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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

“Impact Assessment of Existing Legislation on Civil Code Related Areas: The Law of Property”

______________________________________________________________________________

Component C, Activity C.2: “Undertake an impact assessment of existing legislation on property law” (ToR, Activity 1.2)

Pristina, November 2015

This project is implemented by a

consortium led by GIZ International Services

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DISCLAIMER



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This report has been prepared by Key Expert 2 and the property law team, composed 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.

I. Table of Contents

I. TABLE OF CONTENTS.................................................................................................................. 3

II. EXECUTIVE SUMMARY............................................................................................................ 5

III. INTRODUCTION......................................................................................................................... 7

IV. IMPACT ASSESSMENT OF PUBLIC LEGISLATION (E.G. ADMINISTRATIVE LAW, ETC.) RELATED TO PROPERTY......................................................................................................... 7

1. Constitution of the Republic of Kosovo....................................................................................................... 7

2. Public versus private property: constitutional provisions...........................................................................10

3. Public Property......................................................................................................................................... 10

4. Municipal property................................................................................................................................... 11

5. Social Ownership...................................................................................................................................... 13

6. Privatized socially owned property status.................................................................................................15

7. Registration of immoveable property........................................................................................................ 16



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8. Construction Rights................................................................................................................................... 20

9. Notarial legislation.................................................................................................................................... 20

10. The system of legal remedies................................................................................................................ 23

11. New developments related to Kosovo Property Agency........................................................................25

12. Informal Settlements............................................................................................................................ 26

13. Succession of Kosovo from Serbia......................................................................................................... 27

V. IMPACT ASSESSMENT OF CIVIL LEGISLATION (E.G. CIVIL CODE BOOK ON PROPERTY) ON PROPERTY............................................................................................................ 29

1 Neighbourhood rights............................................................................................................................... 29

2. Possession of property.............................................................................................................................. 29

3. Acquisition of property............................................................................................................................. 29

4. Issues related to construction rights and “superficies solo cedit”...............................................................30

5. Common Ownership................................................................................................................................. 32

6. Securities in Law....................................................................................................................................... 34

7. Pledge...................................................................................................................................................... 35

8. Servitudes................................................................................................................................................. 35

9. Principle of Priority in Property Ownership...............................................................................................35

10. Problems in implementation of laws identified by case law...................................................................36

11. Conclusions and Recommendations...................................................................................................... 36



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II. Executive Summary

This Report provides an impact legal assessment on property rights in Kosovo and serves as reference material for the subsequent preparation of Activities C. 3 and C. 4 of the project´s Terms of Reference (ToR). It is based on material which has been collected and analysed in Activity C.1 of the ToR. To be seen as the conclusive output of C.2 activity, this document aims to identify gaps, inconsistencies and incompatibilities in the existing legislation and examines the main issues affecting the property rights regime in Kosovo and its application in practice.

The existing legal framework of the Republic of Kosovo may be overregulated on the one hand without following a specific pattern also due to a donors driven approach leading to conflicting legal traditions. Thus, local legislation is not coherent. An exhaustive evaluation of the relevant legislation shows that there are many gaps in the field of property law, in the sense that legislation is either missing or existing provisions are not sufficiently regulating fundamental legal institutes.

The Constitution of the Republic of Kosovo ensures the highest level of protection of property. It refers to the notion of public and private property without defining it.

Lack of basic regulation of the notion of public property means that issues relating to public property awaiting for a solution are many, for instance: comprehensive registration and creation of complete records of public assets; broad definition of state property; determining the notion of ownership holder on each individual piece of public property; rules on management, transferring public ownership and use.

Municipal property is a sub-species of public property. Existing rules provide a comprehensive framework. However, implementing by-laws are needed.



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Socially owned enterprises/property are not considered as a type of property in the constitution. It is a matter of time until this kind of property will be transformed into private property. Issues related to SoE still wait for a solution.

Existing Law on Construction Land is still in force and has not yet been replaced as provided by the Constitution. Thus, the legislation does not allow the transformation of the right of use of ownership rights of social / state property into private or public ownership of the construction land and privatization of the ownership of the construction land.

Legislation should be enacted enabling the consolidation into one property right of: occupancy right and ownership of the building insisting on it, in a way that the owner of the building should also become co-owner of the construction land. Addressing the issue of construction land is important also in view of regulating urban planning and urban construction and defining the conditions under which building permits are issued in urban and rural areas.

Section 7.2 of Law on the Establishment of Immovable Property Rights Registry should be amended and clarified, regarding the meaning of the law when it refers to “Entries in the Register shall be made accessible to the general public”;

The Law on Notary arises concerns in relation to its harmonization with other pieces of legislation, mainly LPRR, LOR, Law on Inheritance, Law on Family, Law on non-contested procedures etc.

As an additional example of inconsistency, one may refer to the Roman law notion of communio which may be found in LPRR and LOR. The Law on Property Rights and other Real Rights does not clearly define the difference between common ownership, and co-ownership and its terminology is not fully corresponding with the Law on Obligation Relationships. This difference is causing problems in practice.



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Abbreviations

Agency Kosovo Property Comparison and Verification Agency

CCPR Civil Code and Property Rights

cf. compare

ECHR European Convention on Human Rights

ECtHR European Court of Human Rights

Ed. Edition, editor

e.g. (exempli gratia) for example

EU European Union

EUO EU Office in Kosovo

FRY Federal Republic of Yugoslavia

GIZ Deutsche Gesellschaft für Internationales Zusammenarbeit GmbH

GIZ IS GIZ International Services

GFoK Government of Kosovo

HPCC Housing and Property Claims Commission



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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



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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 Enterprise

STE Short Term Expert

Strategy National Strategy on Property Rights

SWG Property Rights Sector Working Group

ToR Terms of Reference



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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



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III. Introduction

This Report provides an impact legal assessment on property rights in Kosovo and serves as reference material for the subsequent preparation of Activities C. 3 and C. 4 of the project´s Terms of Reference (ToR). It is based on material which has been collected and analysed in Activity C.1 of the ToR. It is divided into two parts: impact assessment of public legislation (e.g. administrative law, etc.) related to property, that is to say legislation that most probably will be left out of the civil code and referred to as ‘special legislation’ and civil legislation on property, which will be included in the envisaged Civil Code of the Republic of Kosovo

IV. Impact assessment of Public legislation (e.g. administrative law, etc.) related to property

The first part of this document focuses on assessing public legislation (e.g. administrative law, etc.) on property, that is to say rules and principles, that stemming from the known dichotomy public/private or civil law, does not belong to the realm of civil law and will be left out of the envisaged Civil Code of the Republic of Kosovo.

1. Constitution of the Republic of Kosovo

The Constitution of the Republic of Kosovo ensures the highest level of protection of property. According to Article 119 Constitution, the Republic of Kosovo shall ensure a favourable legal environment for a market economy, freedom of economic activity and safeguards for private and public property. 2. The Republic of Kosovo shall ensure equal legal rights for all domestic and foreign investors and enterprises.

According to Article 121 [Property] Constitution 1. Types of property shall be defined by law. 2. Foreign natural persons and foreign organizations may acquire ownership rights over immovable property in accordance with such reasonable conditions as may be established by law or international agreement. 3. Foreign natural persons and foreign organizations may, in accordance with such reasonable conditions




as may be established by law, acquire concession rights and other rights to use and/or exploit publicly owned resources, including natural resources, and publicly owned infrastructure.

According to Article 122 [Use of Property and Natural Resources], Constitution 1. The people of the Republic of Kosovo may, in accordance with such reasonable conditions as may be established by law, enjoy the natural resources of the Republic of Kosovo, but they may not infringe on the obligations stemming from international agreements on economic cooperation. 2. Natural resources such as water, air space, mineral resources and other natural resources including land, flora and fauna, other parts of nature, immovable property and other goods of special cultural, historic, economic and ecologic importance, which have been determined by law to be of special interest to the Republic of Kosovo, shall enjoy special protection in accordance with law. 3. Limitations on owners’ rights and other exploitation rights on goods of special interest to the Republic of Kosovo and the compensation for such limitations shall be provided by law.

