of divided co-ownership), the seller proves ownership through the chain of original former deeds, thereby covering the entire period from the respective real estate’s construction to the present. In regards to a mortgage on real estate not yet entered in the Land Registry, the conclusion of a directly enforceable notarial deed is equivalent to an entry in the Land Registry.
4.4 What rights in land are not required to be registered?
Obligatory rights are not required to be registered.
4.5 Where there are both unregistered and registered land or rights is there a probationary period following first registration or are there perhaps different classes or qualities of title on first registration? Please give details. First registration means the occasion upon which unregistered land or rights are first registered in the registries.
Not applicable.
4.6 On a land sale, when is title (or ownership) transferred to the buyer?
Title is transferred to the buyer upon its registration in the Land Registry.
4.7 Please briefly describe how some rights obtain priority over other rights. Do earlier rights defeat later rights?
The priority of certain rights over other ones is governed by the ranking as registered in the Land Registry. The right that has been registered earlier in the Land Registry has priority in ranking over the right registered at a later date.
However, some rights are not registered in the Land Registries (e.g. statutory pre-emption rights). The main rule is that, in the event of conflict between a statutory and contractual right, the statutory right shall prevail.
5 The Registry / Registries
5.1 How many land registries operate in Slovenia? If more than one please specify their differing rules and requirements.
Slovenia has one Land Registry. It is a book of public record and contains information on property rights and legal title. The Land Registry is computerised.
5.2 Does the land registry issue a physical title document to the owners of registered real estate?
The Land Registry issues an order on registration of a title; however, it does not rely on this document; a person acquires a title only when registered.
5.3 Can any transaction relating to registered real estate be completed electronically? What documents need to be provided to the land registry for the registration of ownership right? Can information on ownership of registered real estate be accessed electronically?
The entry in the land register is completed electronically. The underlying documents must include a legal basis for the registration (e.g. purchase agreement) with notarised land registry permission. Information on ownership of registered real estate can be accessed electronically.
5.4 Can compensation be claimed from the registry/registries if it/they makes a mistake?
Pursuant to the rights stipulated in the Constitution, anyone has the right to claim compensation for damages incurred through unlawful actions in connection with the performance of any function or other activity by a person or body performing such function or activity under state authority, local community authority or as a bearer of public authority. This means that the state is liable for such compensation. In addition, any person suffering damage also has the right to demand, in accordance with the law, compensation directly from the person or body that caused the damages.
5.5 Are there restrictions on public access to the register? Can a buyer obtain all the information he might reasonably need regarding encumbrances and other rights affecting real estate?
A buyer can obtain all the information relating to real estate that he might reasonably need.
6 Real Estate Market
6.1 Which parties (in addition to the buyer and seller and the buyer’s finance provider) would normally be involved in a real estate transaction in Slovenia? Please briefly describe their roles and/or duties.
a) Real estate brokers:
Real estate brokers act as intermediaries between sellers and buyers. Their deals consist of the verification of the respective real estate’s status, activities required to establish the contact between parties, negotiations, as well as the preparation and conclusion of legal transactions.
b) Lawyers:
Lawyers verify the status of the real estate and prepare the required legal documentation.
c) Notaries:
Notaries notarise the signature of a seller on the land registry permission (they may also verify the status of the real estate and prepare a contract). They also participate in land registry filing proceedings (conversion of underlying documents into electronic form and submission to the court).
6.2 How and on what basis are these persons remunerated?
a) Real estate brokers:
Their commission is subject to the Real Estate Brokerage Act whereby the broker may charge a commission of up to 4% of the purchase price, unless the transaction value of real estate is less than EUR 10,000.
b) Lawyers:
Fees are currently defined in the Attorney Fees Act but could be agreed differently.
c) Notaries:
Fees are defined in the Notaries’ Tariff.
6.3 How has the real estate market in Slovenia recovered or reacted following the global credit crunch and worldwide recession in 2008/2010? What were the most important real estate transactions in Slovenia in the past year? Please include both local and international investors in your answer.
A fall in real estate transactions and in prices has been visible in Slovenia. A fall has also been seen in the number of requested building permits. In 2012, a selection of investments and a sale and lease back transaction relating to a Slovenian leading food retailer regarding a EUR 500 million real estate monetisation project are in progress.
6.4 Is there a trend in Slovenia towards the investment in retirement homes / nursing homes due to the increased ageing of the population?
Even though construction has decreased in general, more and more advertisements for retirement homes and nursing homes can be observed in Slovenia.
