Executive Summary - Ministria e Drejtësisë€¦ · Web viewSee R. Zhivkovska, Stvarno pravo,...

EU funded project managed by the EUO in Kosovo and implemented by a Consortium led by GIZ IS

Support to Civil Code and Property Rights (CCPR)

Contract Number: 2014/344-574

REVISED REPORT

“Legal Assessment of Existing Legislation on Civil Code Related Areas in the Light of European Legal Standards and Best

Practice: The Law of Property”___________________________________________________________________________

Component C, Activity C.3: “Undertake a legal assessment in the light of European legal standards and best practice to identify

inconsistencies and gaps” (ToR, Activity 1.3)

Pristina, November 2015

This project is implemented by a consortium led by GIZ

International Services

of 63


DISCLAIMER

This report has been edited by the Key Expert, Mr. Marco Roccia, based on the work carried out by a team composed by of Prof. Tomislav Boric, Prof. Iset Morina, Mr. Lazim Salihu, Ms. Odeta Hyseni, Mr. Muhamet Brahimi and Mr. Korab Dibra. The findings, conclusions and interpretations expressed in this document are those of the authors alone and should in no way be taken to reflect the policies or opinions of the European Union Office in Kosovo.

This project is implemented by a

consortium led by GIZ International Services


Table of ContentsI. EXECUTIVE SUMMARY........................................................................................................1II. ABBREVIATIONS..................................................................................................................2III. INTRODUCTION...................................................................................................................5IV. AIM..................................................................................................................................... 5V. EUROPEAN STANDARDS IN THE FIELD OF PROPERTY RIGHTS.............................................5

1. European Convention on Human Rights.............................................................................6

2. Treaty on the Functioning of the European Union (TFEU)................................................15

3. Secondary law...................................................................................................................17

4. Case Law of the European Court of Justice.......................................................................18

VI. BEST PRACTICES IN SELECTED COUNTRIES.............................................................................221. General Remarks...............................................................................................................22

2. Austria...............................................................................................................................22

3. Germany........................................................................................................................... 27

4. Switzerland....................................................................................................................... 30

5. Croatia.............................................................................................................................. 34

6. FYROM (Former Yugoslav Republic of Macedonia)...........................................................38

7. Slovenia.............................................................................................................................44

VII. LEGAL ASSESSMENT OF KOSOVO LEGISLATION IN RELATION TO EUROPEAN LAW...............47Bibliography.................................................................................................................................58




I. EXECUTIVE SUMMARY

Any property law reform is to be framed within the guidelines of ECHR and relevant case law based on two rules (1. protection of property 2. deprivation of property) and three principles (1. lawfulness, 2. legitimate aim in the public interest, 3. fair balance 4.legitimate expectation).

EU Law considers property law mainly as an internal matter of EU Member States (Article 345 TFEU), although a fragmentary European Union Property law is emerging based on the four fundamental freedoms provided by the EC Treaty. Article 49 TFEU is of great relevance in relation to the right of foreigners to acquire immovable property.

When juxtaposing ECHR, ECtHR case-law, EU Law and best legal practices to the domestic regime on property rights, concerns may be expressed above all in relation to a proper definition of the different types of property, lack of an adequate legal framework regarding the definition of which objects are publicly owned, just compensation arising from expropriation, socially owned properties in a way to balance rights of owners and tenants, access of foreigners to property, acquisitive prescription (usucapio) , lack of harmonisation between the law on property and the one on obligations, acquisition, transfer and protection of ownership, constitutive and declarative character of registration and which rights need to be registered, proper regulation of flat ownership, of construction rights, securities and mortgages.

The legislative systems of Austria, Croatia, Germany, Macedonia, Slovenia and Switzerland have been advisedly chosen to serve as a model in order to identify gaps and inconsistencies with European best practices in the existing legislation in Kosovo. A number of these countries were selected by reference to the legal tradition of Kosovo. Some of them have faced similar experiences during the transition period




II. ABBREVIATIONS

Agency Kosovo Property Comparison and Verification Agency

Article Article

CC Constitutional Court

CCPR Civil Code and Property Rights

cf. compare

ECHR European Convention on Human Rights

ECtHR European Court of Human Rights

ECJ European Court of Justice

Ed. Edition, editor

e.g. (exempli gratia) for example

EU European Union

EUO EU Office in Kosovo

FYROM Former Yugoslav Republic of Macedonia

FRY Federal Republic of Yugoslavia

GIZ Deutsche Gesellschaft für Internationales Zusammenarbeit GmbH

GIZ IS GIZ International Services

GoK Government of Kosovo

HPCC Housing and Property Claims Commission

HPD Housing and Property Directorate

id. (idem) in the same work

i.e. (id est) that is

IPRR Immovable Property Rights Register

KCA Kosovo Cadastral Agency

KIESA Kosovo Investment and Enterprise Support Agency




KJC Kosovo Judicial Council

KPA Kosovo Property Agency

KPCC Kosovo Property Claims Commission

KTA Kosovo Trust Agency

KWA Kosova Women´s Network

LEIPRR Law on establishment of immovable property rights registry

LOR Law on Obligation Relationships

LPRR Law on Property and other Real Rights

MCO Municipal Cadastral Office

MESP Ministry of Environment and Spatial Planning

MoJ Ministry of Justice

MoU Memorandum of Understanding

MDP Municipal Development Plans

NGO Non-Governmental Organization

No. Number

O.G. Official Gazette

OPM Office of the Prime Minister

OSCE Organization for Security and Co-operation in Europe (Mission in Kosovo)

PAK Privatization Agency of Kosovo

par. paragraph

PRP Property Rights Program (USAID)

PRPL Plan for Reforming Property Law

R.K. the Republic of Kosovo

SAA Stabilization and Association Agreement

SAPK Socialist Autonomous Province of Kosovo

SFRY Socialist Federal Republic of Yugoslavia

SOE Socially Owned EnterpriseThis project is

implemented by a consortium led by GIZ International Services


STE Short Term Expert

Strategy National Strategy on Property Rights

SWG Property Rights Sector Working Group

ToR Terms of Reference

TFEU Treaty on the Functioning of the European Union

UDP Urban Developments Plans

UNMIK United Nations Interim Administration Mission in Kosovo

URP Urban Regulatory Plans

USAID United States Agency for International Development

Vienna Declaration Vienna Declaration on Informal Settlements in South Eastern Europe




III. INTRODUCTION

To be seen as the final output of activity C.3, this report is intended to serve as reference material for the preparation of subsequent activities C. 4 and C. 5 of the project´s Terms of Reference.

Based on selected topics within the property rights regime in Kosovo, this report evaluates existing property legislation by defining gaps and inconsistencies and incompatibilities in the light of European legal standards and best practices. Such legal systems are to be used in order to spot legal deficiencies on the one hand and suggest appropriate solutions on the other. By juxtaposing ECHR, EU and selected best practices to the current regime of property law in Kosovo, conclusions are formulated.

IV. AIM

The final purpose of the Assessment Report is to determine whether the existing legislation as well as institutions entrusted with implementing such legislation are providing an appropriate framework for property-related rights and transactions in line with European legal standards.

V. EUROPEAN STANDARDS IN THE FIELD OF PROPERTY RIGHTS

Due to their importance in a free market economy, property rights are given special attention in international agreements and conventions. European standards include the ECHR, together with the case law of the ECtHR, the EU Treaty and Directives enforced by the European Court of Justice (ECJ) and principles of the acquis communautaire.

Kosovo is aspiring for EU membership and is in process of negotiating the SAA with the EU, therefore legislation pertaining to property rights needs to be in line with European best practices. As regards the Constitution of Kosovo, a number of International Agreements prevail, including the ECHR.




Since Kosovo is not a member of the Council of Europe, the Convention has not been ratified; nevertheless its provisions are part of the law of Kosovo, as the Constitution and Constitutional Court of Kosovo repeatedly remind us since both referring to its provisions and case law.1

1. European Convention on Human Rights2

The ratification of the ECHR is a prerequisite for EU accession. According to Article 22 3 and Article 534 of the Constitution of the Republic of Kosovo, the ECHR is applicable and prevails.

There are two main provisions of the ECHR impinging on to the right to property:

Article 1 (Protocol 1) (1) Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. (2) The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.

Article 46 of the Constitution of Kosovo has adopted the same concept. The Republic of Kosovo guarantees the right to property in accordance with public interest.

Article 6 on Fair Trial5 1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law….

1 See Case no. KI97/14 Applicant Velibor Jokic on the web site of the Constitutional Court of Kosovo related to Article 1 Protocol 1, the right to a fair trial, the non-enforcement of final court decisions, etc. This case and the many others show the continuous reference to the ECtHR and ECHR articles and case law by both the applicant and the CC.2 See the www.echr.coe.int and www.coe.int.3 Constitution of the Republic of Kosovo, Article 22 Direct Applicability of International Agreements and Instruments: Human rights and fundamental freedoms guaranteed by the following international agreements and instruments are guaranteed by this Constitution, are directly applicable in the Republic of Kosovo and, in the case of conflict, have priority over provisions of laws and other acts of public institutions:… (2) European Convention for the Protection of Human Rights and Fundamental Freedoms and its Protocols; …4 Constitution of the Republic of Kosovo, Article 53 Interpretation of Human Rights Provisions: Human rights and fundamental freedoms guaranteed by this Constitution shall be interpreted consistent with the court decisions of the European Court of Human Rights.5 See Case of S.L. and J.L. v. Croatia no. 13712/11, also described in the following pages of this report.See also case Beshiri and Others v. Albania 7352/02 on a violation of both Article 1 Protocol 1 and Article 6 interpreted as failure to enforce domestic final decisions. Similarly Vrioni and Others v. Albania 42832/06 also relate to violations of both articles.




Article 31 on Fair and Impartial Trial of the Constitution of Kosovo corresponds to the concepts set forth in Article 6 ECHR.

1. European Court of Human Rights

ECtHR judgments on Article 1 Prot. 1 ECHR provide a legal frame which may be conveniently classified into rules and principles. This Report will consider such rules and principles in order and will quote summaries of Court’s case-law in a way to better understand otherwise excessively abstract concepts

Rules

The ECtHR devised three rules based on Article 1 of Protocol 1 :6

Rule 1: Protection of property: it is contained in the first sentence of Article 1 of Protocol 1 ECHR (‘Every natural or legal person is entitled to the peaceful enjoyment of his possessions ’)7 as the following case illustrates:

S.L. and J.L v. Croatia, no. 13712/11S.L and J.L case concerns two minors, whose parents, one in prison and the other a drug addict, exchanged a seaside valuable villa for an apartment worth nearly half the value of the villa, which was registered under the names of their children. According to Croatian national law, for the contractual agreement of the exchange to take place, the parents had to obtain permission from a state centre for the protection of the rights of minors. The Centre gave authorization for the exchange of properties based on the mother’s request and description of the hardship of their economic circumstances. However it did not consider sufficiently the fact that she was a drug addict and that the value of the villa was almost double the value of the apartment at the time. In other words, the Centre failed to protect the rights of the minors and their best interests.

Basing itself heavily on national Croatian legislation8, relevant international law9 and case law10, the Court decided that, despite the fact that the Croatian Government had taken measures to establish such a centre for the protection of the rights of minors, it still failed to afford such

6 Web site of the ECtHR: www.echr.coe.int7 See Case of Arsovski v. The Former Yugoslav Republic of Macedonia no.30206/06, the decision of the EctHR taken in 2013, which found FYROM in violation of Article1 Par 1 of Protocol 1 on the peaceful enjoyment of property8 Constitution of Croatia, Civil Obligations Act, Family Act, Civil Procedure Act and Real Estate Transfer Tax Act. 9 United Nations Convention on the Rights of a Child, Committee of the Rights of the Child, and also the Charter of Fundamental Rights of the European Union. 10 See also Zehenter v. Austria, 2009.




protection in practice. This happened especially because the relevant claims had all been dismissed by the Croatian authorities and courts, without giving the minors a chance to reclaim their rights. The Court decided that Croatia was in violation of Article 1 Protocol 1 ECHR. As the applicants asked for restitutio in integrum, the Court gave the Croatian Government and the applicants 3 months’ time to negotiate an agreement.

Assessment:

The case and decision of the ECtHR require raising the level of safeguards in relation to the rights of minors to property. In a traditional patriarchal society, such as the one we may find in Kosovo, the rights of minors are frequently not sufficiently protected. In the case examined above, the centre established for the protection of the rights of minors failed in its obligations. In Kosovo, such a centre or a similar institution does not exist. Contractual relationships involving the rights to property of minors and women need to be object of specific legislation in order to bring their protection to a higher level.

Rule 2: The second rule concerns deprivation of property. It sets out requirements and general principles for expropriation of immovable property, which may be found in the second sentence of Article 1 of Protocol 1 (‘No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.’).11

Arsovski v. The Former Yugoslav Republic of Macedonia no.30206/06The applicant’s plot of land was erroneously recorded under the State’s name in the Land Register in 1973. The state gave the plot to a company for agricultural and geological purposes. The applicant filed a lawsuit. The courts in 2002 confirmed that he had always been in possession of the plot despite the relevant title was erroneously registered. The company requested the Government to expropriate the plot for the purpose of extracting mineral water; an activity which the Government pleaded to be in the public interest. The applicant filed a lawsuit. The courts decided that the company should offer the applicant an amount of compensation, which Mr. Arsovski did not find satisfactory.