According to Article 22 Constitution, the Universal Declaration of Human Rights, ECHR and other listed international agreements are directly applicable. According to Article 53, human rights in Kosovo should be defined in the context of the European Court of Human Rights (ECHR) interpretation of human rights. This means that Protocol 1 Article 1 is directly applicable in Kosovo and, in the case of conflict, has priority over provisions of laws and other acts of public institutions.

Article 46 Constitution states that the right to own property is guaranteed, no one shall be arbitrarily deprived of property. Article 46 requires the state to compensate owners for land taken by expropriation.

Since the entry into force of the Constitution, the following articles relevant for the property rights regime were abolished: Article 159 Constitution on the privatization of the Socially Owned Enterprises and Property and Article 160 Constitution which determines that publicly owned enterprises pass to state ownership and are subject to privatization, concession or lease.

Chapter I (Basic Principles) and chapter II (Fundamental Rights and Freedoms) of the Constitution provide guarantees for protection of human rights of all citizens of Kosovo without any discrimination, while chapter III “Rights of Communities and their Members” provides rights for members of communities and responsibilities of the state to guarantee such rights.




As mentioned above, even though at present Kosovo is an aspiring member of Council of Europe, the Constitution of Kosovo explicitly recognizes the jurisdiction of ECHR. The following articles of ECHR are the ones more directly linked to the property rights.

Article 1 Protocol 1 ECHR: Protection of property: 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. 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 6: Right to a fair trial: 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. Judgment shall be pronounced publicly but the press and public may be excluded from all or part of the trial in the interests of morals, public order or national security in a democratic society, where the interests of juveniles or the protection of the private life of the parties so require, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice. 2. Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. 3. Everyone charged with a criminal offence has the following minimum rights: (a) to be informed promptly, in a language which he understands and in detail, of the nature and cause of the accusation against him; (b) to have adequate time and facilities for the preparation of his defence; (c) to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require; (d) to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him; (e) to have the free assistance of an interpreter if he cannot understand or speak the language used in court.

Article 46: Binding force and execution of judgments: 1. The High Contracting Parties undertake to abide by the final judgment of the Court in any case to which they are parties. 2. The final judgment of the Court shall be transmitted to the Committee of Ministers, which shall supervise its execution. 3. If the Committee of Ministers considers that the supervision of the execution of a final judgment is hindered by a problem of interpretation of the judgment, it may refer the matter to the Court for a ruling on the




question of interpretation. A referral decision shall require a majority vote of two thirds of the representatives entitled to sit on the committee. 4. If the Committee of Ministers considers that a High Contracting Party refuses to abide by a final judgment in a case to which it is a party, it may, after serving formal notice on that Party and by decision adopted by a majority vote of two thirds of the representatives entitled to sit on the committee, refer to the Court the question whether that Party has failed to fulfil its obligation under paragraph 1. 5. If the Court finds a violation of paragraph 1, it shall refer the case to the Committee of Ministers for consideration of the measures to be taken. If the Court finds no violation of paragraph 1, it shall refer the case to the Committee of Ministers, which shall close its examination of the case.

2. Public versus private property: constitutional provisions

Constitutional provisions refer to the notion of public and private property without defining it. Article 119.9 of the Constitution refers expressly to enterprises that are owned by the Republic of Kosovo. In this context, the term "public property" is not used, but "the property of the Republic of Kosovo". It should also be noted that Articles 159 and 160 of the Constitution, which were repealed in 2012 by an amendment to the Constitution of the Republic of Kosovo, were even more specific in terms of ownership of the Republic of Kosovo. Article 160.1 determined that Kosovo has in its possession all the enterprises in the Republic of Kosovo that are publicly owned enterprise. In this context, the term "publicly owned enterprises" should be interpreted historically as a category of UNMIK law, which was inherited from the constitutional order of the Republic of Kosovo, and which means in substance state-owned enterprises. On the other hand, Article 160.2 has determined that municipalities may be owners of certain enterprises in public ownership, which in substance are not only municipal-owned enterprise. A law addressing such an issue is currently under scrutiny. LPRR does not make any distinction in terms of types of property, but on the contrary the Law on Immovable Property Rights Register does. Under amended Article 2 Par. 2.2 LEIPRR, it is stated that rights on immovable property include: ownership; b) mortgages; c) servitudes; and d) the rights of use of municipal, public, social and state property.




3. Public Property

At the moment the legal system in Kosovo does not provide a definition and regulation of such type of property. A Working Group on Public Property was established by the Ministry of Justice in 2013. This working group has been supported by GIZ bilateral through the Legal Reform Project. The working group has produced a legal analysis with recommendations on the drafting of a Law on Public Property. Based on this analysis a concept paper for the draft law was further developed and sent for approval to the GoK. Following the approval of the concept paper by the Government, the working group will start drafting the actual provisions of the Law on Public Property. Public resources according to the Constitution are presumably public property although a general legal definition is missing. Article 122 Constitution, paragraph 2, includes: natural resources such as water, air space, mineral resources and other natural resources including land, flora and fauna, other parts of nature, immovable property and other goods of special cultural, historic, economic and ecologic importance, which have been determined by law to be of special interest to the Republic of Kosovo, shall enjoy special protection in accordance with law. During the administration of UNMIK and after the declaration of independence and adoption of the Constitution, sector laws have been enacted (such as Law on agricultural land, forestry, waters, expropriation, etc.).

An open issue in relation to public property is the level of government which is responsible for managing public property. At the moment this is subject to different interpretations. Any legislative intervention should define property rights on public law, holder of public property rights, manner of transfer of ownership, right of use, enjoyment and shall determine the powers of the different levels of government. Centralization of ownership and decentralization of use and administration may be a solution. Another issue to be rooted in a future piece of legislation is the legal regime of both movable and immovable property situated abroad. Legislative intervention should be preceded by a comprehensive registration and creation of complete public property records

4. Municipal property

The notion of municipal property as sub-species of a still missing comprehensive framework of public property is well defined.




The Constitution of the Republic of Kosovo grants the right to local self-governance. The Law on Local Self-government (2008) establishes the legal basis for a sustainable system of local self-government in the Republic of Kosovo, regulates the legal status of municipalities, competences and general principles of municipal finances, organization and functioning of municipal bodies, inter-municipal cooperation inter municipal, including the cooperation between municipalities across the boundaries and the relation between the municipalities and the central government.

Article 5 of the Law on Local Self-government defines municipalities as legal persons. As such, each municipality shall have the legal capacity to, inter alia: a) sue and be sued in the courts; b) own and manage property; c) be owner or co-owner of any company that is of interest to municipality in relation to citizens; d) enter into contracts; e) employ staff; and f) engage in other activities that are necessary for discharging its responsibilities.

Article 14 (Property of the Municipality) of the Law on Local Self-government determines that municipalities shall have the right to own and manage, to sell, lease (unless regulated by special law), keep and maintain the register for immovable and movable properties within the boundaries of the municipality.

Municipal organs (Municipal Assembly or President of the Assembly) manage property of the municipality. Management of property is synonym of use and disposal of immovable property which serve to carry out tasks delegated to local self-government. This process enables optimisation of revenues, control of expenditures and maintenance of physical property.

The municipal immovable property can be allocated for use or lease up to ten years. It is also possible that the timeframe can be extended. Allocation of municipal immovable property is possible pursuant to the provisions of Law No. 04/L-144 on Allocation for Use and Exchange of Immovable Property of the Municipality, Article 8, par. 6.1.

The municipality shall be responsible for the public announcement of the allocation of immovable municipal property. The written announcement shall be posted on the municipal website, public spaces and local electronic and printed media. The announcement shall identify property title, location and description, duration of use, any condition or restriction on rights for use, permitted use of land, form of competition, starting price, requirements for participating in the competition, including procedures for registering bidders, auction time and venue, and opening of bids.