7 Liabilities of Buyers and Sellers in Real Estate Transactions
7.1 What (if any) are the minimum formalities for the sale and purchase of real estate?
A written purchase contract is required and must, at a minimum, include the parties, the respective real estate and the purchase price. In order to register ownership, the seller must also provide a land registry permission whereby its signature must be notarised. A notary may notarise the signature only when proof that the real estate transfer tax has been paid is obtained (or in case of value added tax: an invoice is attached; or information from the invoice is included in the contract) and if the certificate on use (issued by the competent municipality) does not include any restrictions with respect to the transfer.
In some cases it is necessary that a contract is in a form of a notarial deed.
7.2 Is the seller under a duty of disclosure? What matters must be disclosed?
The seller has a duty of disclosure arising under the principle of good faith.
7.3 Can the seller be liable to the buyer for misrepresentation?
The seller can be liable for misrepresentation.
7.4 Do sellers usually give contractual warranties to the buyer? What would be the scope of these? What is the function of warranties (e.g. to apportion risk, to give information)? Are warranties a substitute for the buyer carrying out his own diligence?
If (and which) guarantees are given depends on the contractual parties. Pursuant to the Obligation Code, the seller is liable for material defects in the real estate that existed when the risk was transferred to the buyer, irrespective of whether the seller knew about them. The seller is also liable for those material defects that manifest themselves after the risk was transferred to the buyer, provided that they are the result of a cause which existed prior to the risk transfer. Relating to legal defects, please see also under question 7.5 below.
7.5 Does the seller warrant its ownership in any way? Please give details.
The seller is liable if a third person holds any right on sold real estate that excludes, reduces or restricts a right of the buyer, and the buyer was not informed about such third party’s right and did not consent to acquire the real estate subject to the encumbrance. However, the buyer should verify the real estate’s status in the Land Registry.
7.6 What (if any) are the liabilities of the buyer (in addition to paying the sale price)?
The buyer is also obliged to verify the real estate’s status in the Land Registry and inspect the real estate in the customary manner.
8 Finance and Banking
8.1 Please briefly describe any regulations concerning the lending of money to finance real estate. Are the rules different as between resident and non-resident persons and/or between individual persons and corporate entities?
The main provisions relating to the lending of money are stated in the Obligation Code, the Obligations Act, the Banking Act, the Consumer Protection Act and the Consumer Credit Act. Please see further details under question 8.4 below.
8.2 What are the main methods by which a real estate lender seeks to protect itself from default by the borrower?
The lenders usually conclude security agreements, that is to say personal (e.g. surety, bank guarantee) and collateral security (e.g. mortgage, land debt, possessory and non-possessory lien on movables, property rights or securities, assignment of movables as collateral or the assignment of claims as security).
8.3 What are the common proceedings for realisation of mortgaged properties? Are there any options for a mortgagee to realise a mortgaged property without involving court proceedings or the contribution of the mortgagor?
The most common proceeding is a public auction. Currently a mortgage cannot be realised without involving court proceeding.
8.4 What minimum formalities are required for real estate lending?
A loan contract needs to be concluded in written form. If the debtor is a consumer, the provisions of the Consumer Credit Act (specifying the requisite contractual provisions) will apply. Furthermore, a loan contract secured by a mortgage (or a land debt) must be in a form of a notarial deed, and the pledgor must be present personally at the execution of the contract. Specific provisions apply if the creditor is a bank. Such contract must include provisions on the amount of the loan as well as the conditions under which the loan is to be given, its purpose and terms of repayment.
8.5 How is a real estate lender protected from claims against the borrower or the real estate asset by other creditors?
The claims of a real estate lender rank pari passu with all of the other present and future unsecured obligations, except for the claims mandatorily preferred by law. The lender is protected if its claims against the borrower are secured.
9 Tax
9.1 Are transfers of real estate subject to a transfer tax? How much? Who is liable?
Where value added tax is not levied, every transfer of real estate ownership for consideration is subject to a real estate transfer tax at the standard rate of 2% of the real estate purchase price or value, respectively. The seller is ultimately liable for taxation (the contracting parties may agree that the tax shall be paid by the buyer).
9.2 When is the transfer tax paid?
Generally, a tax liability is created at the moment of the contract’s conclusion (where its subject is real estate). The application for taxation must be filed within 15 days after the conclusion, and the tax needs to be paid within 30 days from the date at which the party liable for taxation received the notice concerning the tax assessment.
9.3 Are transfers of real estate by individuals subject to income tax?
If real estate was acquired after 1 January 2002, the capital gains tax base rate for individuals is 20%, which is reduced by 5% for every 5 years the real estate is held. Further gain exemption is applicable in case of a housing unit or residential building consisting of not more than two apartments and appertaining land, in which the individual had its permanent residence, owned it and actually lived in it for at least three years prior to the disposal.