The ECtHR considered that the compensation awarded by the domestic courts was insufficient to offset the burden borne by the applicant. It also noted that the domestic authorities did not take into consideration the existence of mineral water in calculating the expropriation

11 See Case of Gashi v. Croatia, no.32457/05, especially Par 28 and 31that relate directly to the deprivation of property in the name of public interest and its balance to the peaceful enjoyment of property.




compensation. Therefore, even though the expropriation was indeed for the public interest and there was a legitimate aim for the government, the third criterion of proportionality was not fulfilled. The court decided that the burden of the applicant’s expropriation was not proportionate to that of the benefit of the State and the private company that exploited the mineral water. The Court found that the expropriation of the applicant’s land made him bear a burden which was excessive and disproportionate to the aim sought to be achieved. Finally the government had to compensate the applicant.

Assessment:

This case involved an erroneous entry in the Public Registry. The property of the applicant was alienated by the government to third parties, without the owner’s knowledge and consent. The second question dealt with by the case is of secure interest to the Republic of Kosovo since dealing with expropriation for public interest. Kosovo is dynamically changing its infrastructure and moving towards a market oriented economy. In such endeavours, compensation for expropriation is not always based on solid legal and economic references which provide a satisfactory compensation reflecting market value.

Rule 3: The third rule deals with limitation of use of property. It clarifies that obligations may be imposed on property in the general interest. This rule is contained in the second paragraph of Article 1 of protocol 1 (‘The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.’).

Herrmann v. Germany, no. 9300/0712

In 1993, Günther Herrmann inherited two landholdings of less than 75 hectares each. This made him automatically a de jure member of a hunting organisation—something he only became aware of in 2003. His request to terminate his membership of this association because he was opposed to hunting on ethical grounds was unsuccessful.

The local authorities held that Herrmann had to allow hunting on his land. They pointed out how compulsory membership of a hunting organisation for small landholders was an appropriate and necessary means of achieving a balance of interests between his property rights and the public interest of sporting and cultural activities. Even though Herrmann was entitled to a percentage of the profits from the hunting activities, he appealed his claims to all 12 See also Chassagnou and others v. France below




instances of domestic courts up to the ECtHR. The latter decided in 2011 that there had been a violation of Article 1 Protocol 1 ECHR by Germany. The court based its decision on the fact that in German law the owners of plots of over 75 hectares also had the duty to either hunt themselves or tolerate hunting. Such imposition on a landowner, opposed to the hunt on his property, is not a fair balance between protection of the right of property and the requirements of the general interest and was therefore incompatible with Article 1 of Protocol 1.

Assessment:

This case shows the State placing restrictions on the use of property in order to balance out the interests of different groups in society. The peaceful enjoyment of property does not mean that in a democratic market-oriented society one is free to utilise his own property in any manner. Property entails obligations, not only to the Government and immediate neighbours, but rather to society at large to protect the so-called common good. By such interference into the private ownership, the state is not only preserving old traditions, recreational activities, but also controlling the hunting activity. Nevertheless, such interference, without the consent and prior approval of the owner is found to be a violation of Article 1 Protocol 1 and seen as disproportionate and not in a fair balance with the rights of landowners.

Principles

The ECtHR has established three main principles13 applying to the protection of property:

1. Principle of lawfulness14 - any interference by a public authority with the right to peaceful enjoyment of possessions should be lawful, in other words based on domestic law. The case below is one of the landmark cases related to this principle.

Beyeler v. Italy 33202/96

The property in dispute was a painting by Van Gogh, which the Italian Authorities did not want to return based on a wrong interpretation of the UNESCO Convention. At the same time, due to initial lack of funds, the decision to rely on the pre-emption right, which the law accords to the Italian State, was delayed for five years. Finally in 1988 the Italian government arbitrarily decided to pay to the owner the price for the painting obtained in 1977. This value was much

13 See cases below of Herrmann v. Germany no. 9300/07and Cassagnou v. France no. 28443/9514 Landmark case Beyeler v. Italy 33202/96




less than the actual market value of 1988. The ECtHR found Italy in violation of Article 1 Protocol 1. In 2002 Italy paid Beyeler 1.3 Million EUR in damages according to the ECtHR decision, despite the claim of Beyeler to have his painting back or a compensation of 14 Million EUR as pecuniary damage, 1 Million EUR as non-pecuniary damage and ancillary costs of 775,000 EUR. With regard to the principle of legitimate aim, in this case the ECtHR emphasized that this principle implies not only mere lawfulness, but also entailed an examination as to whether there are elements of legal uncertainty in the domestic laws. The painting remained in the ownership of the Italian State, while the applicant received the indexed price had the painting been sold at market price when the Italian State paid for it.

Assessment:

The question is whether a state can exercise pre-emption rights whenever it pleases, i.e. dragging the pre-emption right decision for 5 years? Is this an unlawful interference with the peaceful enjoyment of property that places an excessive burden on the owner? The decision of the ECtHR remarks that this interference creates legal uncertainty, placing the conduct of the Italian state on a borderline between lawful and unlawful behaviour. Moreover, the compensation was not satisfactory; therefore the ECtHR decided that the applicant should receive a higher compensation for the property that was expropriated.

2. Principle of legitimate aim in the public interest15 – interferences of the state with the right to property have to serve a legitimate aim in accordance with the general interest. The following case of the ECtHR is an illustration of how the Court has decided in matters related to this principle.

Inze v. Austria no. 8695/79

This is a case of inheritance issues among brothers over an agricultural farm in the Federal Province of Carinthia in Austria. The Applicant's mother died intestate on 18 April 1975 and left as her heirs, apart from the Applicant, her husband and her second son. Under the Civil Code, the widower was entitled to a one-fourth part of the inheritance and each of the sons (irrespective of their illegitimate or legitimate birth) to three-eighths thereof. In proceedings before the Klagenfurt District Court, the heirs expressed their willingness to accept these shares. Under the Carinthian Hereditary Farms Act of 1903, farms of a certain size may not be 15 See case of Iatridis v. Greece 31107/96




divided in the case of hereditary succession; instead, one of the heirs must take over the entire property and pay off the other heirs. The Applicant claimed on 8 August 1975 that he should be called to take over his mother's farm as he was the eldest son and that both his step-father and his half-brother were in any event excluded as being unfit to work the farm. This was because, according to the laws of the same province, only legitimate children could inherit. In this particular case, as noticed, one of the brothers was born out of wedlock. The legislation showed that the precedence accorded to legitimate children was based on customary convictions of a rural society. The Carinthia Act also gave precedence in inheriting to male siblings over female ones.

In a judicial settlement, the brothers settled to divide their mother’s estate, where the illegitimate brother took a piece of forest at a value far less than he had partaken as his share of the farm. Thus, applicant was compensated in a very discriminatory way. Austria was found in breach of Article 1416 ECHR and of Article 1 Protocol 1 ECHR. In its decision, the ECtHR also raised the issue of traditions and customs as one of the arguments set forth in the proceedings by the Austrian Government. The Court advised the Austrian Government, that ’in future, the attribution of a hereditary farm is to be based on objective circumstances, notably training for running farms and the fact of having been brought up on the particular property...The aim of the legislation in question could also have been achieved by applying criteria other than that based on birth in or out of wedlock.’17

Assessment:

This case has been picked because of its parallelism with traditional or customary law in Kosovo. Legislation in the Austrian Federal Provinces, at the time of this decision, reflected old traditions and customs that in fact were outdated and not in line with the universal principles of human rights. The case highlights that specific customary norms may not only be outdated, but the application of such norms can result in violations by the state of the ECHR. In Kosovo, there are many traditional aspects related to the right to property, such as inheritance and the prevailing rights of the big families versus the rights, say, of widowed or divorced women and their children. There is need for more and greater attention in ensuring that current legislation takes a pro-active stance in order to prevent any customary practices that restrict and/or deprive citizens of their legitimate rights.

16 The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as ... birth or other status.17 Paragraph 44, Inze v. Austria.




3. Principle of fair balance18 – even in case of general interest, the state interference must not impose an excessive or disproportionate burden on the individual. The two cases presented below are related to this principle.

Berger-Krall and Others v. Slovenia, no. 14717/04

This is a case that involves the regime of ex-Yugoslav socially owned flats a result of the nationalisation of private property carried out during the communist and socialist regimes. More specifically it focuses on protected tenancy within the frame of restitution of property reforms undertaken by several countries in the Eastern Block.

In the former Socialist Republic of Slovenia, socially-owned dwellings represented a significant part of the housing stock (230,000 housing units19). Approximately one-third of the Slovenian population lived in such housing units at the time. The Denationalization Act 1991 permitted former owners (or their heirs) to claim restitution of properties which were expropriated by the State, including dwellings which had been left under the “specially protected tenancy” scheme. In parallel, the Housing Act 1991 regulated the rights of the new owners and of the tenants. It replaced the “specially protected tenancy” with a normal lease arrangement. All previous holders of “specially protected tenancies” were in principle given the possibility of renting the flats from the new owners for an indefinite period, but on less favourable terms, in particular, as regards rent, rights of transmission to family members and security of tenure.

The interference with the applicants’ right to the peaceful enjoyment of their possessions was lawful and in accordance with the general interest. It had also struck a fair balance between the demands of the general interest of the community and the requirements of the protection of the individuals’ fundamental rights. Thus, the Court decided that there had been no violation of Article 1 Protocol 1.

Assessment:

This case, involving the law on denationalisation, is an example of conflict between laws affecting the interests in the same property of the different groups of the society. On the one hand, it restores the rights of former owners, and on the other hand it gives the right to tenants to continue the lease on favourable rents. Both issues are relevant to Kosovo, where socially

18 See landmark case of Chassagnou and Others v. France no. 28443/95, in particular the court’s explanations on the principle of Fair Balance and Proportionality. 19 Figures and facts taken by the text of the judgment of the Court.




owned property is still a reality. Questions have been raised on whether Kosovo should take the path of denationalization.

The main rules and principles, mentioned above, inform and affect the decisions of the ECtHR. However this is not an exhaustive list of the principles that guide the Court. We would like to mention now the much more general principle of legitimate expectation20, as evidenced by the following case:

Althoff and others v. Germany no. 5631/05

The ECtHR decided that the applicants, heirs of parties whose land was expropriated in 1953 by the German Democratic Republic, had a legitimate expectation under German Law to be compensated for their property in accordance with appropriate legislation following the Reunification of Germany.

The case was brought by a group of heirs to an owner of property, which was expropriated at the time of the socialist German Democratic Republic (GDR) and which had previously belonged to Jewish owners who were forced to sell it under the Nazi regime. The applicants complained that the Property Act, whose purpose was to settle property conflicts on the territory of the former GDR, was amended with retrospective effect in 1998. Following the amendment, the time-limit originally set for filing restitution claims did not apply to claims by the German State, which became the legal successor to the heir of the original Jewish owners of the property under an agreement between Germany and the United States of America.

As a result, the applicants had not been entitled to either restitution of the property or to payment of the proceeds from the sale that took place after German reunification. The Court held that, once there is the legitimate expectation established by law, the right to that property still exists and the parties can only be deprived of it through expropriation procedures.

In its Chamber judgment of 2011, the Court found a violation of Article 1 of Protocol No. 1 and granted a just satisfaction. The German Government paid the applicant the amount of EUR 210,000, a fair amount in this case in the Court’s view.

Assessment:

This case is not only related to the principle of legitimate expectation through law, but also to legal measures having a retrospective effect. When a law creates a legitimate expectation that a

20See case of Althoff and others v. Germany no.5631/05 related to the principle of legitimate expectation. This project is



group of parties can benefit from, the State should honour such rights as created by law. The ECtHR decided that it is unlawful to amend the law so that parties are no longer eligible to benefit from their property. This principle is important when drafting legislation on compensation in relation to expropriation or restitution. Compensation needs to be calculated in a way that the impact on the state budget is taken into account before creating a legitimate expectation.

EU LAW

The European Union respects the fundamental rights enshrined in the ECHR and requires Members States to ratify the ECHR as a condition of membership.

The three sources of European Union law, Primary law, Secondary Law and Supplementary Law such as international law and general principles of law create a system of property rights.

2. Treaty on the Functioning of the European Union (TFEU)

The TFEU sets out organizational and functional regulations, guided by a specific set of principles that will be described hereafter.

Principle of non-discrimination among EU nationals

Non-discrimination among EU nationals is a fundamental principle of the EU treaty which is the basis of the four freedoms. Article 12 of the EC Treaty states that any discrimination on the grounds of nationality is prohibited. At the same time, Article 141 repeats the already mentioned by ECHR non-discrimination between men and women, though only as far as equal pay is concerned.

Article 13 complementing Article 12, enables the Council to take appropriate action to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation. Additionally, the EU has established its own Charter of Fundamental Rights, which incorporates the rights of the EU citizens, including human rights and the freedom to own property in Article XVII. This Charter was given legal effect with the Treaty of Lisbon in 2009.