Transparency requires that every decision of the municipality relating to the allocation of immovable municipal property is made public. Citizens are also given a period of 30 days from the announcement about the allocation of the immovable property, therefore a citizen can file a complaint against the particular allocation. Immovable property of the municipality is registered on behalf of the municipality in the Immovable Property Rights Register.

The main issues affecting municipal property regime are related to difficulties in registering municipal property, lack of implementing by-laws and professional capacities.

5. Social Ownership

In former Yugoslavia by 1990, social property was the dominant form of ownership, while personal and private property was less common.

All the successor states of former Yugoslavia have abandoned the system of social property. Indeed, following the dissolution of Yugoslavia, all the former socialist republics of former Yugoslavia changed the provisions and the laws on property, which reflected the change in the social order, i.e. relevant laws for transforming the social property were issued. With the passing of the new legislation on transformation of social property, the new states stemming from the dissolution of Yugoslavia became the legal owner of the property that was social before.

Also Kosovo, after the end of the war in 1999 and during the administration of UNMIK, started to abandon the system of social ownership, through the privatization of socially owned enterprises. After the declaration of independence of the Republic of Kosovo, the Constitution of the Republic of Kosovo, especially after repealing Articles 159 and 160, has definitely abandoned social ownership as legal concept. In the new system of Kosovo's legal order the Constitution anticipates two forms of property: private property and public property (Article 119 paragraph 1 of the Constitution), which enjoy equal protection and security (Article 46 and Article 119 paragraph 1 of the Constitution).

In 2009, in accordance with the Constitution, in order to ensure a favourable legal environment for the market economy, freedom of economic activity and securing private property, the Law on property and other real rights was adopted. LPRR clearly states “The provisions of this law do not apply to real rights




in public or common assets which are regulated by special laws, unless specifically provided otherwise in this law".

Returning to the impact of the abolished Articles 159 and 160 of the Constitution on socially owned property, one may wonder how still existing SoE is regulated. Article 121 par. 1 of the Constitution of the Republic of Kosovo states that the “types of property shall be defined by law”

Referring to the present, Law No 03/L-087 on publicly owned enterprises establishes a legal framework governing the exercise of ownership rights in publicly owned enterprises. The Kosovo Privatization Agency is mandated by Law No. 04/L-034 to manage selling, transferring and/or liquidation of socially owned enterprises and assets as defined under the present law.

The social status/state ownership over construction land in Kosovo has formally still not changed in the region, in terms of allowing free usage and disposal of urban construction land and thus creating the possibility for the land to be in private ownership. When nationalization of construction land after WWII was finalized, the right to ownership of the previous owners was terminated. However, new rights were linked to that land such as the temporary right to use the land of the previous owner until the acquisition of the permanent right to use the land under the building (object) and the land which has served to regular use of the building was created.

The Republic of Kosovo after 1970 enacted its own Law on Construction Land. This law is formally still applicable according to Article 145 paragraph 2 of the Constitution of the Republic of Kosovo. This law has still not been replaced with a new one. On urban construction land there can be no right of private ownership but just a right of use. The municipality, in accordance with its constitutional position, had the exclusive right relating to the governance and disposal of urban construction land.

The right to use the land in order to build, which the previous owner acquired based on the right of priority could be transferred to persons defined by law, (spouse, successor, the adoptive parents and adopted that these rights have not been able to carry with legal actions in other people, etc.). The right to use the land could not be framed within the western notion of property or real right to use or habitatio, since being more than the latter two but less than property.

Some western European refer erroneously to such right as a sui generis type of tenancy right, which was foreseen for flats in order to provide workers with adequate living space. This socialist type of right to




use flats has not yet been abolished formally, although existing legislation does not recognise it any longer. However, the existing rights are still in place and regulated ratione temporis by old Yugoslav law. Current legislation does not allow the transformation of the right of use of ownership rights of social / state property into private or public ownership of the construction land and privatization of the ownership of the construction land. Therefore, relevant legislation should be enacted enabling the consolidation into one property of right to use on the land and ownership of the building insisting on it, in a way that the owner of the building should also become co-owner of the construction land. Addressing the issue of construction land is important also in view of regulating urban planning and urban construction and defining the conditions under which building permits are issued in these areas (urban or rural). Public property (and other forms of public property) as an exception to the mentioned general should be retained on construction land in these cases: 1) Land which was already public property when nationalisation took place 2) Land public where roads are built, or streets, parks or other assets which are for public use; 3) Land intended for public use according to urban planning; 4) other cases prescribed by law.

6. Privatized socially owned property status

Privatization raises emotional issues from the past: confiscations, nationalisations as well as the creation of socially owned property and later transformations of businesses. When socially owned property is privatised, there may be property claims from individuals or their descendants who owned private property prior to its seizure or following its transformation. The situation in Kosovo is further complicated because many property records have disappeared as a result of the 1999 conflict.1

According to the Law on Privatisation adopted by Kosovo Assembly, the UNMIK Regulation 2003/13, on the transformation of the right of use to socially-owned immovable property as amended by UNMIK Regulation No. 2004/45 and implemented by Administrative Direction No. 2005/12 are still in force.

UNMIK legislation 2 provides that any right of use to property (i.e. land and buildings thereon classified as “immovable socially owned property”) registered in the name of an SOE which is transferred to a subsidiary of the SOE as part of a reorganization or which is included in the liquidation of an SOE, shall 1 Privatization in Kosovo, OSCE Report, May 2008.

2 UNMIK Regulation No. 2003/13, Sections 2–9, as amended by UNMIK Regulation No. 2004/45, Section 2, and implemented by Administrative Direction No. 2005/12, Sections 2 and 3.




be transformed into a leasehold upon transfer or liquidation. Such statutory leasehold shall include the right to possess, use, transfer and encumber the property to third parties (always subject to the leasehold).3 The 99-year leasehold is created in privatizations and liquidations. 4 Transfers and encumbrances must be done in writing and must, like the transformation of a right into leasehold, be registered.5 A leasehold shall not be affected by any change to the underlying ownership of the property and can only be expropriated under the same conditions and procedures provided for expropriation of ownership of real property.6

The National Park of “Sharri” may serve as an example for the unclear ownership relations due to the fact that the land of the National Park was managed by the Government of Kosovo and there are still cadastre records which show that the ownership by the now defunct SOE is still registered in the cadastre. This may create legal difficulties for the Directorate for the National Park, in charge of the management of the area, while conducting any activity or implementing any touristic or economic activity.

In the period of the UNMIK administration there was no attempt to find a final solution for the transformation of socially owned property rights. By providing a 99 years leasehold it was hoped that this issue would solve the problem of attracting investment. This also in the light to decide, who is the owner of relevant land on which construction object of lease-hold is insisting. This in turn created significant issues which are still to be solved. The so called “Marigona Residence” may serve as an example and shows that future legislation should eliminate the common law notion of leasehold.

7. Registration of immoveable property

According to Article 24 on Principles of Public Data, access to the Agency’s and MCO’s data shall be granted in compliance with the provisions of the Law on Access to Public Documents No. 03/L-215.

3 UNMIK Regulation No.2003/13 (2003).



6 UNMIK Regulation No. 2003/13 (2003). The Trust Agency has developed a practice whereby it provides the buyer in a privatisation or liquidation with the documentation with which the buyer can register the leasehold with the cadastre.




Article 25 on Certificates and Other Data provides that any person shall have the right to obtain an extract or copy of the recorded data in the Cadastre against payment of a fee set in compliance with applicable legislation proposed by the KCA. Article 26 Data for Official Use lays down that government and local institutions shall acquire the data from the Cadastre, according to the manner defined with legislation into force proposed by the KCA.

Section 2 of the LEIPRR stated that Article 2.1 Immovable property rights, as regulated by the applicable law, pertaining to land, buildings and apartments (hereinafter the “immovable property”) shall be recorded in the register.

Article 2.2 Immovable property rights include: a) ownership; b) mortgages; c) servitudes; and d) rights of use of socially owned property and state owned property.