9.4 Are transfers of real estate subject to VAT? How much? Who is liable? Are there any exemptions?
VAT should only be paid for the transfer of construction land or buildings as well as for the land on which they are built, prior to first moving in and/or use (or - where the transaction was made before the expiration of two years - from the first year of use and/or moving in). Notwithstanding these provisions, the contracting parties (if both are subject to VAT) may always agree on VAT. The general rate is 20% (for some real estate it is 8.5%). The seller is ultimately liable for tax claims.
9.5 What other tax or taxes (if any) are payable by the seller on the disposal of a property?
If not agreed otherwise, the seller is required to pay the land transfer tax (provided that VAT is not applicable). If the seller is an individual, please see also question 9.3 above. Regarding legal entities, the Corporate Income Tax Act sets forth the cases where the transfer of real estate shall be deemed a source of income.
9.6 Is taxation different if ownership of a company (or other entity) owning real estate is transferred?
There is no taxation regarding the transfer of real estate in the context of a change of ownership of a company that owns real estate. Please see also question 9.5 above.
10 Leases of Business Premises
10.1 Please briefly describe the main laws that regulate leases of business premises.
The main laws are the Obligation Code and the Office Buildings and Business Premises Act.
10.2 What types of business lease exist?
There are no specific provisions regarding general classification of business leases.
10.3 What are the typical provisions for leases of business premises in Slovenia regarding: (a) length of term; (b) rent increases; (c) tenant’s right to sell or sub-lease; (d) insurance; (e) (i) change of control of the tenant; and (ii) transfer of lease as a result of a corporate restructuring (e.g. merger); and (f) repairs?
a) Length of term
Definite or indefinite period.
b) Rent increases
Possible to agree (e.g. foreign currency clause, inflation rate).
c) Tenant’s right to sell or sub-lease
A statutory provision which addresses the tenant’s right to sell does not exist. If not agreed otherwise, a sub-lease is not allowed without the landlord’s consent. A sub-lease is always terminated if the original lease agreement is terminated.
d) Insurance
The landlord usually covers the costs for the insurance relating to common use areas and installations.
e) (i) Change of control of the tenant
If not agreed otherwise, the lease remains with the tenant.
e) (ii) Transfer of lease as a result of a corporate restructuring (e.g. merger)
If not agreed otherwise and the new entity arising under the corporate restructuring is the universal legal successor of the tenant, the lease agreement remains with the new entity.
f) Repairs
If not agreed otherwise, the costs must be borne by the landlord.
10.4 What taxes are payable on rent either by the landlord or tenant of a business lease?
The lease of real estate is exempted from VAT, except where the contracting parties (both being subject to VAT) previously agree that VAT shall be charged. Rent payments are considered an income for which the law expressly stipulates that it is subject to the payment of income tax.
10.5 In what circumstances are business leases usually terminated (e.g. at expiry, on default, by either party etc.)? Are there any special provisions allowing a tenant to extend or renew the lease or for either party to be compensated by the other for any reason on termination?
Business leases may be agreed upon for a definite or indefinite period of time. Unless a lease agreement is terminated with consent or for breach of contract by the other party, any lease for a definite period of time ceases with the expiration of the lease term. Leases for an indefinite period of time cease upon termination, i.e., after the expiry of the termination notice period (which cannot be shorter than 12 months). A lease agreement concluded for a definite period will transform into an indefinite term lease agreement if the tenant continues to use the premises after the termination of the lease agreement, and the landlord does not file an application for a court order to vacate within one month after the lease term expires.
10.6 Does the landlord and/or the tenant of a business lease cease to be liable for their respective obligations under the lease once they have sold their interest? Can they be responsible after the sale in respect of pre-sale non compliance?
If the landlord transfers ownership of the leased object (and the publicity of the lease is ensured), the acquirer shall assume the landlord’s place under the lease, and the rights and obligations arising under the lease shall thereafter exist between the acquirer and the tenant. The transferor shall be jointly and severally liable as a surety for the obligations held by the acquirer under the lease. If - because of the alienation of a leased object - the landlord’s rights and obligations were transferred to the acquirer, the tenant may in any case terminate the contract. By doing so, however, the tenant is required to observe the statutory termination periods. Where a sub-lease exists, the tenant must guarantee to the landlord that the sub-tenant will use the property under the sub-lease in accordance with the lease contract.
10.7 Green leases seek to impose obligations on landlords and tenants designed to promote greater sustainable use of buildings and in the reduction of the “environmental footprint” of a building. Please briefly describe any “green obligations” commonly found in leases stating whether these are clearly defined, enforceable legal obligations or something not amounting to enforceable legal obligations (for example aspirational objectives).