The EU Charter of Fundamental Rights is heavily based on the ECHR.

Right to property

Article 345 TFEU




The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership.

In accordance with the principle of subsidiarity, substantive land law remains national. States assert an overriding power to regulate the use of land and planning regimes. Indeed these powers are in fact essential attributes of statehood. Although it appears that most parts of property law are still purely national, the EU, through the CJEU does have the competence to act in the area of property law in the spirit of the four EU freedoms and fundamental human rights.

The vague wording of Article 345 TFEU has caused considerable confusion with respect to property law and continues to do so. Some scholars maintain that this provision is meant to exclude property law from EU competence. Others argue that it is vague as far competence of Member States to nationalize or privatize property is concerned. Despite all possible interpretations, this provision has not prevented the European legislation adjudication on matters that touch upon or directly concern property law.21

At the same time, the ECJ has addressed property law in several cases in relation to internal market freedoms.22 The four fundamental freedoms will be briefly enumerated:

Freedom of Establishment

Article 49 TFEU

Based on the Freedom of Establishment, an EU citizen can buy land, a home or a second home in another EU/EEA state. This right can also come with restrictive measures, such as the restriction on the right to purchase second homes in Austria and in Denmark.23

Permissible Restrictions

Article 50 (2) TFEU

The European Parliament, the Council and the Commission shall carry out the duties devolving upon them under the preceding provisions, in particular: …(e) by enabling a national of one Member State to acquire and use land and buildings situated in the territory of another Member State, in so far as this does not conflict with the principles laid down in Article 39(2);

21 ‘Property and European Integration: Dimensions of Article 345 TFEU’, pg.8, Helsinki Legal Studies Research Paper no.17.22 See below case law of ECJ23 Special provisions: Protocol No 32 of the Treaty On the acquisition of property in Denmark … Notwithstanding the provisions of the Treaties, Denmark may maintain the existing legislation on the acquisition of second homes.




Article 39 (2) sets out the possible restrictions on the use and acquisition of agricultural areas, given its importance on the economy as a whole.

Consumer Protection

Consumer protection receives a very high level of focus and attention by the EU because of its very direct link with the four freedoms as presented in the following articles of the TFEU:

Article 38 of the TFEU on Consumer Protection: ‘Union policies shall ensure a high level of consumer protection’

Article 12 TFEU: Consumer protection requirements shall be taken into account in defining and implementing other Union policies and activities.

Article 169 (1) TFEU: In order to promote the interests of consumers and to ensure a high level of consumer protection, the Union shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organise themselves in order to safeguard their interests....’

3. Secondary law

Directives related to the right to property enacted by the European Parliament:

Directive 88/361 related to Capital Movements

According to the annex of this directive, the nomenclature of capital movements include Foreign Direct Investments, Real Estate Investments or Purchases, Securities Investments, Granting of Loans and Credits and Other Operations in Financial Institutions.

The freedom of capital movements gained the status of other Internal Market freedoms24 after the entry in force of the Treaty of Maastricht. Generally speaking, capital movements have been almost fully liberalized across the 28 Member States, with transitional periods granted to newly accessing Member States especially related to second homes and agricultural land.

Directive 2004/38/EC on the right to move and reside freely

This directive has been transposed into national legislation by both Austria and Germany and basically gives the EU nationals25 the freedom to work and reside in any Member State,

24 The EU four freedoms are goods, capital, services and people.25 Citizens from the EEA




permanently or temporarily. It also emphasized the idea that citizens from other Member States should be treated equally without discrimination with locals.

Directive 2008/122/EC on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts

The directive increases transparency in this market and provides significant protection for consumers against unwanted timeshare contracts – agreements of more than one year under which the consumer buys a right to use overnight accommodation, such as an apartment at a holiday resort, during certain periods.26 A timeshare is based on a property with a particular form of ownership or use rights, typically, resort units in which parties hold the right to use the property for a certain period of time during the year. The regulation for such rights comes under the umbrella of Consumer Protection in the TFEU.27 Timeshare rights are sanctioned through this directive in the general scope of consumer protection.28

4. Case Law of the European Court of Justice

For purposes related to this paper, the case law of the ECJ focuses on trials against Austria and Germany in two landmark cases of the ECJ Konle v Austria and Reisch and Others v Austria where the ECJ provides an interpretation of fundamental freedoms of the EU in relation to access of foreigners to property.

- Klaus Konle v Austria C-302/97

The conflict of the parties originated from the provisions of the Law of Tyrol on Transfer of Land 1993. K was allocated a plot of land in Tyrol by the Lienz District Court in the context of a compulsory sale by auction. One of the conditions for K's acquisition of the plot was that he obtain the administrative authorisation required under the Tyrol Law on the Transfer of Land 1993 ("TGVG 1993"), which made the acquisition of such land subject to authorisation by the authority responsible for land transactions.

26 Official web site of the European Union, section on Consumer Rights and Travel27 See Article 2 Point 1 (a) of the Directive 2008/122/EC on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts: ‘timeshare contract’ means a contract of a duration of more than one year under which a consumer, for consideration, acquires the right to use one or more overnight accommodation for more than one period of occupation; ...’28




Section 14(1) of the TGVG 1993 provided that such authorisation would be refused. This would happen in particular where the acquirer failed to show that the planned acquisition would not be used to establish a secondary residence. However, under section 10(2) such authorisation was not required where the acquirer was an Austrian national and had made a declaration that the land would not be used for a secondary residence . Thus, the Federal Province of Tyrol did not allow the building of holiday homes or second residence homes. This fact was seemingly allowed under the (now) Article 345 of the Consolidated Treaty, which stated that property ownership regime falls under the competence of Member States. The issue at hand was rather that of discrimination among nationals of the Union, because Austrian nationals were not required to obtain such authorization, but other EU nationals were. As K intended to build on the plot of land he acquired with the final intention to make it his first residence, he appealed the refusal by the local authorities up to the Constitutional Court.

Indeed the Tyrolian Law of 1993 on Transfer of Land was declared unconstitutional in 1994 following Austria’s accession in the EU, which implied the obligation to abolish laws which were discriminatory to other EU nationals. The new law that came into force in 1996 required both Austrian citizens and nationals of other Members States to comply with the requirement of prior authorization before acquiring a plot of land and to prove that the land would not be used for a second residence.

Although the TGVG 1996 had not been applied to K's case, since it entered into force before he initiated his action for damages before the national court, the interpretation of Community law sought was not irrelevant to the assessment of liability on the part of Austria in respect of its refusal to grant authorisation to K.

Although property was a matter for each Member State under Article 295 E.C. (formerly Article 222 E.C.), that provision did not have the effect of exempting such rules from the fundamental rules of the E.C. Treaty. Accordingly, a procedure of prior authorisation, such as that under the TGVG 1996, which entailed by its very purpose a restriction on the free movement of capital, could be regarded as compatible with Article 56 E.C. only on certain conditions. In that regard, the town and planning objective of maintaining a permanent population could only justify the prior authorization requirement, if it was not applied in a discriminatory manner and if the same result could not be achieved by other less restrictive procedures. As to the first condition, various factors pointed to that requirement being applied in a discriminatory manner, in particular the considerable latitude enjoyed by the administrative authorities in assessing the information provided by the person seeking authorisation, which was closely related to a




discriminatory power. As to the second condition, the Member State concerned had at its disposal a variety of other measures for ensuring compliance with its town and country planning guidelines. In those circumstances, the authorisation procedure at issue constituted a restriction on capital movements which was not essential for preventing infringements of the national legislation on secondary residences. The Court decided that the Law of 1996 was not in line with the Treaty and Austria was liable for damages to Mr. Konle.

Assessment

National legislation on the acquisition of land must comply with the provisions of the Treaty on freedom of establishment for nationals of Member States and free movement of capital. According to Article 54(3)(e) of the Treaty, the right to acquire, use or dispose of immovable property on the territory of another Member State is the necessary corollary of the freedom of establishment. Capital movements include investments in immovable property on the territory of a Member State by non-residents, as it is clear from the nomenclature of capital movements set out in Annex I to Directive 88/361 for the implementation of Article 67 of the Treaty.

The following case is related to the previous one and it sheds further light on a similar matter.

- Reisch and Others v. Austria, C-515/9929

The principle underlying this case is that Member States need to apply the principle of proportionality when adopting legislation that restricts the right to property. Under Austrian law, ownership of immovable property is acquired by means of an entry in the land register confirmed by the Grundbuchsgericht (Land Registry Court), which is required to determine whether authorisation is necessary for the transfer and, if so, whether that authorisation has been granted.

In the Federal Province of Salzburg, Paragraph 12 of the SGVG states that certain legal transactions relating to building plots, such as the transfer of ownership or the grant of a right to build, are permissible only where the acquirer of title submits a declaration stating, first, that he is an Austrian national, or a national of another Member State exercising one of the freedoms guaranteed by the Treaty or the Agreement on the European Economic Area. The acquirer of the title must, secondly, declare that the land will be used as his principal residence or to meet a commercial need. Use of the land as a secondary residence is possible only if the

29 Joined cases C-515/99, C-519/99 to C-524/99 and C-526/99 to C-540/99This project is



land was already used for that purpose before 1 March 1993 or if it is located in an area in which secondary residences are permitted.

In Cases C-515/99 and C-527/99 to C-540/99 the Mayor of Salzburg imposed a fine on each of the applicants for failure to notify to the Grundverkehrsbeauftragten within the period laid down by Paragraph 36 of the SGVG a legal transaction relating to the acquisition of building plots. They appealed against those decisions to the Unabhängiger Verwaltungssenat Salzburg.

It should be stated, as a preliminary point, that national legislation, which regulates the acquisition of land for the purposes of prohibiting in the interests of regional planning the establishment of secondary residences in certain areas, must comply with the provisions of the Treaty on the free movement of capital. First, as it is apparent from Article 44(2)(e) EC, the right to acquire, use or dispose of immovable property on the territory of another Member State, which is the corollary of freedom of establishment30, generates capital movements when it is exercised.

A procedure of prior notification/authorisation for the acquisition of immovable property restricts, by its very purpose, the free movement of capital. Such restrictions may nevertheless be permitted if the national rules pursue, in a non-discriminatory way, an objective in the public interest and if they observe the principle of proportionality, that is, if the same result could not be achieved by other less restrictive measures.

The prior notification scheme allows public authority the adoption of criminal sanctions and a specific action for annulment which may be brought before the national court. In case the project fails to comply with the initial declaration, the acquirer is required to provide security up to the value of the property.

The provisions of the SGVG relating to the prior authorisation procedure before the Land Registry Court go beyond what is necessary in order to achieve the chosen regional planning objective. The measures, which Member States are entitled to take under Article 58(1) (b), EC prevent infringements of their laws and regulations.

Assessment

National legislation which regulates the acquisition of land for the purposes of prohibiting, in the interests of regional planning, the establishment of secondary residences in certain areas must comply with the provisions of the Treaty on the free movement of capital.

30 See also Case 305/87 Commission v Greece [1989].This project is



The principles outlined above need to be taken into account and incorporated into the new property and real rights action-plan in Kosovo. EU Primary Law is directly applicable. Directives by the European Union as a secondary law apply after the process of transposition in the national legislation of the Member States. Nevertheless, the influence of the primary and secondary legislation has to be seen in the scope of the internal market and the four freedoms.

Ownership is a fundamental institute regulated and guaranteed in the Constitution of each Member State. One of the attempts to achieve a uniform private law is the Common Frame of Reference, which represents soft law that includes provisions related to property rights. This Common Frame will be a useful tool and should inform any effort to draft a consolidated property law action-plan.

VI. BEST PRACTICES IN SELECTED COUNTRIES

1. General Remarks

The impact of EU property Law on in Member States of the European Union is to be considered in the light of Article 345 TFEU and the four fundamental freedoms granted by the EC Treaty.

The legal systems presented below were chosen since related to the legal framework of Kosovo: Austria and Germany are examples of EU best practices and influenced the legal framework of former Yugoslavia. Croatia, Macedonia and Slovenia have a past in common with Kosovo. The first two have also a relatively common present in relation to their efforts to accede the EU. When analysing the law in the mentioned selected countries, the chosen topics are meant to reflect the two important principles of transparency and security in law.

2. Austria

Sources of the property law

According to Article 10 (1) point 6 B-VG (the Austrian Constitution), civil law matters are under the responsibility of the Austrian federal government. However, legal provisions on acquisition of property by foreigners do not fall under the competence of the central government but under the ones of the individual states of the Federation. In other words, local Acquisition of Property by Foreigners Acts are enacted by each laender (see in more detail further below).

Classification of assets




Various criteria are listed according to which assets in a legal sense can be classified.

First, assets can be divided into state-owned or private assets. The latter may be owned by individuals, legal persons, small corporations or municipalities. State-owned assets can either be public goods or public property.

The next distinction relates to tangible and intangible assets. Tangible assets are all assets which have a physical form. Otherwise all the other assets are intangible. Among these assets, hunting or fishing rights, for example, may be listed. Another classification relates to movable and immovable assets. All assets which can be moved from one place to another without causing damage to their substance are movable. Otherwise they are immovable in the legal sense.