Article 2 of the basic LEIPRR, par. 2.2 point d) is amended and reworded as follows:

d) the rights of use of municipal, public, social and state property

2. Article 2 of the basic law, par. 2.2, after the point d) there is added a new point

e) As follows: Property burdens and charges.

Article 3 of the basic law, par. 3.7 is amended and reworded as follows:

Rights on immovable property as provided under Article 2 of the law shall be registered based on: a) omnipotent court decision; b) the decision of state administrative body; c) contract for transfer of immovable property rights certified by the competent body; d) decision or contract for the privatization issued by the Kosovo Privatization Agency; e) the Commission’s decision for the Reconstruction of Cadastre; f) the Commission’s decision for the regulation of lands; and g) other documents which foresee the property rights registration due to special laws.

It is arguable whether the data in cadastral records is accurate, depending on the definition of accuracy. With modern techniques data can be accurate up to 3 cm of error tolerance, but what the data in cadastre is lacking is the update. Cadastral records can be under the name of deceased persons who have left many heirs, who might not even have a recordable title. Information on deceased persons is not transferred institutionally from civil registry offices to cadastral offices even in the same




municipality. Other important data which is frequently missing are the addresses, but there is a newly implemented street address system in Kosovo, which is currently at the stage of road signing.

With regard to fair trial within the meaning of Article 6 ECHR, the cadastral registration procedures require the MCO to make changes in ownership public. Citizens can appeal such registration within 15 days after the publication. In the cadastre reconstruction process (or systematic registration) there are public hearings and notifications prior to the final surveying and property registration, which registration can also be appealed in court.

MCOs perform registration in a timely manner. The time a court needs in order to complete a process can be long and give rise to allegations of delay and an unfair trial. This is especially so, given the nature of property rights, which can be transferred to third parties, and therefore cause an economic loss to the claimant who might wait for years in order to obtain the peaceful enjoyment of his or her property.

Under the premise of a fair trial it is also important to point out that in cases in which parties are missing (usually IDPs), these parties can also be represented by an attorney appointed by the Bar Association to represent the rights of the absent party. The attorney is also paid by the claimant and this constitutes a conflict of interest for the attorney, with the consequence that the principles of fair trial are prejudiced.

The property law Project component has encountered inconsistencies in implementation of the Law No. 2003/13 – Law on the Establishment of Immovable Property Rights Registry (hereinafter referred as LEIPRR) and the administrative instruction on implementing the main law.

Section 7.2 of the Law No. 2003/13 on LEIPRR states that “entries in the LEIPRR enjoy the presumption of accuracy, truthfulness and legality until and unless corrected by means of the procedures established by this law. Entries in the Register shall be made accessible to the general public.”

Section 7.2 of the law should be amended and clarified, regarding the meaning of the law when it refers to “Entries in the Register shall be made accessible to the general public”. Is the register accessible by all individuals, or only by those who declare to have a legal interest? Formal (prima facie) or material access (by receiving a copy of the entry in the register)?

Law No. 2003/13 on amendments and additions to Law No. 2003/05 LEIPRR, in particular Article 3.3 LEIPRR obliges each Municipal Cadastral Office (MCO) to maintain a public notice board where notices of




requests for registration shall be posted. The notice board shall be located in a secure and accessible place and visible to the public during official working hours for at least five (5) working days prior to issuing a decision authorizing registration.

Article 21.2 LEIPRR of the administrative decision for implementation of law on property rights registry restricts the access of the public to the name of the owners of one unit or several units of property, except for the request from the owner of the property (against payment), from the Courts or based on any other procedure authorized by law.

Article 21.3 LEIPRR states that the Kosovo Cadastral Agency (KCA), when technically possible can grant a public access to property rights registry. Article 21.3 LEIPRR of the instruction conflicts with Article 7.2 of the law on immovable property rights registry.

Article 21.2 LEIPRR leads to non-transparency which may be an obstacle for possible domestic and foreign investors and creates uncertainty in property transactions. This is a counterproductive provision restricting the essentially public nature of cadastral records.

Finally, the Law on Cadastre regulates how a building unit (this also includes apartments) needs to be registered. The Law on Property and the Law on IPRR do not regulate it any further.

Institutional changes like the establishment of a new Cadastre system with vertical hierarchy with the Municipal cadastral offices or the termination of the current mandate of the Kosovo Property Agency (KPA) and the commencement of handing over of the role of KPA to the new Agency, the KAPVC represent an additional element which may affect legal certainty. Coordination and communication between institutional bodies is not developed in a sufficient way. An ex officio approach of administrative bodies and in judicial decisions in order to increase the enforcement of judgments is missing.

Lack of transparency of records in the Cadastre and a restrictive access to the registered records provided by the Kosovo Cadastral Agency and the Municipal Cadastral Offices for individuals as well as for public authorities are based on different reasons. One of them is the political issue of returning data from Serbia. In April 2013 Kosovo and Serbia reached an agreement on the return of original data from Serbia through the European Union Special Representative in Kosovo. Another reason may be seen in the organisational structure of the relevant public authorities.




A critical review of the existing structure, including the question whether a change towards a vertical hierarchy of the cadastral system, where Municipal Cadastral Offices (MCOs) are no longer part of the local government is recommended. Direct access to data for all relevant actors (notaries, surveyors, attorneys, bailiffs and judges) may also have a positive impact on the efficiency and accuracy of registrations. Inconsistent processes in the Municipal Cadastral Offices additionally hinder the development of real estate transactions and have a negative impact on legal certainty. The accountability of MCOs needs to be developed through training programs.

8. Construction Rights

The Law on Construction No. 04/L-110 sets out the provisions governing the issuance of a construction permit, the compliance with the construction permit requirements and the issuance of an occupancy certificate within the territory of the Republic of Kosovo.

The law mostly defines the technical criteria for acquiring a construction permit.

Article 20 of the Law on Construction is about the application for a construction permit. Par. 3.1 of the law states that “a copy of the plan and the certificate of ownership of the applicant as certified by competent bodies” are required.

The abovementioned article states that only the owner of the land plot can apply for a construction permit. In practice the owner/s of the land conclude(s) a contract on joint construction with an investor, usually being a construction company on constructing residential and commercial premises. In general the owner/s of the land plot applies to the competent authority of the municipality where the property is located in order to acquire a construction permit. The investor is obliged to follow the technical completion of the project. The property is transferred to the name of the buyer at the time all the payment instalments are settled with the investor.

9. Notarial legislation

The Law on Notary arises concerns in relation to harmonization with other pieces of legislation, namely LPRR, LOR, Law on Inheritance, Law on Family, Law on non-contested procedures etc.




As to the harmonization of the law on notary with other relevant legislation, it is to be noted that according to Article 76, paragraph 10, of the Law on Notary it is provided that "Within one (1) year following entry into force of this Law, the Provisional Institutions of Self-Government shall submit to the Special Representative of the Secretary-General the amendments to the Law on Inheritance in Kosovo and the Law on non-Contested Procedure rendered necessary by this Law." Notwithstanding this, to date there has not been any steps taken to implement Article 76, paragraph 10, of the Law on Notary.

Notaries perform activities which, according to the Law on Inheritance (e.g. “wills made in court”, articles 76 to 80, article 83 etc. Law on Inheritance), fall under the competence of courts. According to Article 29, paragraph 1.4 Law on Notary, notaries may deal with all non-contentious inheritance proceedings7, meaning that notaries may perform jurisdictional functions8. However, no amendment has been made to the law on non-contested procedure in a way to mention the new competences given to notaries9. Similar concerns may be expressed in relation to the new draft-law on notaries. Neither article 30 (mandatory notary processing of deeds)10 Law On Notary No. 03/L-10 of 17 October 2008 nor article 43 11 (mandatory notary acts) Draft-Law on Notaries provide an exhaustive list of acts to be notarised

7 Article 29, paragraph 1.4 Law on Notary “To deal with all non-contentious inheritance proceedings”

8 See Recommendation No. R (86) 12 adopted by the Committee of Ministers of the Council of Europe on 16 September 1986 and Explanatory Memorandum.