Commonly, the lease agreements do not include provisions requiring the contracting parties to ensure that the use and operation of the premises minimises environmental impacts.
11 Public Law Permits and Obligations
11.1 What are the main laws which govern zoning and related matters concerning the use and occupation of land?
Please briefly describe them and include environmental laws.
The main laws are the Spatial Planning and Management Act, Spatial Planning Act, the Construction Act, the Cultural Heritage Protection Act, the Environment Protection Act and the Nature Conservation Act.
11.2 Can the state force land owners to sell land to it? If so please briefly describe including price mechanism.
The ownership right may be expropriated against the damages (value of the real property and costs relating to the expropriation) or compensation in kind. Expropriation shall be admissible for the public benefit only and under a condition that it is essential to attain the public benefit, and that the public benefit of the purpose of expropriation is in proportion with the interference with private property.
11.3 Which bodies control land/building use and/or occupation and environmental regulation? How do buyers obtain reliable information on these matters?
The area of zoning and related matters is covered mainly by the responsible ministries (mostly Ministry of Environment and Spatial Planning, Ministry of Agriculture, Forestry and Food), organs under their responsibility, the administration units and municipalities, respectively. These are also the authorities where the buyer can obtain respective information.
11.4 What main permits or licences are required for building works and/or the use of real estate?
In general, the main permit for building works is a building permit. In some cases, building works may start without obtaining a building permit (e.g. for construction of a simple object). A use permit is generally necessary to be able to start using an object.
11.5 Are building/use permits and licences commonly obtained in Slovenia? Can implied permission be obtained in any way (e.g. by long use)?
Permits are commonly obtained. Only in certain statutory defined cases may implied permission for use be obtained (this applies, inter alia, under specified conditions to single occupancy buildings that were in use on 1 January 2002).
11.6 What is the appropriate cost of building/use permits and the time involved in obtaining them?
The Administrative Fees Act defines building and use permit fees. Building permits are generally calculated based on the value of the investment, the costs of use permits depend on the type of construction and cannot exceed EUR 272. Before obtaining a building permit, investors must cover the costs for meeting project conditions and obtain consents for construction, as well as development tax (payment for a part of the costs for providing land with the local municipal infrastructure). The permits are generally issued within one month (summary procedure) or two months (special procedure).
11.7 Are there any regulations on the protection of historic monuments in Slovenia? If any, when and how are they likely to affect the transfer of rights in real estate?
The Cultural Heritage Protection Act defines statutory pre-emption rights in favour of the state and municipalities.
11.8 How can e.g. a potential buyer obtain reliable information on contamination and pollution of real estate? Is there a public register of contaminated land in Slovenia?
A potential buyer can obtain information while checking on use of land over the past years, test drills, etc. No register of contaminated land exists.
11.9 In what circumstances (if any) is environmental clean up ever mandatory?
Environmental clean-up (cleaning up the source of pollution and the effects from it) is mandatory in cases of excessive environmental strain.
11.10 Please briefly outline any regulatory requirements for the assessment and management of the energy performance of buildings in Slovenia.
Slovenia has implemented the EU Directive on the energy performance of buildings in its legislation. Beside the Energy Act, the Construction Act includes provisions relating to methodology of calculation and requirements on the energy performance of buildings, while regular inspection of boilers is covered by the Environment Protection Act.
12 Climate Change
12.1 Please briefly explain the nature and extent of any regulatory measures for reducing carbon dioxide emissions (including any mandatory emissions trading scheme).
Following the UN Framework Convention on Climate Change, Kyoto Protocol, EU legislation and its Constitution, Slovenia has adopted most of its legislation (setting a register of emissions, measures for their reductions, pollution levy, emission trading). Slovenia is included in the emission trading scheme (which means limiting emissions to 8.1m tonnes of CO2), therefore only emissions from the non-traded sector matter in attaining the Kyoto target.
12.2 Are there any national greenhouse gas emissions reduction targets?
National greenhouse targets were set. Emission allowances are currently distributed on the basis of national allocation plan, which reflects the Kyoto targets of Member States. The second trading period (2008–2012) is being implemented; with the start of the third period (2013–2020) some changes will be enforced; e.g. the emission limit will be determined at the EU level and no longer via the allocation plans of individual Member States.
12.3 Are there any other regulatory measures (not already mentioned) which aim to improve the sustainability of both newly constructed and existing buildings?
In compliance with EU legislation, Slovenia has i.a. introduced the issuance of building energy certificates, regulations on efficient use of energy and energy-efficient buildings.
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