Furthermore, divisible and indivisible assets need to be kept separate. An asset in a legal sense is indivisible, if it cannot be disassembled due to its natural condition or without a significant loss of value. This distinction is relevant when it comes to co-ownership of an asset in a legal sense. If a co-ownership of an indivisible asset is dissolved, the only solution is the sale of the assets and the subsequent division of the revenue from the sale.

Another specification of assets is regulated in § 294 ABGB, which distinguishes between ancillary assets and accessories. Ancillary assets include everything which is connected to an asset in a permanent way but does not include the growth of an asset. Accessories make the main assets usable or are essential for the permanent use of the main asset by law or by determination of the owner. Furthermore, accessories can be divided into independent and dependent accessories.

Superficies solo cedit

Referring back to the paragraph above, the principle of “superficies solo cedit” is connected to dependent accessories (accessorium sequitur principali). These dependent accessories (as in buildings over land belonging to third parties) are not privileged by law which means that the owner of a main asset normally also owns the dependent accessories. Therefore it is not possible to grant dependent accessories the same rights as other properties.

Nevertheless the principle of “superficies solo cedit” has several exceptions in Austrian law. This is true for example in the context of buildings which are constructed on land owned by another person and which are not of permanent nature (Superädifikate).

Construction rightsThis project is



According to the property rights law, the owner of the construction land would also own the building on the plot. Construction rights are the exception to the principles of the property right law as well as the principle of “superficies solo cedit”, because they enable the construction of buildings on or underneath the surface of land owned by another person. Construction rights are also recorded in the land register.

Ownership

The law envisages different kinds of ownership. Sole ownership means that a single natural or legal person owns an asset. Co-ownership is a different kind of ownership. Whenever the ownership of an asset and the same right is attributed to multiple persons in an undivided manner, a co-ownership is established. Such co-ownership may be based on a law, testate inheritance or a contract. Each co-owner is the full owner of his share.

Acquisition of property

The acquisition of property can either be direct or indirect. The latter kind of acquisition means that assets are acquired in a legal way from somebody who already owned the asset. Furthermore, ownership cannot be obtained without a title and a legal mode of acquisition. The term “title” encompasses a rather broad definition which contains all the legal possibilities to acquire ownership.

Ownership can be established under Austrian law by the following means:

1. Appropriation § 381 et seq. ABGB2. By the finding of lost assets § 388 et seq. ABGB3. Accession § 404 et seq. ABGB4. Derivative acquisition § 423 et seq. ABGB5. Acquisition in good faith § 367 et seq. ABGB6. Adverse possession § 1452 et seq. ABGB7. Expropriation § 365 ABGB8. Acquisition in a compulsory auction § 237 (1) EO (Exekutionsordnung = Austrian

Execution Act)

The ways of transfer are the following:

1. Physical transfer2. Symbolic transfer3. By declarationThis project is



Acquisition of property by foreigners

Foreigners desiring to acquire a right to property need a mandatory authorization. This does not apply to citizens of an EU- or an EEA-member state as these enjoy equal status with Austrian citizens. Applications are approved of cultural, social or macroeconomic interest and no national interest is negatively affected.

The law of property is not only regulated in the Austrian Constitution but also in the Austrian general civil code (Allgemeines Bürgerliches Gesetzbuch or ABGB). Starting with § 285 ABGB a rather broad definition of assets in a legal sense is provided.

Registering the property right

In order to acquire property rights, filing an application to the competent land register court (Bezirksgericht) is necessary. After that, it is compulsory to submit a request to the government land register including:

- Exact definition of the property- Applicant's first and last name- Family status and domicile

In general, the application has to be submitted to the competent district court in writing and the required documents also have to be attached. Since November 2012, land register applications can be declared orally in court but this only applies to simple cases such as cancellations and simple transfers of property.

Land register

The land register is publicly available and documents are in electronic format. Every property of Austria is ex officio recorded in the land register. Austria has a number of land registries in different cadastral communities. Every cadastral community is assigned different register numbers which again contain different sections. These sections contain general information, information about the ownership structure and information about liabilities.

Pledges and mortgages

Pledges are real rights. According to § 448 ABGB, all assets which are tradable can be given as a pledged asset. If the asset is movable, it is called a pledge of movable or pledge with a narrow meaning. If the pledged asset is immovable, it is called mortgage or real security.




According to § 449 ABGB, a pledge always relates to a valid claim but not every claim constitutes a title for the acquisition of a pledge. This title can be based on the law, on a court decision, on a contract or the last will of the owner.

Furthermore, the pledge is characterized by four principles:

1. Accessorya. The pledge serves as a protection of a claim and without a claim no pledge

exists.2. Right to objects owned by another person3. Particularity

a. A pledge can only guarantee a claim on a single object and it is not possible to hold a general pledge on all assets.

4. Indivisibility a. A pledge remains unchanged although a part of the claim is already satisfied or

compensated.

Protection of property

According to § 366 ABGB, the owner has the right to claim the asset withheld from each holder by a claim of ownership in court (rei vindicatio).

Another action available for protection of ownership is based on § 523 ABGB – actio negatoria. The owner can also protect his property against any kind of interference. In these cases, the owner is obliged to prove title of ownership and the relevant interference.

A softer form of protection of property exists in the field of neighbour rights. § 364 et seq. regulates issues between neighbouring real estate properties. This implies that a neighbour can be protected from any kind of intrusion from neighbouring property. Nevertheless not every intrusion can be avoided. Issues are here decided on a case by case basis.

Protection of possession

According to § 372 ABGB possession can be protected by the actio publiciana. This claim is based on the legally assumed ownership of the claimant. This claim is similar to claim of § 366 ABGB – rei vindicatio. Besides that, there are different possibilities to file actions against trespass such as §§ 339, 346 ABGB. These actions are of a peremptory nature and are intended to restore the status quo ante.




Right to fair trial

Article6 of the ECHR applies in Austria.

3. Germany

Article 14 of the German Constitution31 guarantees the right to ownership32. Property and right of inheritance shall be guaranteed. Their content and limits shall be defined by the laws. (2) Property entails obligations and serves the public welfare. (3) Expropriation shall only be permissible in the public interest. It may only be carried out pursuant to a law which determines the nature and extent of compensation. Such compensation shall be determined by establishing an equitable balance between the public interest and the one of those affected. In the case of a dispute concerning the amount of compensation, a right to recourse to ordinary courts is established.

Another important source of property law is the Constitution (Grundgesetz).

Other Legislation

The most important source of the property law33 is the German Civil Code (BGB).34 BGB has five books. Property law is regulated in the third book. German law does not regulate any differentiation of property. In other words, there is no distinction between public and private property. Furthermore, property rights are absolute. This third book also regulates the other real rights/jura in rem such as Usufruct (Article 1030 – 1089 German BGB), Personal Servitudes (Article 1090 – 1093 BGB), Right of Pre-emption35 (Article 1094 – 1104 BBG), Charges on land (Article 1105 – 1112 BGB), Mortgage, land charge, annuity land charge (Article 1113 – 1203 BGB), Pledge of movable things and other rights (Article 1204 – 1296 BGB).

Besides the BGB there are also other legal sources affecting real rights in the field of agricultural land, rights of watercourse (Riparian Right) and forests.

31 The Constitution of Germany calls quite “Basic Law of the Federal Republic of Germany” [Grundgesetz der Bundesrepublik Deutschland]. 32 Here is to mention that the Term „Ownership” in the sense of Article 14 of Constitution does not mean the same how it is regulated in the Civil Code. The Term “Ownership” in the sense of Article 14 of Constitution incorporate not only “Ownership” in the sense of Civil Law, but also Rights of Property holdings (vermögenswerte Rechte).33 This third book is mentioned as “Real Rights” and regulate the ownership and other real rights such as Mortgage, pledge, servitudes etc. 34 In original: “Bürgerliches Gesetzbuch”.35 This right of preemption in the sense of real Rights is strictly to distinguish to the right of preemption in the Sense of Obligation right.




The most important legal source related to agricultural land is the Law on Transformation of Agricultural Land36. The law contains special rules in particular on transfer of agricultural land, which requires approval by the state. This measure is justified because of practical reasons and to prevent land fragmentation. There are many special rules on water rights that are part of the Federal or state law37.

The main legal source for the forest law is the Federal Law on Forests38. There are also many Laws on Forests coming from the Federal Provinces. The most important special rules39 are the ones sanctioning that forests are of public interests and establishing when and in which cases privates may acquire rights on forests

Acquisition, Transfer of Property

German property law makes a distinction between titulus and modus, that is to say title and registration. This is based on the principle of separation and abstraction meaning that the acquisition of property requires a separate contract from the objective transaction (§§ 873, 929 BGB)

In the system of BGB, ownership is not transferred by a contract of sale, as in some other jurisdictions. Instead, a contract of sale merely obliges the seller to transfer ownership of the good sold to the buyer, while the buyer is obliged to pay the stipulated price. The buyer does not automatically gain ownership by virtue of the contract of sale whereas the seller has not automatically gained ownership of the money. Section 433 of the BGB explicitly states this obligation of the seller, as well as the buyer's obligation to pay the negotiated price and take the thing he bought. So, seller and buyer have just gained reciprocal claims. For transfer of ownership, another contract is necessary which is governed by sections 929 et seq. Thus, in a simple purchase of goods paid immediately in cash, there (at least) three contracts: the contract of sale itself, obliging the seller to transfer ownership of the product to the buyer and the buyer to pay the price; a contract that transfers ownership of the product to the buyer, fulfilling the seller’s obligation; and a contract that transfers ownership of the money (bills and coins) from the buyer to the seller, fulfilling the buyer’s obligation (40).

36 “Grundstücksverkehrsgesetz”, 28.07.1961 (BGBl. I 1091, 1652, 2000) and the Implementations Laws of Federal Land. 37 “Das Gesetz über die Wasser- und Bodenverbände”, 12.2.1991 (BGBl I 405); “Das Gesetz über die Bundeswasserstrasse”, 21.05.1951 (BGBl I 352). 38 „Bundeswaldgesetz, 02.05.1975 (BGBl I 1037) 39 Baur/Stürner, Sachenrecht, 18. Aufl. 2009, S. 358 ff.40 The main advantage of the principle of abstraction is its ability to provide a secure legal construction to nearly any financial transaction however complicated this transaction may be. A good example is the well known retention of title. If someone buys



https://en.wikipedia.org/wiki/Ownership


Acquisition of movables is through a legal transaction, namely an agreement is necessary for the transfer of ownership between the seller and buyer (Article 929 BGB) and the delivery of the movable (§§ 929, 930, 931 BGB). The German legal system recognizes also the principle of acquisition of property on movables through good faith. Acquisition of movables is also possible through prescription, accession, processing41, occupation, appropriation42 and finding43. The main manner of acquisition of immovable property is also by legal transaction. In this case, the separation and abstraction principle applies, which means that an agreement is necessary for the acquisition about the transfer of ownership between a transferor and acquirer as well as the Registration in the Land register44. The agreement enables the transfer of ownership according to §§ 925 BGB and must be concluded in the presence45 of both transferor and acquirer at the same time as a notarial deed. Another possibility of acquisition of immovable is prescription following registration46. Renunciation of ownership47 implies that the Federal State should be the new owner.

Property relationships are registered in the land register. The third Book of the BGB also regulates charges on property. The law regulates mortgages as well as land charges “Grundschuld” as a way of safeguarding loans and credits. In contrast to the mortgage48, for the land charge as a lien a claim is not necessary. This means that the land charge is not an accessory to the immovable property49.

Rights of Foreigners

There are few countries like Germany where legal and natural persons have the right to buy immovable property irrespective of their origin and nationality. However a non-EU foreigner

something and pays the purchase price by installments the system faces two conflicting interests: the buyer wants to have the purchased goods immediately, whereas the vendor wants to secure full payment of the purchase price. With the principle of abstraction the BGB has a simple answer to that: the purchase contract obliges the buyer to pay the full price and requires the vendor to transfer property upon receipt of the last installment. As the obligations and the actual conveyance of ownership are in two different contracts it is quite simple to secure both parties' interests. The vendor keeps the rights to the property up to the last payment and the buyer is the mere holder of the purchased goods. If he fails to pay in full the vendor may reclaim his property just like any other owner.41 Article 946, 947 BGB.42 Article 958 BGB.43 Article 965 BGB.44 Article 873 BGB.45 The representation is allowed; see Baur/Stürner, Sachenrecht, 18. Aufl. 2009, S. 285.46 Article 900 BGB.47 Article 928 BGB.48 Article 1113 BGB.49 Article 1119 BGB.




needs to be a resident in Germany and has to prove this either through a visa or through a residence permit.


According to the principle of "Superficies solo cedit", the owner of the land is also the owner of the construction thereon. Problems regarding this issue are regulated by common ownership rules meaning that the owner of an apartment is at the same time also a common owner of the respective parts of the real estate. This fundamental principle is regulated through the Law on Ownership of Flats50 and the Construction Rights.

Construction Rights

Another important right is the “Erbbaurecht”, “Construction right”. It is a hereditary and alienable right on a real estate. The nature of this right is based on § 873 BGB. This institute is regulated separately by the directive on Construction rights. This right can be unlimited or limited, and is usually granted for a long time, such as 99 years.