9 However, decision making cannot be completely delegated to notaries since courts need to have always the last word trough a functional system of legal remedies.

10 Article 30 (mandatory notary processing of deeds) Law on Notary 1. Notarized deeds are mandatory in regard to the following legal transactions, under threat of nullity: 1.1. Transfer or acquisition of ownership or other real rights over real estate; 1.2. Constitution of mortgages on immovable property; 1.3. Marriage contracts and settlements regarding property relationships between spouses or persons living in non-marital community; 2. The parties may request the notary processing of documents regarding other legal transactions than those listed in paragraph 1 of this Article. Other acts so notarized shall be endowed with the authenticity attaching to acts of public authority.

11 1. According to Article 44 of this law, in the form of notary acts are drafted the following: 1.1. Legal work, whose object is the transfer or acquisition of property or other real ownership rights over immovable property; 1.2. Contracts on the constitution of mortgage on the real-estate and constitution of mortgage in the immoveable property; 1.3. Marriage contracts and settlements regarding property relationships between spouses or persons living in non-marital community;1.4 Agreements on the division of joint property between spouses or extramarital spouses; 1.5 Arrangements for administration and disposition of joint household members property; 1.6 Alimony settlements between spouses.




since, in addition to the remarks mentioned above in relation to inheritance and non-contested procedures, other acts subject to compulsory notarisation are listed in other laws but not mentioned under article 30 (mandatory notary processing of deeds) Law on Notary No. 03/L-10 of 17 October 2008 and article 43 (mandatory notary acts) Draft-Law on Notary. Examples are for instance: conditional sale at Article 523 LOR, gift in event of death at Article 548 LOR, contract on delivery and distribution of property at article 561 LOR. Pledge and mortgage provisions in LPRR do not make any reference to notarisation. However, article 43 Draft Law on Notary at Article 1.2 requires notarising contracts on constitution of mortgage on real-estate and constitution of mortgage in the immoveable property. The Draft Law on notaries authorizes courts to delegate specific functions to notaries in order to promote efficiency. However, the provisions for referring functions to notaries are very vague since not providing

2. Legal works from paragraph 1 and 4 of this Article which are drafted in the form of a notary act have the same probative power as if drafted in the court or administrative bodies.

3 Legal works from paragraph 1 and 4 of this Article which are not drafted in the form of the notary act do not produce legal effects.

4. The form of the notary act on some legal works may be provided in other laws.

5. The parties may request the form of the notary act on other legal works not foreseen under paragraph 1 of this Article

6. Preparation of acts for notary processing and verification of the document and representation of the parties before the notary can be done by a lawyer.

7. If the parties assisted or not by an advocate, have written themselves a contract of transfer or acquisition of ownership or other real rights over real estate whose validity requires the authentic form, the notary has to perform a solemnisation of the document.

8. The notary has to check the identity and the capacity of the parties, the existence of the legal persons if any, and the legality of the contract according to the articles, 36, 37, 38 and 43 of this law.

9. The notary can write the solemnisation either at the bottom of the document prepared by the parties or on a separate paper (in this case, the solemnisation is affixed in a sustainable manner to the document).

10. The notary has to read the solemnisation to the parties, to explain them the legal consequences of the contract and to check their final will. If the parties refuse to modify unclear or ambiguous terms of the contract, the notary has to mention this fact expressly in the act.

11. The regulation about archives, books and issuance of copies is applicable to the solemnisation.




clear guidelines for delegating authority and deadlines against which courts must refer cases to notaries. It is also not entirely clear which functions notaries are to perform related to non-contested inheritance cases. Article 4.l.4 Draft Law on Notary provides that the function of notaries is “to deal with all non-contentious inheritance proceedings under the authorization by the competent court”, while Article 5.1 provides “The Court or another government body may entrust the notary to perform the following services: 1. Registration and evaluation of the inheritance share.” These Articles appear contradictory. While the first provides notaries with the authority to address all non-contested inheritance claims, the second appears to limit the role of notaries to only register and evaluate the inheritance share. This apparent contradiction should be resolved. The Draft Law provides no additional provisions for court referral of proceedings to a notary. This may perpetuate the on-going confusion regarding the jurisdiction of courts and notaries over inheritance cases. An essential element of due process is the right to appeal. The Draft Law authorizes notaries to determine legal heirs and the portion of the estate to which they are entitled, the value of property, and the validity of alimony settlements. Each of these acts determines fundamental rights of citizens. If the notary applies the law incorrectly, the injured party must have the right to appeal and recourse to remedy. The Draft Law does provide a mechanism to appeal the substantive decisions made by a notary which might infringe fundamental rights. Article 5, paragraph 4, provides a party with the right to file a complaint to the first instance court related to the specific tasks delegated by the court. Article 20.4 provides that a party may appeal a notary’s refusal to compile a notarized deed or perform an action to the Chamber of Notaries

10. The system of legal remedies

The United Nation’s Security Council adopted Resolution 1244 on Kosovo on 10th June 1999. The resolution had as premises that “Determined to resolve the grave humanitarian situation in Kosovo, Federal Republic of Yugoslavia, and to provide for the safe and free return of all refugees and displaced persons to their homes...” and “Reaffirming the right of all refugees and displaced persons to return to their homes in safety.”

The Kosovo Property Agency was established as an independent agency by the promulgation of UNMIK Regulation 2006/10 on the Resolution of Claims Relating to Private Immovable Property, including agricultural and commercial property. UNMIK Regulation 2006/10 was amended by UNMIK Regulation 2006/50 of the same name which provided the agency with a clear mandate and a division of roles between its three main bodies, namely the Executive Secretariat, the Kosovo Property Claims




Commission and the Supervisory Board. Following the non-extension of UNMIK Regulation 2006/50 which ceased to have legal effect on 31 December 2008, the agency is operating under the Assembly of Kosovo Law No. 03/L-079 amending UNMIK Regulation 2006/50, which itself was amended by Assembly of Kosovo Law No. 04/L-155.

The KPA is mandated to receive and register and through the KPCC to resolve claims resulting from the armed conflict that occurred between 27th February 1998 and 20th June 1999 in respect of private immovable property, including agricultural and commercial property. Decisions taken by the KPCC are subject to a right of appeal only to the Supreme Court of Kosovo.

Any natural or legal person could file a claim with the KPA where this claim was allocated to one of the following categories:

They were the owner of private immovable property, including agricultural, residential and commercial property and they are now not able to exercise your property right; or

They were the lawful possessor/user or the occupancy right holder of private immovable property, including agricultural, residential and commercial property and they are now not able to exercise your property right.

As of December 2014, the KPCC adjudicated all 42.749 claims, of which most were submitted by members of communities which are displaced mostly in Serbia and Montenegro, and which were not able to exercise their property rights over the claimed property as a result of the conflict of 1998/1999 12.

According to an OSCE report published in February 2015 13, between 2008 and 2013, the KPA referred a total of 326 cases of illegal reoccupation of properties under its administration to the public prosecution. The OSCE monitored these cases and found that over 95 percent of the involved property was owned by members of the Kosovo Serb community.

In all of these cases the KPA carried out an initial eviction in line with its mandate with the assistance of the Kosovo Police. These evictions were unsuccessful because the properties were subsequently 12 Information taken from the KPA official website.

13 Review of illegal re-occupation cases in Kosovo, published by OSCE on 19 February 2015.




reoccupied. The KPA in its capacity as an administrator of the properties in question then resorted to the criminal justice system to address the reoccupation.

By October 2014, final judgments had been issued in just 42 percent (137 cases) of these cases. On average it took two years and three months from the time the Kosovo Police submitted the case to the prosecutor’s office to the final judgment. It must be stated that the duration of the processes greatly depends on the region.

As far as the system of ordinary legal remedies, all civil property related disputes (not related to the conflict of 1998/1999) need to be brought for a court settlement before basic courts of Kosovo. All court decisions are subject of appeal. The second instance court is the Appeal Court situated in Pristina (second instance court). The third instance court is the Supreme Court of Kosovo (third instance Court).