Flat Ownership

The principle "superficies solo cedit" is regulated by Article 93 and 94 BGB, which means that the owner of the real estate is also the owner of the house. This principle is regulated by the Law on Flat Ownership51. On the basis of this law, the owner has a special ownership of the flat and at the same time rights on the whole property52.

4. Switzerland

Sources of property law

According to Art 122 of the Federal Constitution of the Swiss Confederation, civil law and the law of civil procedure fall under the competence of the confederation. Cantons are in charge of courts organisation and administration of justice in civil matters, unless the law provides otherwise. Apart from the Federal Constitution of the Swiss Confederation, the Swiss Civil Code (ZGB), specific laws and cantonal laws are important sources of property law.

The fourth part of the Swiss Civil Code regulates property (Article 641 – 729 ZGB), limited real property rights, possession (Article 730 – 918 ZGB) and the land register (Article 919 – 977). In

50 See below.51 “Wohnungseigentumsgesetz”, Schönfelder, Nr. 37.52 Article 1 of the Law on Ownership of Flat.




addition to the fourth part of Swiss Civil Code there are other sections within the Civil Code with rules concerning property law.

For instance, according to Article 686 ZGB the different cantons are authorized to determine distances between constructions and excavations. Furthermore cantonal civil law applies according to Article 5 ZGB, due to referrals to the local practices. The cantons are bound by the rules of the Swiss Civil Code within the scope of the civil law.

Ownership

There is no legal definition of property in the Swiss Civil Code. Nevertheless its main feature is the owner’s absolute right. In general, different kinds of ownership exist under Swiss legislation. First of all, there is the sole ownership or ownership upon a single person. Other kinds of property are common to several people. There are two forms of common ownership: hereditaria communio or ”communio” of heirs (Gesamteigentum). Any individual may exercise property rights in the name of the communio.

The other kind of property is the co-ownership of property by shares (Miteigentum). This is the ‘general’ form of ‘communio’ which applies if the law or the title do not specify otherwise. The title of each co-owner is a part of the whole. Every “shareholder” is entitled to the rights of the object as far as they do not affect negatively the corresponding rights of others.

Another kind of common ownership property is based on amendments to the code’s rules on co-property by shares (Article 712a et seq.). Reference in other words is made here to condominium. All the common parts excluding parts in common use such as staircases and garages are the property of the co-proprietors in undivided co-ownership. These common parts have to be administered by an organisation which consists of the assembly of the owners and an administrator.

Duties to the neighbour

On the one hand the neighbourhood law is regulated by the Civil Code. On the other hand public law regulations are provided by the cantons and the communities. Although the Federal Civil Code is supposed to be the only source of private law, local laws also deal with property due to the necessity of implementation rules. Therefore, every canton has established an introductory law to the Civil Code which implements such rules. Thus, these local laws represent an extensive source for property law and in particular for neighbour’s interferences.




The neighbourhood law prohibits the excessive use of one’s land to detriment of the neighbours. This rule should include any kind of nuisance such as noise. In this context it is always necessary to balance each party’s interest.


Main assets and accessories are perceived as a common unit due to the principle of accession. The principle of accession which translates superficies solo cedit does not only apply to property regulations, which explicitly contain it, such as Article 667 (2) ZGB, but it is of high relevance for the whole property law system.

Exceptions to this general rule exist. An example is Article 675 (1) ZGB, stating that buildings and similar constructions on someone else’s land can be owned by different persons. Another example may be found at Article 676 ZGB, regulating the ownership of interred electro-ducts and aqueducts ground. This can be different from the ownership of the land.

Construction rights

Buildings, plants, sources and ground water are ex lege part of the plot of land where they are situated (Article 667 (2), Article 704 (3) ZGB).The owner of real estate property is due to the principle of accession normally also the owner of the buildings, plants, etc.

Acquisition of property

In the context of the acquisition of property it is necessary to distinguish between movable and immovable assets.

Furthermore, there are different types of acquisitions:

1. Transfer Article 657 ZGB2. Appropriation Article 658 ZGB3. Formation of new land Article 659 ZGB4. Ground displacement Article 660 ZGB5. Redrawing of boundaries Article 660b ZGB6. Adverse possession Article 661 ZGB7. Extraordinary adverse possession Article 662 ZGB8. Ownerless and public objects Article 664 ZGB

The acquisition of land ownership is to be recorded in the land register. Furthermore, if the acquisition is conducted by appropriation, inheritance, compulsory purchase, debt enforcement




or court judgment, the acquirer becomes the owner even before the registration in the land register. But the acquirer obtains the power of disposal over the immovable property only when the ownership is recorded in the land register. Property can be transferred by physical control over the object on the basis of a valid contract. When land is subject to the contract, the transfer of control is replaced by an inscription in the land register.

Acquisition of property by foreigners

The legal bases for enabling foreigners to acquire property are the federal law on the acquisition of real estate by foreigners and the ordinance on the acquisition of real estate by foreigners. The federal law of Switzerland restricts acquisition of real estates by foreigners. In order to acquire a real estate property a prior authorisation from the appropriate cantonal authority is required. The respective canton where the real estate property is located is responsible for enforcing this law.

Land register

The legal basis for the land register can either be found in the Swiss Civil Code, in the Ordinance of the land register (Grundbuchsverordnung) or in the ordinance on the forced sale of property (Verordnung über die Zwangsverwertung von Grundstücken).

According to Article 942 ZGB, the land register consists of different sections such as the main register, the plans, property directories, supporting documents and property descriptions appended to the main register and the journal.

Furthermore, the land register may be kept on paper or electronically.

The land register records the following immovable property and related rights:

1. Parcels of land and the buildings thereon2. Distinct and permanent rights recorded in the land register3. Mines4. Co-ownership shares in immovable property

Protection of property

Property protection is regulated by the Constitution (Article 26) and by the Swiss Civil Code. These sources are not supposed to be seen in a hierarchical relationship but rather in a symbiotic one because the Constitution does not define property. The regulation in the Constitution consists of two aspects. The first aspect is that it contains an institutional




guarantee that the institution of private property may not be abolished. The second aspect is that of granting a right to full remuneration where an expropriation has occurred and governmental dispositions have caused substantial losses to the value of the private property.

On the level of civil law, the owner is entitled to enforce his rights by a claim called actio negatoria. This is an injunction which prohibits third parties interfering with one’s property use. Furthermore, there is also the possibility to file a suit against a holder without the respective title to return an object or rei vindicatio. Another possibility is that the owner requests and obtains a declaratory judgment from the competent court.

Injunction relief may also be granted to a person who is not able to show a title to the property but who has the property under actual possession (Article 928 ZGB).

Pledge and mortgage

The pledge of chattels is not as important as mortgaging. This is due to the publicity principle which requires the physical transfer of pledged chattels. Some exceptions are contained in special laws for chattels which are of particular importance, such as livestock. These exceptions are treated as if they were land.

Mortgages are frequently used for construction loans. The repayment claim and the mortgage right can be bonded in a security (Schuldbrief) or not (Grundpfandverschreibung). The bond should facilitate mortgaged credits to a maximum by giving the creditor the possibility to sell the claim easily. In Switzerland there is also the possibility for craftsmen and entrepreneurs to obtain a mortgage on their works in progress on a building site.

Another interesting aspect is that in Switzerland the criterion of priority in time for mortgages does not exist. The Swiss Civil Code has a system of fixed ranks on the mortgage rights which imply that a lower placed mortgage right will not automatically advance into a higher rank if the higher mortgage is cancelled.

Right to a fair trial

The protection of the right to a fair trial applies in Switzerland.

5. Croatia

Introduction




Based on the Constitution of the Republic of Croatia ownership is defined as one of the basic human and citizen rights.53 The Croatian legislator is the only one in the region that established a new comprehensive regime for property rights covering land register, property rights and denationalization (restitution).

Law on Ownership

The Law on ownership and other real property rights of the Republic of Croatia was promulgated in 1996, effective from the 1st January 1997. This legislation makes a clear distinction between private and socially owned land. If the land was private and as such recorded into the land register before 1997, the state guaranteed the title as registered. If the property was registered as socially owned property, the state did not guarantee the correctness of the cadastral information. The new real rights regulation, defined by the Law on Property and other real rights of the Republic of Croatia creates significant changes.

Act on Agricultural Land 1991 and Act on Forests 1991:

The Agricultural Land and Forests Act states that agricultural land and forests are of special interest for the Republic of Croatia.

Law on Ownership and Other Real Rights (LO)

In the first part of the basic provisions on real estate and real rights (Article 1 to 9), there are fundamental changes to the concept of ownership. Article 1 par. 2 stipulates that there is only one kind of ownership, without making a distinction between private or public ownership. There is no distinction between holders of title. The provision is in line with the Constitution of Croatia at Article 48.

Property regarded of particular interest for the Republic of Croatia by the Constitution, and consequently enjoying its special protection, may form the subject matter of ownership and other real rights. Owners and persons authorized to possess other property under par. 1 of this article may exercise their rights in accordance with the procedure laid down by law for their use. Property is subject to limitations in case of third parties rights. Rules for compensation (par. 2 of Article 2) are envisaged.

53 RK Constitution, National Gazette no. 56/90, provisions for the property right included in point 3. Chapter III - Economic, social and cultural rights. The property right is especially addressed at Article 48, 50 and 52 of the Constitution.




Provisions on ownership (Article 30-173) regulate real rights. Provisions on co-ownership, joint ownership and flat ownership may be also found as well as neighbourhood rules. In other words, the Croatian law regulates:

1. On ownership in general

This section regulates: rights of owners; general and special limitations on ownership of property; limitations based on legal provisions, and rights over public property (Article 30-35).

2. Co-ownership and Joint ownership

Article 36-65 define: general provisions on ownership (parts of co-ownership, ideal part of property, imposing rights of ownership in the whole property – Article 36-39); administering property (Article 40-45); protection of property (Article 46); termination of ownership (Article 47-56).

3. Ownership of particular parts of property

This section is divided as follows: general provisions (Article 66-70); establishment of the particular part of property or object (Article 71-78); enforcement rights over a particular part of property or object (Article 79-84); enforcement rights on property as a whole (Article 85-93); termination of the possession of a particular part of the property or object (Article 94-99).

4. Ownership acquisition

Dealt with from Article 114 to 125, it includes: acquisition by order of court or some other authority (Article 126 and 127); acquisition by inheritance (Article 128); acquisition based on Law (Article 129-160).

5. Construction rights (Article 280-296)

They are regulated by provisions on right to build in general and rights relating to acquisition and protection of land for construction, construction contracts and termination of construction contracts. The right to build (superficies) is a limited real right on third party land, authorizing the bearer of the right to maintain the separate ownership of a permanent construction on a plot of land or below it. The owner of the land is bound to accept such rights. The holder of the right to build is the owner of the building which is treated as an accessory of this right. Such a right is subject to his obligation to compensate the owner of the land in an adequate manner. According to Article 286 par. 1 of the Law, the right to build may be established based on a legal




transaction by the owner of the real property being encumbered or based on a decision of the court.

In general there is no time limit established for the right to build unless such a limit is established by agreement or by the fulfilment of a termination condition established by the agreement of the land owner and the holder of the right to build (Article 293). Upon the termination of the right to build, the part that formed an accessory to the land is consolidated with the land.

6. The right to a pledge

Provisions from Article 297 to 353 define: the right to pledge in general (Article 297-304); the acquisition of pledge (Article 305-320); creditor’s rights until all requirements are fulfilled (Article 321-335); realization of other rights for fulfilment of requirements (Article 336-338); protection of pledge (Article 339-342); termination of the right to pledge (Article 343-353).

7. Real rights of foreigners (Article 354-358)

Prior to Croatia’s accession to the EU, the provisions relating to the purchase of immovable property by foreigners were based on the principle of reciprocity. An authorization to purchase was issued on the basis of reciprocity, without distinction between EU and non-EU nationals. On Croatia’s accession to the EU, the acquisition procedures were liberalised for EU nationals and legal entities. In other words, they do not need now any prior authorisation whereas for non-EU nationals, the principle of reciprocity still applies.

Due to restrictions in the Law on Agriculture and Law on Forests, foreigners are not allowed to purchase agricultural land. For EU nationals the restriction is valid only for a transitional period.

Title and Mode

Transitional and final provisions (ownership 359-396)

These parts of the OPRE are of specific importance in Croatian legislation because they are concerned with transformation of socially owned property. The right to use and the right to dispose of socially owned property were both transformed into property rights. From the conceptual point of view, as far as the principle of superficies solo cedit is concerned, the legislator linked the legal status of the land to that of the building rather than vice versa 54. Although these provisions on the law of property have terminated the regime of socially owned 54 The principle is somehow and partially comparable with the Roman law notion of accessio contraria (accessio contraria quomodo detur….)




property, such property is still registered in the land registers as there was no legal obligation to update the land registers in accordance with these legal provisions. This situation is causing legal uncertainty because the accuracy of the data is not reliable.

6. FYROM (Former Yugoslav Republic of Macedonia)

Introduction

Macedonia has a complicated system of individual laws related to property and a main legislative enactment in the Law on Ownership and other real rights of 2001.

Constitution

The Constitution of the Republic of Macedonia enacted in 1991 guarantees the right to property as one of the economic, social and cultural rights guaranteed by Article 30 of the Constitution. Property implies rights and duties for the benefit of both individuals and the whole community (Article 30 Par. 2). Deprivation of the right to property is possible only when there is a prevailing public interest at stake in cases provided for by law. Expropriation or restriction of the property rights require adequate compensation based on the market value (Article 30 par. 3 and 4).

The Constitution does not make a distinction between private and public ownership as separate; it refers to the right to property as a subjective right (Article 30). As far as the Constitution is concerned, foreigners are allowed to acquire properties under conditions determined by law (Article 31).

Other sources of legislation

The main law regulating property relationships is the Law on Ownership and other Real Rights, promulgated on February 20th, 2001

This Law was intended to establish a modern property rights system harmonised with the new constitutional order after 1991.55 The law is based on the concept of the property as a subjective right. Besides the enactment of the new law on ownership, other special laws were promulgated. These include the Law on inheritance,56 Law on family57 and Law on Housing58. In drafting the new provisions on ownership of property, the Macedonian legislator referred to 55 Constitution of the Republic of Macedonia was published in the Official Gazette no. 52 from November 22, 1991. 56 Law on inheritance, Official Gazette of RM, no. 47/9657 Law on family, Official Gazette of RM no. 80/92, 9/96, 38/04, 33/06, 84/08, 65/10, 156/10, 39/12 and 44/12.58 Law on housing, Official Gazette of RM no. 21/98.




the old legal tradition, the law on ownership and other real rights of Croatia of 1996, the Civil Code of France, the Civil Code of Germany, the Civil Code of Switzerland and others.59

Types of Property

Property is guaranteed and protected by the Constitution and the Law on Ownership and Real Rights. The Constitution of Macedonia does not make a clear distinction between types of properties.

State property is only implied by Article 56 of the Constitution:

‘All Natural treasures of the Republic, vegetation and wild life, goods of public use as well as things and objects of particular cultural and historic importance are determined as goods of public interest for the Republic and enjoy special protection’.

The exact wording ‘ownership of the state’ is used in other laws, such as the Law for Use and Administration of property of State bodies,60 Law for Agricultural Land and the Law for Construction Land. Article 2 of the Law on Ownership recognises the right to property in relation to domestic and foreign nationals and entities, state and local government. A uniform concept of ownership divided into private ownership, state ownership and municipal ownership is adopted.

In line with Article 30 par. 2 of the Constitution, Article 3 of the Law on Ownership emphasizes that the right to property is established for the benefit of the citizens and the whole community.

Acquisition, Transfer, and protection of ownership

The types of rights over real estate in Macedonia are: (1) Right of Possession, (2) Right of Use, (3) Right of Disposal – 3.1 Possession Right, 3.2 Servitude Right 3.3 Mortgage/Pledge and 3.4 Lease. All the above may be created by a contract between parties, a legal deed, such as a Court decision or by a specific law.61 All property rights must be registered in order to be effective vis-à-vis any third party. Under Macedonian legislation, ownership right over real estate is transferred to the buyer at the moment of registration in the cadastral books under

59 See R. Zhivkovska, Stvarno pravo, Evropa 92, Skopje 200560 See Official Gazette of Republic of Macedonia, 8/05.61 See Law on Obligations




the name of the buyer pursuant the principle prior in tempore potior in jure. The right to ownership can also be acquired by a decision of a government body.62

Rights of Foreigners to acquire property

Article 31 and Article 59 (par. 1) of the Constitution regulate the right to ownership for foreigners. Article 31 ’Foreigners in the Republic of Macedonia may acquire the right of ownership of property under conditions determined by law.’

Article 59 (P1)’ Foreign investors are guaranteed the right to the free transfer of invested capital and profits.’

Until 2008, foreigners could acquire ownership over apartments and offices only under the condition of reciprocity. Authorization from the Ministry of Justice and the Ministry of Finance was necessary. Foreigners were not able to acquire agricultural land or construction ground, but only to lease such property for a long-term. Following the amendments of 2008, they may now acquire ownership of property. However, there is a distinction between EU and OECD citizens and others. Foreigners who reside in the EU and OECD countries may acquire apartments and offices under the same conditions as Macedonian citizens. They can also obtain ownership of construction land after receiving a specific authorization granted by the Ministry of Justice, after consultation with the Ministry of Transport and the Ministry of Finance.

Non-EU and non-OECD nationals can acquire apartments and offices by contract only on condition of reciprocity. They also need an authorization from the Ministry of Justice, Ministry of Transport and the Ministry of Finance for acquisition of construction land, again under condition of reciprocity. Acquisition of agricultural land is an exclusive right of the Macedonian citizen.63 Foreign natural and legal persons can lease agricultural land under conditions of reciprocity and upon consent of the Ministry of Justice, further to consultation with the Ministry of Agriculture and the Ministry of Finance.64

Notwithstanding the efforts to have a comprehensive regulation of property rights and the fundamental changes which were introduced by the new law of 2001, current legislation maintains the former concept of differentiation of types of land, that is to say: construction,

62 R. Zivkovska, The legal ramework concerning the ownership in Republic of Macedonia, Iustinianus Primus Law Review63 Article 4 of the Law on amendment and supplementation of the Law on ownership and other real rights, Official Gazette of the RM, no. 92/08.64 See International Comparative Legal Guides, Macedonia Real Estate 2015, Chapter 1, Dragan Dameski, Jasmina Ilieva Jovanovikj, Debarliev, Dameski &Kelesoska Attorneys at Law




agricultural or forest land, all regulated by special laws.65 A law on use and possession of property by State bodies was also enacted. Further efforts to modernise the law on property include the law on denationalization, the law on privatization of State-owned construction land, the law on expropriation, the law on illegal buildings, the law on real estate cadastre and the law on contracted pledges and the law on securing claims.

Agricultural land

The legal regime of agricultural land is based on the notion of general interest. Agricultural land can be owned by Macedonian legal and natural persons as well by the State (Article 7 of the Law). In the context of other rights to agricultural land, the law envisages specific rules for socially owned agricultural land. Agricultural land can be rented and used by natural and legal persons. It can also be exchanged with agricultural land under private ownership in order to consolidate land plots (Article 16 and 17). Agricultural land under State ownership is still based on the old principle affecting socially owned agricultural land. In other words, it cannot be sold (Article 17 par. 11 of the Law). Availability of privately owned agricultural land is limited by the right of pre-emption in favour of community members, co-owners or neighbours (Article 15). Another limitation is that fragmentation of parcels of less than two hectares is not allowed (Article 15 a). Socially owned agricultural land can be exchanged for privately owned agricultural land through a procedure established by law.

Construction Rights

The Law on Construction Land defines other types of real rights in the legal system of Macedonia. These include: the right to use the construction land under State ownership for concession and public –private partnership (Article 20) and the right for permanent use (Article 42). The Law for Construction Land regulates the right to a long-term rent of the construction land. This right represents a subjective right that authorizes its holder to construct on third party land and to acquire ownership through the long term lease.

According to the Law on Construction,66 the right to construct a building on a particular piece of land is given to the person who owns the land, as evidenced by a document issued by the Cadastre of Real Estate. However, the owner of the land can transfer the right of construction on his land to a third party by contract. The third party can construct and register the building

65 For example the Law on Agricultural Land, Law on Construction Land, Law on Forests, Law on Pastures, etc.66 Law on construction, Official Gazette of the RM, no. 130/09, 124/10, 18/11, 36/11, 54/11 and 13/12.




in the cadastre in its own name as owner, while the actual land will remain registered in the name of the owner of the land.

Superficies solo cedit and Flat Ownership

The principle superficies solo cedit may be found in a certain number of laws. The legal principle that the land is the main item (par. 1 of Article 10 of the Law on Construction Land) and that buildings are accessory, does not apply to those buildings erected on the basis of the right to a long-term lease of construction land.67

Article 10 “...unless a property right legally separates them from that land, authorizing the bearer of that right to erect a privately owned building on somebody else’s land or unless through concession, the bearer of the right is authorized to erect a privately owned building upon that land.

The Law on Urban Land at Article 7 defines explicitly what ownership of land includes.

“The ownership of the urban land includes, the surface of the land and everything else which is permanently connected to the land, whether this is on the surface or below the surface, unless the law states otherwise.”

The law reflects the principle of superficies solo cedit in its purest form. This means that everything which is placed on the land is an accessory to it. The owner of the land is the owner of the buildings and everything else built within the boundaries of the land and over or under the surface, except for in cases of long lease or a specific concession68. Flat ownership is regulated by the Law on Ownership and Other Real Rights, throughout Section 3, Article 95-111, which cover the right to ownership of separate parts of buildings,69 rights and duties of owners of these separate parts, such as pre-emption rights70 and duties related to maintenance of ideal parts.

Securities and mortgages

A creditor can accept security over movable or immovable assets owned by the debtor or third party that is willing to provide security on behalf of the debtor71. A pledge and a mortgage are valid only if they are in the form of a written agreement signed by the creditor and the debtor,

67 Tina Prseska, things that may be object of contractual pledge in the legal system of Republic of Macedonia’, Iustinianus Law Review68 See Vanco Gjorgjiev and Gjorgji Gjorgjiev ’Registration of 3D in R. Macedonia, Problems and Needs’, FIG working week, 200969 Article 95 of the Law on ownership and other real rights establishes the right to floor and apartment ownership.70 Article 97 and 100 on the Law on Ownership and other real rights regulates the right of pre-emption.




certified by public notary and registered with the official pledge register in Macedonia. The pledge over movables shall be registered only within the Pledge Register, while the pledge over securities shall be registered in the Central Depositary of Securities. Mortgages are registered at the Agency of Cadastre and Real Estate.7273

The common proceedings for the realization of mortgages are based on a contract with an enforcement clause, i.e. the mortgagee realises the mortgage in an enforcement procedure in front of an authorized bailiff. Another method for the realisation of a mortgage is through the services of a public notary, depending on the contract by which the mortgage is established. Neither of the two methods involves court action, assuming that no disputes arise between the mortgagee and the mortgagor during the process of mortgage realization.74

Socially owned property

The Law on Use and Administration of property of State bodies75 regulates the legal regime of acquisition, use and availability of movable and immovable socially owned property (Article 1a). Other provisions related to state property are included in other special laws: Law on Budget, Law on Agricultural land, Law on Construction land, Law on Public enterprises and others.

The Law on Privatization and Lease of socially owned construction land76 regulates the privatization procedure to transform socially owned land into privately owned land.

Denationalization/Restitution77

Denationalization is defined as a way of terminating socially owned property rights and enables legal and natural persons with a view to acquire assets which were taken over by the State.78The Law on Denationalisation regulated methods of restoring assets confiscated through nationalization, agrarian reform, expropriation and other schemes. Denationalization, which is almost completed in Macedonia, was implemented in two ways: with the restoration of the assets (where this was possible) or by compensation – if the asset does not exist anymore or

71 See International Comparative Legal Guide to: Corporate Recovery and Insolvency 2014, Chapter on Macedonia, Paragraph 1.1. Dragan Dameski and Jasmina Ilieva Jovanovikj, Debarliev, Dameski & Kelesoska Attorneys at Law72 See Law on Contractual Mortgage.73 See Law on Real Estate Cadastre and Law on Survey and Land Cadastre.74 See International Comparative Legal Guide to Macedonia Real Estate, 2015, Part 8.3.75 Law on use and availability of the state bodies things, Official Gazette of the RM, no 8/05, 150/07 and 35/11.76 Law on privatization and rent of the socially owned construction land. Official Gazette of the RM, no. 4/05, 13/07, 165/08, 146/09, 18/11 and 51/11.77 Law on denationalization, Official Gazette of the RM, no 20/98, 31/00, 42/03, 44/07, 72/10 and 171/10.78 Law on denationalization, Official Gazette of the RM, no. 20/98, 31/00, 42/03, 44/07, 72/10 and 171/10.




could not be practically returned (Article 20 and 27 of the Law on Denationalization). The right of denationalization belonged to the previous owners or their inheritors of they were citizens of Macedonia (Article 13).

7. Slovenia

The Constitution of Slovenia enacted in 1991, guarantees the right to property. Through an amendment in 1997, which was one of the steps necessary for EU accession, Slovenia has changed the rules for foreigners willing to acquire land in Slovenia.

Article 68 (Property Rights of Foreigners) “Foreigners may acquire ownership rights to real estate under conditions provided by law or if so provided by a treaty ratified by the National Assembly, under the condition of reciprocity. Such law and treaty shall be adopted by the National Assembly by a two-thirds majority vote of all deputies.”

Restrictions on the use and acquisition of property are foreseen under Article 69 of the Constitution:

Article 69 (Expropriation) “Ownership rights to real estate may be revoked or limited in the public interest with the provision of compensation in kind or monetary compensation under conditions established by law.”

Further restrictions on property ownership are regulated in the Constitution at Article 71, which accords a special protection to agricultural land. The Constitution of Slovenia does not distinguish between the types of property, i.e. publicly owned, privately owned or state owned. There is no specific mention in the law of socially owned property.