Law on Courts No. 03/L-199 regulates the organization, functioning and jurisdiction of the courts in the Republic of Kosovo.

11. New developments related to Kosovo Property Agency

According to the 19th April 2013 agreement between Kosovo and Serbia a new independent agency was requested to be established to address issues of cadastral records which will be returned from Serbia. All discrepancies in the cadastral records will be considered. However, parties cannot submit requests as the procedure for these cases will be only ex officio initiated. A commission shall compare and decide about the discrepancy in the cadastral records in order to change the cadastral records accordingly. The parties may appeal the decision before the Supreme Court composed of two international and one local judge. On this note 12 million pages of cadastral records will be reviewed. The Agency will be continuation of and will work similarly as the KPA.

According to the draft law on the Kosovo Property Comparison and Verification Agency (Agency), which was submitted by the Prime Minister’s Office to the Kosovo Assembly, the Agency will be of temporary character. The comparison will be performed electronically by linking the two databases. The Kosovo Property Claims Commission will remain in a position to be activated when needed to deal with remaining cases, while technical issues for implementation of the law will be regulated through




administrative instructions. The draft Law had its first reading in the Kosovo Assembly on the 7th April 2015.

12. Informal Settlements

The Vienna Declaration on Informal Settlements in South Eastern Europe (Vienna Declaration), signed in Prishtina on 17th March 2005, stipulates that informal settlements are “mainly characterized by informal or insecure land tenure, inadequate access to basic services, both social and physical infrastructure and housing finance.”

The Ministry of Environment and Spatial Planning (MESP) guidelines for spatial planning of informal settlements, 2005, states that “informal settlements are human settlements that do not enable inhabitants to enjoy their right to an adequate standard of living, particularly to adequate housing”.

In the Law No. 04/L-174 on the Spatial Planning, informal settlements are identified as: “settlements where the residents do not enjoy their rights for an appropriate standard of living or housing and do not have a legal possession of the property or, adequate access to public services, and governance, and that live in an environment with high risk.” A definition of informal settlements in Kosovo is provided by the Law on Spatial Planning, while policy documents that apply in Kosovo provide slight variations of this definition. In general, the main elements can be summarized as follows:

1. A lack of secure property tenure;

2. Inadequate enjoyment of basic services, infrastructure and humanitarian standards;

3. Inadequate or non-participation in governance.

According to the OSCE report on “Assessment of municipal responses to informal settlements in Kosovo” conducted in 19 municipalities, a total of 95 informal settlements throughout Kosovo have been identified. It is evident that one of the criteria that determine informal settlements is the lack of legal ownership of the property. There is a number of cases where the land owners cannot prove ownership of the land because they do not possess a certificate of ownership, as either they have not updated the data in the cadastre registry for inherited property, or they have not updated the cadastre registry for




purchased property. Additionally, there are cases were residents have occupied municipal and socially owned property, without acquiring the right to use the property from the municipal assembly. In some instances, these cases are caused by municipal authorities who do not respond in time to requests of residents. In others, these cases result from delays of the courts which are responsible for reviewing inheritance cases.

The goal is to achieve a fair and rightful implementation and interpretation of the property related laws by the courts, including the law on obligations. Furthermore, it is necessary to recognise inheritance proceedings and update the cadastre registry based on the presentation of documents by the heirs in the inheritance procedure.

13. Succession of Kosovo from Serbia

The comprehensive proposal for Kosovo status settlement in the part of external debt provides that the Republic of Kosovo will assume its share of the external debt of the Republic of Serbia. Kosovo’s share will be determined through negotiations between the Republic of Kosovo and the Republic of Serbia, taking into account the principles used for the allocation of the external debt in the case of the succession to the Socialist Federal Republic of Yugoslavia. The same principle shall be used also for the succession of the Republic of Kosovo from Serbia regarding the property of either the Republic of Kosovo or the Republic of Serbia, located in each other’s territory. Such agreement from Kosovo’s side should be in accordance with the Constitution of the Republic of Kosovo and the Law on the Privatization Agency of Kosovo. The principle of reciprocity shall be a fundamental principle that shall be applied in case of succession, regarding property. The same principle shall also be applied with other former Yugoslavian republics.

The Article 5 of the Law on Privatization Agency of Kosovo states that “The extent of the Agency’s administrative authority under 5 par. 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 par. 1 – with respect to such property located outside of Kosovo, the Agency is only required to exercise its authority over such property to the extent that the Agency deems such exercise reasonable, taking into account value and accessibility of such property and the limits of the Agency’s administrative resources as referred to in Article 7.1. In deciding on such matters, the




Agency shall take into account any relevant policies that may be adopted by the Government or Assembly of Kosovo.”

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




V. Impact assessment of civil legislation (e.g. civil code book on property) on property

The second part of this document focuses on assessing civil legislation that which will be included in the envisaged Civil Code of the Republic of Kosovo.

1 Neighbourhood rights

The Law on Property and other Real Rights clearly specifies neighbourhood rights in Article 44. The wording of this Article is clear and does not create any uncertainty from the theoretical point of view. The former version of the law included subjective elements which have been abolished by the new law. The provisions regulating neighbourhood rights seem to be precise and clear.

Nevertheless, according to the information collected, there is an enormous backlog of cases dealing with property and neighbourhood rights. In this respect, a special emphasis should be given to the Law on Mediation as well as the possibility of Arbitration as an alternative suggestion by the court in order to enhance efforts to deal with neighbourhood rights issues in an extra-judicial process. This suggestion should be given to the parties before commencement of the proceeding in the court.

2. Possession of property

Article 103 of the Law on Property and other Real Rights regulates the possession of property. But in the official English version it incorrectly only refers to movable property, whereas in the original Albanian version it encompasses both movable and immovable property. The same applies to many other provisions of LPRR where the Albanian expression ‘possession of objects’ is translated into ‘possession of movables’.

3. Acquisition of property

Due to the fact that the notion of verbal agreement for transfer of property is still widespread, for instance, the courts are at times requested to annul written contracts of sale of immovable property, as it is claimed that there was another previous oral agreement between the seller and a third party. It has




been suggested that a clause should be included in every sale contract declaring that any previous verbal agreements relative to the said property are automatically rendered null and void14.

LPRR does not list specifically the different means of acquiring property. The ideal solution would be for the law to provide such a list (see for instance Article 39 Slovenian property law (The right to property is acquired on the basis of a legal transaction, inheritance law or decision of a state body) or the preferable ‘open’ formula adopted by the Italian Civil Code. Article 922 (Acquiring property) Italian Civil Code is more adaptable to the long list provided by Article 4 LEIPRR - Law No. 04 /L-009 of 2011. The provision enumerates in a more extensive way the legal means of acquiring property, mentioning inter alia acquisitive prescription, which Slovenian Law on property at Article 39 ignores. Its closure phrase says that property is finally acquired “by other means provided by law”).

The Law on Property does not foresee the acquisition of property through the decision of a court or any other administrative body. However, Article 4 of one of the amendments of the LEIPRR - Law No. 04 /L-009 of 2011 - foresees the types of rights that can be registered in IPRR can be derived from (quoting from the law Article 4, changing Article 3.7 of the existing law: a) final court decision; b) the decision of state administrative body; c) contract for transfer of immovable property rights certified by the competent body; d) decision or contract for the privatization of immovable property issued by the Kosovo Privatization Agency; e) the Commission’s decision for the reconstruction of cadastre; f) the Commission’s decision for the regulation of lands; and g) other documents required by special laws that foresee the property rights registration.

Finally, the law should list the legal means of transfer which require registration ad validitatem (see for instance, the Italian Civil Code at Article 2643).

4. Issues related to construction rights and “superficies solo cedit”

The principle of “superficies solo cedit” is incorporated in the LPRR, in particular in the Articles 37, 38, 39 LPRR which stipulate that the transfer of ownership of an immovable property includes the transfer of the area above the immovable property and the area below the original surface. The transfer of ownership of an immovable property also includes the transfer of movables that have become

14The problem also applies to movable property like vehicles. The vehicle registration center could register the pledged vehicle and make note of the pledged asset under "important notes" on the vehicle registration document.




component parts thereof. Upon the transfer of an immovable property, it is presumed that its fixtures are acquired at the same time. However, these articles are difficult to be implemented in practice, because of the dualist system existing in the past and which the Republic of Kosovo has inherited.