Other Sources of Legislation

Slovenia does not have a Civil Code. On the 1st of May 2004, Slovenia joined the EU. By that date, almost all EU directives had been transposed into Slovenian law. In the Treaty of Accession to the EU, Slovenia was granted a seven year period79 after the accession date, in order to harmonise its legislation with the Acquis.

Among others, the following laws are essential in relation to property rights: the Law on Obligations, the Law on Property,80 the Act on Execution and Security Rights, the Act on

79 The time period of 7 years is higher than the usual time that the EU has allowed to a country. See web site of www.europa.eu on ’Single market for capital’.80 This law was adopted on 27 September 2002, and entered into force on 1 January 2003.



http://www.europa.eu/


Bankruptcy, the Act on Companies’ Financial Conduct, Consumer Protection Act, the Act on Consumer Credit, the Act on the Securities Market, the Land Register Act, the Act on Business Companies, and the Notaries Act.

Types of Property

The Constitution does not distinguish types of property, as mentioned above. Public property is a notion introduced in the Law on Property.81

Acquisition, Transfer of property

An agreement between the parties (disposition or willingness) is the prerequisite for the passing of the title.82Acquisition is possible by titles deriving from: legal transactions, succession, and decision of a public authority or the law itself.83 It is noticeable that the acquisition through succession is implied as derivative universal succession, in the sense that there are no further prerequisites foreseen for the transfer of the right to ownership. The land register is used to enter and record details of titles relating to immovable property and facts of legal relevance associated with immovable property. All entries in the land register are public and free and take effect as of the date on which the request for recording an entry is received by the court keeping the land register.

Rights of Foreigners

Citizens from EU, OECD and US, as well as Slovenian expatriates without Slovenian national status can acquire land under the same conditions as Slovenian citizens. This rule is applicable to both natural and legal entities.

Natural and legal entities, citizens of EU candidate countries and other countries are subject to the principle of reciprocity.

Superficies Solo Cedit

In accordance with the principle of superficies solo cedit, a building erected on land is considered as an integral part of the underlying land.

Construction Rights

81 See Article 19 of the Code of Property Law of Slovenia.82 See Article 40 of the Law on Property of the Republic of Slovenia. Stvarnopravni zakonik – SPZ [Real Property Code]; Ur. l. RS, No. 87/2002.83 See Article 39 to 42 of the Law on Property of the Republic of Slovenia.




According to the Law on Property from Article 256 to 265, the building lease is a real right, the duration of which is limited to a maximum of 99 years. After this period, the right expires, causing the building to become again an accessory to the real property. The building lease is a transferable right and is transferred in accordance with the same rules applicable to ownership in real property. The acquisition is therefore conditional to registration in the land register.84

Floor Ownership

A share in the common areas of the building (e.g. staircase) belongs to each part of a building held in ownership of an entire floor and co-ownership of separate jointly owned parts. Such co-ownership is inseparably linked with ownership of an entire floor and cannot be transferred separately. It is not possible to waive ownership or ask for a partition of such property.

Socially Owned Property

In 1992 Slovenia adopted a Law on Transformation of Company Ownership, according to which a mixed scheme of shares was granted to employees and former employees.85 The law was a compromise86 between different interests and political views.

Enterprises were essentially divided into three groups: the first consisted of large enterprises (essentially unprofitable), which were to be subject to a “restructuring” intended to prepare them for sale to the private sector. The second group consisted of enterprises in social ownership, to be privatized under the (normal) conditions of the Act. The third group included enterprises under the direct supervision of the government, such as public utility companies and steel works, which were to remain in the government domain.

Titles to individual apartments in a block are regulated by the Act on the acquisition of the strata title of the part of a building on proposal of the owner and on determining the land belonging thereto, Official gazette 45, 2008, amended in 2011 in gazette 59).

Denationalisation/Restitution

The Republic of Slovenia passed a Denationalization Act at the end of 1991 as a legal basis for the restitution of the property nationalized after the Second World War in different phases, 84 Guidelines on Credit Risk Mitigation, Legal Framework in Slovenia, published by Österreichische Nationalbank (Austrian National Bank).85 See Cultural Policy in Slovenia, published by Council for Cultural Cooperation in 1998.86 Wolfgang Faber, Brigitta Lurger, ’National reports on the transfer of movables in Europe Volume I: Austria, Estonia, Italy, Slovenia’, 2008.




that is to say in 1945, 1948, 1953 and 1958. It was supplemented by indemnities in the form of restitution bonds issued by SOD, if restitution in kind was impossible.87

The denationalization claims were to be in the first instance settled by the state administration units on the local levels, while the complaints were to be settled by corresponding ministries. In specific cases the ministries were responsible for the restitution claims in the first instance. Thus, the Ministry of Finance (MF) was to settle restitution claims for the property in banks, insurance companies, and other financial institutions. The Ministry of culture (MC) was to settle claims on property, which was a part of cultural inheritance, while the Ministry of Environment and Spatial Planning (MESP) was to address the claims for property which was protected as natural heritage. The courts were directly involved in the cases in which property had been confiscated by the decisions of the courts.

VII. LEGAL ASSESSMENT OF KOSOVO LEGISLATION IN RELATION TO EUROPEAN LAW88

The Constitution of the Republic of Kosovo

It should be noted that the Constitution of the Republic of Kosovo ensures the highest standards of protection of property and other real rights. Various European and international conventions have constitutional rank, pursuant to Article 22 of the Constitution of the Republic of Kosovo. Therefore they apply directly and take precedence over other domestic legislation.89 The Constitution of the Republic of Kosovo itself provides certain rules regarding ownership, though not in the technical legal sense.90 A fundamental norm regarding ownership may be found at Article 46 of the Constitution, according to which, "ownership" is classified with other fundamental rights and freedoms and given constitutional protection. There is however a terminological inconsistency in that. While the title of the provision of Article 46 of the Constitution does not refer to "Right to Property", but rather to "Property", the text of Article 46 par. 1 of the Constitution describes the “right to property", not "property".91

Thus, this norm is simply a linguistic terminological error because there should not be such thing as protection of "property" but rather protection of "the right to property" since in the

87 Mencinger, J. ‘Privatisation in Slovenia”, University of Ljubjana, 2006.88 European Law in this context refers to European Acquis and the ECHR.89 Academically it has not been decided so far whether the dispositions of Article 22 are to be considered as numerus clausus90 See Article 7, 24, 46, 119,121,122,156 of the Constitution, while Article 159 and 160 have been abrogated.91 The wording in the Serbian language is ’imovina’, which means wealth.




Albanian language, the notion of "property"92 in the legal sense has to do with "object" and not with the abstract notion of property. The expression used for "ownership" in the three versions, Albanian, English and Serbian, has flaws. Other constitutional provisions on "property" are characterised by the same problem, that is to say lack of a coherent and consistent terminology with potential consequences in substance. It is questionable if in the Constitution the concept of ownership is absolute or if it allows a duality93 in terms of property (ownership) types. There is a discrepancy in terms of contents between Article 46 of the Constitution on the one hand and Article 119 and 122 on the other. By repealing Article 159 and 160 of the Constitution, the property regime dualism has been made even more unclear.

Other formal sources of law on real rights

Several laws related to ownership and other real rights have been enacted in Kosovo. The following is a general summary of some of the most important ones.

Undoubtedly the main law is the one on Property and Other Real Rights and special laws which regulate specific parts of real rights. Special laws that regulate some parts of real rights may be divided into four groups: a) Special laws regulating the legal regime of some immovable assets (Law on Agricultural Land, Law on Forests, Cultural Heritage Law, Kosovo Water Law, Law on Roads etc.); b) Special laws regulating some forms of property rights (Law on Local Self-Government, the Law on financing the local government units, the Law on Budget, the Law on Business Organizations, etc.); c) Special laws regulating specific ways of acquiring the property rights (Law on Expropriation, Law on Construction, Law on Treatment of constructions without permit; the Criminal Code - Confiscation of material goods obtained by a criminal offense etc.); d) Special laws regulating the registration of property rights on the immovable property and other real rights in public books (Law No. 2002/5 on the Establishment of the Immovable Property Rights Register, the Law on Cadastre etc.).

Types of property ownership

The notion of types of property ownership94 is not properly regulated. The Constitution itself appears to be unclear in this regard. Article 46 of the Constitution mentions "property" without making a distinction between "public property" and "private property". Deprivation or

92 The right wording in the Albanian version is used only in Article 119 of the Constitution.93 See below the section on Types of property ownership.94 In the Albanian version it should be ’types of property ownership’(llojet e pronesise), not types of property (lloje te prones). Unfortunately, the Constitution itself in Article 122 reads ’types of property’.




restriction of right to property is allowed only if expressly stipulated by law.95 At first sight it may seem that the Constitution recognises ownership as an absolute right regardless of whether the holder is a natural person or a legal person or, indeed, the State. However, Article 122 expressly stipulates that "the types of property" should be regulated by law. That does not mean that there is a need to enact a specific law addressing "the types of property". In Europe there are different approaches to such matter. French law for instance recognises public and private property, while German law makes no distinction in this regard. There are problems arising from the fact that the Constitution of Kosovo does not take a precise stance in this respect. That indeed results in interpretative issues as far as the Law on Ownership and Other Real Rights is concerned. In particular, one may wonder if such law regulates also acquisition of property which is publicly owned. Article 1 par. 5 of this law explicitly excludes from its scope objects which are publicly owned. In addition to that, there is no adequate legal framework regarding the definition of objects that are publicly owned and a definition of title holder 96 over certain objects. Such an ambiguous approach is a common feature in almost all the laws which are expected to deal with the issue of public real right holders, e.g. the Law on roads, Agricultural land etc. In this respect, reference to the basic law, that is the Law on Property and Other Real Rights, is always missing. Such a situation creates legal uncertainty which considerably hinders the development of a market economy. The question finally arises as to the regulation of the future of the concept of "social ownership". The new legal system of Kosovo will not acknowledge the concept of "social property", at least in a legal sense. This is clear from the fact that Article 159 and 160 of the Constitution have been repealed without being replaced.

Acquisition and Transfer of Property

The comparative exercise previously carried out provides some best practices in relation to various methods of acquiring ownership and other real rights in selected countries. Although Germany and Austria are both part of the Germanic legal family, their respective rules referring to acquisition of property and other real rights are completely different. Thus, it is irrelevant which model Kosovo will be following in relation to the institute of acquisition of property. Traditionally, the Austrian traditio concept prevails, hence the method of acquisition of

95 In the case of expropriation; the use of property should be seen in the aspect of public interest as stipulated by Article 46 Par.2 of the Constitution. 96 An exception in the positive sense is the Law on waters (2004/24) in which Article 1 is defined that the Republic of Kosovo is the owner of waters. Nevertheless, even in this case, there is not a distinction in the law between the body of the water and the stream of the water itself.




property through titulus and modus. These two elements are required for the acquisition of property, regardless of whether the property is movable or immovable property. Clearly, if the object of the transaction is an immoveable asset, then the modus is the registration, not the delivery of the object, as is the case if the object of the transaction is movable. The issue of acquisition of ownership in movable and immovable property is regulated exclusively by the Law on Property and other Real Rights. This law, in general, seems to have the tendency to maintain the traditional system of property acquisition.97 However, as "the devil is always in the detail", there are some fundamental problems:

1. The law explicitly regulates the acquisition of property through contract and not through the law or a court decision; 2. The law does not appear very clear whether the same act needs to fulfil both the requirements under the law on obligations and the law on property OR for the acquisition of property it is just needed to comply with property law principles. In practice application of obligations principles have prevailed in detriment of property law ones. Yet the main issue is that acquisition of proprietors’ titles is regulated by the Law on Property and Other Real Rights 3. The absence of the expressive regulation of the clause clausula intabulandi;4. Constitutive and declarative character of the registration. It was mentioned earlier that registration modus is of constitutive character only if titulus is a notarised act. Otherwise that may create conflicts with other legal principles. 5 The issue of registration is also problematic not only due to the presence of data which are not fully accurate , but also because the legal framework especially on real estate registry is still far from being a modern one.

Pre-emption rights

Pre-emption rights are regulated both by the Law on Obligations’ Relationships (LOR) and the Law on Property and Other Real Rights (the LPRR). The fact that they are regulated in parallel by these two basic laws is not to be considered incorrect. This is due to the fact that there should be a distinction between the right of pre-emption, as a right stemming from an obligations’ relationship on the one hand and as a real right on the other hand.

97 See in particular the provisions set forth by Article 21 and 36 of the Constitution of Kosovo.This project is



The right of pre-emption described by the law on obligations implies an inter partes character. The real right of pre-emption, instead, implies an erga omnes character and only as such it is registered in the Register of Immovable Property Rights (IPRR).

Security Rights

Security rights are regulated by the Law on Ownership and Other Real Rights since previous laws on the same matter have been abrogated under the lex posterior principles. In the past, law makers have maintained a narrow approach towards security rights on real estate, which means that until now the concept of mortgage has been the sole option for using immovable property as collateral for obligations. This situation may hinder the establishment of a market economy by not serving the different needs of foreign and domestic investors. Therefore, lawmakers should introduce at least one additional concept of security rights, such as collateral assignment.

Rights of Foreigners to acquire immoveable property

An area of concern in property rights is acquisition of ownership by foreigners. The current legal situation in Kosovo does not provide foreigners with a sound framework. This issue must be addressed with a view to provide an advanced legal framework capable to attract foreign investment. There exists a variety of legal opinions amongst lawyers, judges, real estate agencies whether the aliens have a right to acquire ownership in immovable property or not.

Some argue that foreigners do not have a direct right to acquire ownership over immovable property in Kosovo. In other words, only foreign legal persons may acquire such a right but not natural persons. Others believe that aliens in Kosovo have a right to acquire ownership over immovable property. This is because local legislation provides foreigners with a status equal to a the one of Kosovar nationals.

Article 2 LPRR stipulates that any person, legal or natural, can acquire real rights, unless otherwise provided by law. Based on the exact wording of the Constitution of the Republic of Kosovo at Article 121, foreign organizations and natural persons may acquire ownership rights over immovable property in accordance with such reasonable conditions as may be established by law or international agreement. The wording of the law on property and other real rights states that any person can acquire real rights, unless otherwise provided by law. The conclusions that can be drawn from such provisions is that foreigners have access to




immoveable property, but the means of acquiring ownership over immovable property for foreign organizations or foreign natural persons, beside the Constitution, are not regulated.

Considering that domestic law applies both to Kosovar nationals and foreign natural and legal persons that are residing within that territory, we can conclude that the law allows foreigners to buy property.

Hence, in respect to aliens’ right to acquisition of ownership over immovable property, two hypotheses may be brought forwards. One is that aliens have the right to acquire ownership over immovable property in Kosovo. The second one is they do not to have such right, apart from if they are legal persons.

With respect to the first hypotheses, looking at the Constitution of Kosovo, a legal base for an alien to acquire ownership over immovable property in Kosovo exists. In addition, the wording of Article 2 LPRR, which refers to any person, is a legal argument for the right of aliens’ to acquire ownership over immovable property in Kosovo, regardless they may be nationals of Kosovo, aliens residing temporary or permanent in Kosovo. In other words, an alien in Kosovo is equal to a national in Kosovo and have a right to acquire ownership over immovable property in Kosovo through the law, a legal act, inheritance or with a decision from the state body.

Equal access to property for aliens and the nationals is provided by the Foreign Investment law. The principal purpose of the law is to promote and encourage foreign investment in Kosovo by providing foreign investors with a set of fundamental and enforceable legal rights and guarantees. This in order to ensure that foreign investors that they and their investments will be protected and treated with fairness and respect in strict accordance with the rule of law and widely accepted international standards and practice.

Further, it stipulates that Kosovo shall accord fair and equitable treatment to foreign investors and their investments in Kosovo and no unreasonable or discriminatory action or inaction shall be imposed on them. A conclusion that might be drawn from the Foreign Investment law is that a foreign legal person/alien can acquire ownership over immovable property by investing in Kosovo, after being registered at the Kosovo Business Registration Agency in full compliance with the provision of the same law.

In relation to agricultural land, the legislation of Kosovo on agricultural land treats natural resources as a public interest and, as such, it accords a special protection. The economic function of agricultural land cannot be changed, unless the law allows it. However, the law on




agricultural land as other laws does not mention explicitly or addresses the issue of ownership of agricultural land in relation to aliens. The only provision that addresses aliens in connection with agricultural land in Kosovo is the right to lease agricultural land.

Agricultural land may be leased to natural and legal persons, locals or foreign, involved in agricultural activities. Granting of agricultural land for use under lease for a period of over three (3) years will be considered as long term lease, while granting of agricultural land for use under lease for a period of up to three (3) years will be considered as short term lease. For a long term lease contract to bear legal value, it must be in written form and be registered at the competent municipal bodies for agriculture. The law on agricultural land does not say anything else, whether an alien can acquire ownership over agricultural land/immovable property.

A natural person may acquire ownership over immovable property also through inheritance. The law on inheritance treats aliens as equal to nationals of Kosovo regarding inheritance, subject to reciprocity. Reciprocity is presumed.

Superficies Solo Cedit

As already stated in previous reports98, the Law on property and other real rights has reasonably rehabilitated the long-lacked fundamental principle of superficies solo cedit. This is to be welcomed. However, it is not enough because we have an evident gap and hardly passable apparently due to the factual situation on the ground, resulting from the legal tradition and the consequences inherited this far. The area requires for legislative intervention in order to reintroduce this principle in practice.

Construction Rights

Construction rights, as other rights as well, are regulated in a modern way by the Law on Ownership and Property Rights. The problem is the gap between legislation and practices. Therefore legislative intervention is needed.

Floor ownership

In principle, floor ownership is well regulated by the Law on ownership and other real rights. The rules regarding floor ownership are provided respectively in Article 57 and subsequent provisions. Most of these norms are based on German law on floor ownership. The problem is that Kosovo has also adopted a separate Law that regulates apartments’ ownership. Therefore, harmonisation between the two pieces of legislation is needed. Different legal terminology is 98 See Impact Assessment Report corresponding to Activity C2 of the CCPR project.




also used for the same institute in an ambiguous way, or one notion is used for various institutes. Notions like "co-ownership99" and "joint ownership"100 seem inadequately used in some cases. This can create various legal consequences with substantial effects. The language used in the Albanian version of the law seems to be more standardized than the Serbian or English versions.

Socially Owned Property

Social had its beginnings in 1950 when the state limited private ownership and converted the property in social ownership by means of expropriation, confiscation, nationalization, etc. Such property was then allocated to municipalities and the municipalities handed over land attached to socially owned property mostly to socially owned enterprises.

Under the current legal framework, privatization in Kosovo requires that a privatized social property not to be turned into private property, but it may be given or transferred for long-term use, respectively, 99 years, in the form of a long-term common-law framed lease-hold. The Assembly of Kosovo, after the declaration of independence, adopted the Law no. 03/L - 067 on the establishment of the Kosovo Privatization Agency (PAK), as amended and supplemented by Law no. 04/L - 034, which establishes this Agency as an independent public body with full legal capacity and legal successor of all rights and obligations of the Kosovo Trust Agency (KTA), established under Regulation UNMIK (no. 2002/12).

Problems within such law may be summarised as follows:

- UNMIK commenced the privatization process of SOEs and their assets without considering the possibility of restitution of property to former owners.

- Article 5, Point 3, of the Law on Privatization Agency of Kosovo no. 04/L-34, states:

„3. The extent of the Agency’s administrative authority under 5 paragraph 1.1 shall extend to all property in the ownership or possession of an Enterprise, including property located outside of Kosovo; provided, however, that - notwithstanding its obligations set out in Article 2 paragraph 1 with respect to such property located outside of Kosovo, the Agency is only required to exercise „

- Currently the Kosovo Privatization Agency does not have the possibility to exercise its authority over property of socially owned enterprises outside Kosovo.

99 See the dispositions of Article 55 and following of the Law on Property and Other Real Rights.100 See the dispositions of Article 71 and following of the Law on Property and Other Real Rights.




- The Agency does not guarantee the natural or legal person who privatizes SOE’s and SOE’s property towards claims from third parties.

- The law does not give an answer to what will happen to a right of lease after 99 years, and if the privatized SOEs or SOEs land will return to be a public asset, or they will be possible for them to be transformed into private property.

- Finally, the Constitutional provisions laid down by Article 159 of the Constitution have been abrogated, creating a legislative gap regarding the holder of the right to the immovable property, given in use for 99 years.

Denationalisation/Restitution

The Republic of Kosovo has not undertaken a denationalisation process such as the one which took places in other countries (e.g. Slovenia, Croatia and Macedonia). Restitution of properties occurred in relation to internally displaced persons under the competences of the Kosovo Property Agency and its predecessor agencies.

It is not a requirement of any International Convention, or the ECHR for any State to undertake such reform, as also stated in the case law of the ECtHR.101 The decision relies entirely upon the State, but, once it is taken, and once the respective laws are enacted, the ECtHR will hold the State responsible for any eventual violations. This will also be true for the Republic of Kosovo when it becomes a member of the Council of Europe.

VIII. CONCLUSIONSAny property law reform is to be framed within the guidelines of ECHR and relevant case law based on two rules (1. protection of property 2. deprivation of property) and three principles (1. lawfulness, 2. legitimate aim in the public interest, 3. fair balance 4.legitimate expectation).

101 A very direct statement on the matter comes from the Case of Beshiri and Others v. Albania no.7352/03 related to the restitution of property and the enforcement of court decisions. ’The Court has held in this connection that the Convention cannot be interpreted as imposing any general obligation on the Contracting States to restore property which was transferred to them before they had ratified the Convention (see Kopecký v. Slovakia [GC], no. 44912/98, § 35, and von Maltzan and Others v. Germany (dec.) [GC], nos. 71916/01, 71917/01 and 10260/02, § 74, ECHR 2005-V). Nor is there any general obligation under the Convention to establish legal procedures in which restitution of property may be sought. However, once a Contracting State decides to establish legal procedures of such a kind, it cannot be exempted from the obligation to honour all relevant guarantees provided for by the Convention, in particular in Article 6 Par. 1.’




EU Law considers property law mainly as an internal matter of EU Member States (Article 345 TFEU), although a fragmentary European Union Property law is emerging based on the four fundamental freedoms provided by the EC Treaty. Article 49 TFEU is of great relevance in relation to the right of foreigners to acquire immovable property.

1. As far as public legislation (e.g. administrative law, etc.) on property is concerned: In cases of expropriation, compensation for expropriation should be based on solid legal

and economic references, by offering a satisfactory compensation that reflects the market value to the expropriated party. Finally, current legislation provides that compensation is due only if the owner is found but no reference to the legal obligation to find an owner is made.

In respect of socially owned properties, new legislation should be drafted in a way that property rights granted through previous legal acts are not violated. In addition to that, the legislator should ensure tenants adequate rents compatible with market economy standards. In other words, it is requested to strike a proportionate balance between rights of the tenants and excessive burdens of proprietor’s rights.

It is not a requirement of any International Convention, or the ECHR for any State to undertake a privatisation reform, as also stated in the case law of the ECtHR.102 The decision rests entirely within the authorities of the State, but, once it is taken, and once the respective laws are enacted, the ECtHR will hold the State responsible for any eventual violations.

Foreigners right to acquire property in Kosovo should be framed in a proper law. An adequate legal framework regarding the definition of the objects that are publicly

owned and a definition of title holder103 over certain objects is missing. This situation of ambiguity and legislative indecision is a feature seen in almost all the laws that are

102 A very direct statement on the matter comes from the Case of Beshiri and Others v. Albania no.7352/03 related to the restitution of property and the enforcement of court decisions. ’The Court has held in this connection that the Convention cannot be interpreted as imposing any general obligation on the Contracting States to restore property which was transferred to them before they had ratified the Convention (see Kopecký v. Slovakia [GC], no. 44912/98, § 35, and von Maltzan and Others v. Germany (dec.) [GC], nos. 71916/01, 71917/01 and 10260/02, § 74, ECHR 2005-V). Nor is there any general obligation under the Convention to establish legal procedures in which restitution of property may be sought. However, once a Contracting State decides to establish legal procedures of such a kind, it cannot be exempted from the obligation to honour all relevant guarantees provided for by the Convention, in particular in Article 6 Par. 1.’

103 An exception in the positive sense is the Law on waters (2004/24) in which Article 1 is defined that the Republic of Kosovo is the owner of waters. Nevertheless, even in this case, there is not a distinction in the law between the body of the water and the stream of the water itself.




expected to treat the issue of public right holders, e.g. the Law on roads, Agricultural land etc.

UNMIK commenced the privatisation of SOEs and their assets without considering the possibility of restitution of property to former owners. However:

o The Agency does not guarantee the natural or legal person who privatizes SOE’s and SOE’s property towards claims from third parties.

o The law does not give an answer to what will happen to a right of lease after 99 years and if the privatized SOEs or SOEs land will return to be a public asset, or it will be possible for them to be transformed into private property.

o At last, Constitutional provisions of Article 159 of the Constitution have been abrogated, creating a legislative gap regarding the holder of the right to the immovable property, given in use for 99 years.

o Currently the Kosovo Privatization Agency does not have the possibility to exercise its authority over property of socially owned enterprises outside of Kosovo.

o In relation to occupancy rights, it is suggested to link the legal status of the land to that of the building.

2) As far as civil legislation (e.g. civil code book on property) on property is concerned:

In relation to sale contracts, LPRR does not appear very clear whether the same act needs to fulfil both the requirements under the LOR and the LPRR or for the acquisition of property it is just needed to comply with property law principles. In practice application of obligations principles have prevailed in detriment of property law ones. Yet the main issue is that acquisition of proprietors’ titles is regulated by the Law on Property and Other Real Rights

,

In principle, floor ownership is well regulated by the Law on ownership and other real rights. The rules regarding floor ownership are provided respectively at Article 57 and subsequent provisions. Most of these norms are based on German law on floor ownership. The problem is that Kosovo has also adopted a separate Law that regulates apartments’ ownership. Therefore, harmonisation between the two pieces of legislation is needed.




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