In the Yugoslavian legal system the legislation concerning property rights was drafted with the intention of limiting private ownership of land. The laws allowed citizens in urban areas to own structures/objects (i.e. buildings or houses), but granted only a user right to the underlying land. This concept was reinforced by a policy that rights to use land were tied with the structure/building, and only granted as long as rights to the object existed.

The Law on Land for Construction of 1980, later amended in 1986, authorized the municipalities to issue decisions determining the boundaries of “construction land”15. According to this law, construction land is defined as land already constructed in an urban manner, land on the border of a general urban plan designated for extension of the city and land in other regions designated for the construction of residential and other complexes.16

As a consequence, any construction land previously owned by private persons, private companies as well as municipal and public land was registered in cadastral records with the abbreviation P.SH.SH to show its classification as socially owned land.

After the conflict, legislation regarding property rights in Kosovo has moved away from the concept of socially owned property. The newer property rights legislation only operates with two types of property ownership: private and public property. There has however not been any update of the Law on Land for Construction after 1986, neither has it been repealed. The law as such is still legally applicable. There are wrong attempts to solve the problem of occupancy rights on construction law which is socially owned by using Article 271 to 282 LPRR 17. This is not the correct approach, taking into account that the provision

15 Cf. Art. 5

16 Art. 6 in the amended law “Law on Land for Construction”

17 Art. 271 LPRR:1. A building right is a right to ownership of a building on or under the surface of an immovable property. 2. A building right encumbers at the time of its creation the immovable property on which the building exists or will be constructed. 3. A building constructed pursuant to a building right is a component part of the building right. 4. A building right may not be restricted to a part of the building, such as a level or storey. 5. A building right may be alienated or inherited.




is not applicable in the light of Article 1.5 LPRR. The provisions of this law (LPRR) do not apply to real rights in public or common assets, which are subject to specific legislation, unless specifically provided otherwise in this law.

5. Common Ownership

Articles 1000 to 1008 LOR provide rules that apply to common ownership; however, the English version of the LOR improperly uses the word “community” instead of “communion”. Common ownership (Latin, “communio”) occurs when several persons are property co-owners or co-holders of a real right of enjoyment of assets. Common ownership can therefore be either an ownership right (co-ownership) or another real right held in common. Co-ownership over a building is usually referred to as “condominium”. The rules referred to above must be reviewed to ensure that no overlap or incongruity exists with the provisions of the LPRR, and in particular those referring to “joint ownership” i.e. undivided co-ownership (also known as co-ownership pro indiviso) (Articles 51 to 56; see also Article 43), “common ownership”, i.e. pro diviso co-ownership of movable property (Article 77; see also Article 43) and “ownership of a building unit” (Articles 57 et seq.). It appears that the LPRR already regulated various forms of common ownership prior to the adoption of the LOR, with a clear focus on immovable and movable property. In order to prevent duplication and inconsistency, the regulation of common ownership rights should be adopting a univocal notion of common ownership and a harmonised terminology. Furthermore, Article 43 LPRR provides that: “The provisions of this law on ownership of an immovable property are also applicable to joint ownership and collective ownership of immovable property.” The expression “collective ownership” does not appear elsewhere in the context of the LPRR. It is arguable that the concept of collective ownership corresponds to the one of social ownership prevailing in former Yugoslavia. Collective ownership and operation of the means of production were the alpha and omega of socialist ideology. However, the concept of “collective ownership” should be defined and/or clarified within the framework of the Civil Code. In legal literature the co-ownership and joint ownership represent two forms of ownership of property. There are differences between these forms of ownership regarding the definition of the ideal parts. In practice, dilemmas in distinguishing these forms of ownership exist. The Law on Families and the Law on Property and other Real Rights have not provided a clear distinction of these two types of ownership, which deepens the dilemmas regarding the distinction of these types of ownership.




Article 51 of the LPRR, in the Albanian version, refers to “Bashkëpronësia” translated as “co-ownership” in English, however in official translation of the law it is mistranslated as “joint ownership”. Article 77 of the same law in the Albanian version, refers to “Pronësi e përbashket” only to movable property which in English is translated as “joint ownership”. However in the official translation of the law it is mistranslated as “common ownership”.

The “common ownership” in Article 77 of the LPRR is defined as “[i]f several persons are entitled to the ownership over movable property in such manner that no shares are determined then they are common owners”. Article 57 of the LPRR “ownership of a building unit”, par. 2 of the Albanian version refers to “Pronësi e përbashkët” while in the English version it is translated as “joint ownership”.

1. Ownership of a separate part of a building (building unit) is the separate ownership of a flat, an office, or a garage parking space together with a share of joint ownership of the immovable property in which the building unit is located.

2. Joint ownership exists for the immovable property on which the building is erected as well as all pertinent parts, installations and equipment unless owned separately and or owned by a third party.

There is a need to distinguish between various notions of co-ownership, joint ownership, joint property, common property and undivided ownership of immovable property. In the Law on the Family joint property is defined as:

Article 47: Joint Property: (1) Joint property of spouses is the property acquired through work during the course of the marriage as well as income deriving from such property.

Article 58: (1) Property gained through corporate work of husband and wife in an extra marital community partnership without cohabitation is considered their common property.

(2) Property acquired during the factual relationship (out-of-marriage relationship) and that is subject to distribution or division is considered joint property. Provisions of this law relating to apportioning of joint property of spouses of a legally registered marriage are applied analogically for property relations of persons in a factual relationship (out-of-marriage relationship).




The position is even more complicated when it comes to property owned between spouses. This is referred to as joint property in Article 26.1 Law on Inheritance and as common property in the same Article 26.2 of the Law on Inheritance (Law No. 2004/26).

26.1. Law on Inheritance: The spouse of the decedent has the right to ask for the entitled share from the joint property gained by work between the spouses during their marriage.

26.2. Law on Inheritance: If the decedent and his spouse had common property under their matrimonial property regime, only the share that pertains to the decedent after distribution of the common property shall fall in the scope of the inheritance.

In the LPRR, Article 77 par. 5 stipulates that: the provisions on joint ownership apply to common ownership unless otherwise provided by law.

To further compound the issue, Article 57 of the LPRR introduces the notion of “ownership of a building unit”, without defining it further. It is submitted that a unified and less vague concept be adopted and harmonized to avoid problems of interpretation.

6. Securities in Law

Mortgages are established pursuant to the Law on Property and other Real Rights, Law No. 03/L-154. They mean the creation by agreement or by law of an interest in immovable property. Therefore, the mortgage creditor (mortgagee) has the right to initiate foreclosure proceedings for such immovable property for the purpose of satisfying a sufficiently identifiable obligation that is secured by the mortgage and has fallen due.

Article 192 of the Law on Executive Procedure allows enforcement actions against immovable property which shall be applied through the annotation of the enforcement in the public record as well as the determination of the value of the real estate, the sale of the real estate and finally the payment of the enforcement right to the creditor with the money generated through the sale. The law on mortgages suffers from lack of regulation, however in the case that property on land is immovable and the owner of the property and the owner of the land are different persons.




The contract on mortgage is an executive title, based on Article 22, item 1.7 of the Law on Executive Procedure under the premise that such mortgage is verified by the competent body and registered in the public register in accordance with the law.

7. Pledge

Articles 133 to 171 of the LPRR regulate the “pledge” (Articles 136 and 137 LPRR specifically deal with the “pledge agreement”). However, the LOR also regulates certain aspects of collateral over movable property. These include the “pledge” (see Articles 228, 230, 276, 283, 319, 326, 331, 347, 349, 421, 433, 975, 977, 1024 and 1053 LOR) and the “lien” (see Articles 643, 693, 694, 750, 777, 800, 826, 867 and 874 LOR). In addition to this, it is not clear what the difference between pledge and lien is. In many respects, the lien (which originates mainly from common law tradition) resembles the “right of retention” (see Articles 267, 268, 270 and 742). An in-depth evaluation of the provisions related to real guarantees over movables is thus needed so as to assess whether there is room for streamlining and unifying the legal framework and related legal language.18

Currently a pledge is registered in the Central Bank of Kosovo and Kosovo Business Registry Agency – Sector for registration of Pledge. However, the movable property registered as pledge does not contain any notes that such property is under pledge (e.g. vehicle documents). There is also a lack of documentation for machinery (only customs documents exist if the machinery is imported).

8. Servitudes

Personal and real servitudes are well regulated in the Law on Property and Real Rights. The only intervention recommended could be towards a more orderly classification of these rights in the law.

9. Principle of Priority in Property Ownership

The principle of “prior tempore potior iure” is also applicable in the registration of property in Kosovo. The transfer of property is sanctioned in the Law on Property and other Real Rights. It is arguable if the same sanctions apply to both the transfer of private and public property. It should be stated more

18 Taken from the “Initial analysis of main issues affecting the law of obligations and contracts and its practical implementation“ Component B, Activity B.1




explicitly in the law which model will prevail in Kosovo, if sale contracts are consensual, as LOPR says or real as he Law on Property, based on the German model, implies.

The legal framework in force in Kosovo then not only demands a title in order to alienate immovable property to a buyer, but the property should also be registered in IPRR, even though a person has a constitutive title such as the one from a final court decision or a declaratory nature of a title such as a law.

10. Problems in implementation of laws identified by case law

During the first activity of the project, the property law component compiled 20 leading judgments related to property. The findings are the following:

The confirmation of property rights based on oral agreements and/or informal transactions without legal basis, inconsistent case-law, non-execution of court decisions, inconsistent judgments related to the same issue, conflicting competence between Privatization Agency of Kosovo and the Kosovo Forest Authority on forest land, and sub-legal acts issued by municipalities are not in accordance with the main law. There are also a number of judgments delivered in the absence of respondents. These cases may breach Article 6 of the ECHR and the corresponding provision in the Constitution of Kosovo.

11. Conclusions and Recommendations

Conclusions

a) As far as public legislation (e.g. administrative law, etc.) on property is concerned:

1. Definition of what is considered public property is missing

2. The transformation of socially owned property to private and/or public property is not completed yet.

3. The accuracy of cadastral data is in question, the return of original data until June 1999, displaced in Serbia, still pending to return to Kosovo.




4. Unclear legislation to whether a foreign person can buy and transfer in his name an immovable property in Kosovo in the capacity of a natural person.

5. Law on Land for Construction was not amended or abrogated yet, the land for construction in urban areas is still considered as “socially owned property”.

6. Law on notaries lacks of harmonization with several pieces of legislation

7. Cadastral data is not accessible to the public (private persons and public authorities).

8. Some old Yugoslavian laws are still applicable, creating confusion.

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

- Several wrong translations of the English version of legislation in force have been detected

- Incoherent and contradictory legal framework, for instance: 1. LPRR does not list specifically the different means of acquiring property. There are wrong

attempts to solve the problem of occupancy rights on construction law which is socially owned by using Article 271 to 282 LPRR

2. Common ownership is not defined using univocal terminology. Inconsistencies between LOR, LPRR etc. may be noticed. The Law on property and other real rights regulates condomimium, although a subsequent law on floor-ownership was subsequently enacted.

3. Law on Property and Real Rights covers the same legal provisions as the 2002 Law on Mortgages and UNMIK Regulation 2001/5 on Pledges. However the LPRR does not specifically amend or abrogate these prior laws. This can, and does, give rise to confusion and uncertainty.

Recommendations

a) As far as public legislation (e.g. administrative law, etc.) on property is concerned:

1. A new law should be adopted to clearly define the concept of public property.

2. Socially owned property which is still pending privatization should be privatized as soon as practicable.




3. Occupancy rights and right of use should be consolidated in one property right

4. A legislative act is needed in order to abolish this institute abolish existing occupancy rights and turn them into full ownership.

5. Notarial law should be harmonized with other pieces of legislation

6. The original cadastral data displaced in Serbia should all be returned to Kosovo, and passed through the process of comparison and verification. (New draft law on Kosovo Comparison and Verification Agency was passed to the Kosovo Assembly in the beginning of February 2015).

7. The law should be amended, in order to grant foreign natural persons the right to acquire immovable property in Kosovo without any discrimination.

8. The law on land for construction needs attention. It can either be abrogated and replaced or heavily amended along the lines mentioned above.

9. Cadastral data should be made accessible to the public. The Law on immovable property rights register, should provide for this possibility.

10. The accuracy of Cadastre data should therefore be one of the priorities of the acting Cadastral offices. Such priorities may be assisted in practice by corresponding legislative measures

11. Old Yugoslavian laws must be specifically abrogated by new adopted laws in order to avoid confusion.

12. Since it is assumed that substantive provisions will be included in amended laws or special laws in this field, it will be necessary to support such laws with appropriate procedural measures.

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

1. LOR, LPRR and other laws which will be the bone of the civil code should be reviewed from the point of view of consistency in relation to sale contracts, common ownership, condominium etc.

2. Different means of acquiring property should be listed in a specific provision. The ideal solution would be for the law to provide such a list.




3. The ideal solution regarding the need for registration of transfers of immovable would be for the law to specifically define and list all legal means of transfer which require registration ad validitatem. Additionally courts should be advised to implement a consistent approach when adjudicating civil contests related to property. The Courts of Appeal have the obligation to ensure consistency in this regard.

4. Law on property and Real Rights shall specifically amend or abrogate Law on Mortgages and UNMIK Regulation 2001/5 on Pledges to avoid confusion and uncertainty




Bibliography

Organization for Security and Co-operation in Europe - Mission in Kosovo, Assessment of the Provision of Social Housing by Municipalities in Kosovo (2013).

Coordinator of Property Rights: duties and responsibilities (Government Decision No. 11/78, 12.06.2012)

Council of Europe - Directorate General of Human Rights and Legal Affairs, Case-law of the European Court of Human Rights: summary of selected judgments and decisions on property restitution/compensation, (2011).

GIZ: Analysis of Property Legislation in Kosovo (2013).

Hassine Khaled, Regularizing Property Rights in Kosovo and Elsewhere (2010).

Haxhi Gashi, The Legal Conflict Regarding the Privatization of Socially Owned Enterprises: Amendments to the Law on the Special Chamber of the Supreme Court, the Law on PAK and other Relevant Laws (2011), http://www.institutigap.org/documents/39959_PAK.pdf.

Kosovo: Proposal for the Organization and Organizational Chart of the Office of the Coordinator of Property Rights and configuration of the future Government Agency for Defining and Protecting of Property Rights October 2013. (Office of the Coordinator of Property Rights).

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http://www.institutigap.org/documents/39959_PAK.pdf


Muscat Azzopardi, Godwin, Immovable Property Rights in Kosovo, September 2014 (website Muscat Azzopardi and Associates).

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Organization for Security and Co-operation in Europe - Mission in Kosovo, Assessment of municipal responses to informal settlements in Kosovo (2011).

Perritt Jr, Henry H., Resolving Claims when Countries disintegrate: the Challenge of Kosovo (2005), http://scholarship.kentlaw.iit.edu/cgi/viewcontent.cgi?article=1488&context=fac_schol.

Edward Tawil- International Center for Transitional Justice, Property Rights in Kosovo: A Haunting Legacy of a Society in Transition (2009), https://www.ictj.org/sites/default/files/ICTJ-FormerYugoslavia-Kosovo-Legacy-2004-English.pdf.

Muscat Azzopardi, Godwin, Socially Owned Enterprises in Kosovo: post conflict considerations (2014), http://www.ma-advocates.com/socially-owned-enterprises-in-kosovo-post-conflict-considerations/.

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