Land registration system of the republic of Croatia

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April 23, 2010 /

Damir Kontrec


Judge and Vice President of the County Court in Varaždin

Introduction

Land registers on the territory of today’s Republic of Croatia have a very long tradition which dates back to the second half of 19th century. In the past 130 to 140 years of land registers as a public registry competent for real estate legal transactions, there has been many ups and downs. What particularly stands out, in a negative light, is the period of socialist regime (the period after the Second World War until 1990) when land registers were neglectd due to the existence of social ownership.

This paper will briefly illustrate the history of land registers in the Republic of Croatia, from their establishment in the second half of 19th century until today, in order to give a better understanding of the current status of land registers. Also, the description will include basic characteristics of the current land registration system, so that it is possible to compare the Croatian system with the systems of other
countries. At the end, the paper will indicate the direction in which the land register development is moving in the future, in relation to the creation of a joint information system of land registers and cadastre.

History of Land Registers in the Republic of Croatia. 

Establishment of land registers in the second half of 19th century.

The land registers were established on the territory of today’s Republic of Croatia in the second half of 19th legal act for the structure of land registers was the Land Registry Order from 1855. In the next 25 to 30 years, the land registers were structured according to the Austrian model for the most part of today’s Republic of Croatia.

Land Registration Act from 1930

The developing society and new social relations required passing a new and more modern Land Registration Act. Again modeled after the Austrian laws, the Land Registration Act from 1930 was
passed at the time when the territory of oday’s Croatia was a part of the Kingdom of Yugoslavia, and it
represented a modern codification of material and process land registration law. It is important to emphasize that the legal rules of that act were applied in the Republic of Croatia until 1996 when the
Republic of Croatia law was passed.

Land registers neglected during the socialist regime

After the Second World War, a socialist regime was established on the territory of today’s Republic of Croatia which was then a part of Yugoslavia. At that time the nationalization of real properties was conducted, i.e. the real estate owned by the enemy was confiscated, and social ownership prevailed over private ownership. Under the circumstances of undeveloped market and a planned economy, the private ownership was neglected and this was the reason why the land registers were neglected. In that period,
there were many ideas that land registers should be archived, that land registers did not represent any relevant records, that land registers should be given to cadastre or state administration for management, etc.

Fortunately, even in the period of the social ownership, the land registers managed to survive, even the titles on real properties that were socially owned, were registered in land registers. This presents valuable data today, especially in the denationalization procedure, i.e. the return of the property confiscated from former owners, and in the privatization procedure of former social companies.

Law on Ownership and Other Real Rights, and Land Registration Act from 1996

As the Republic of Croatia became independent and the first Constitution of the Republic of Croatia [1] was passed, the ownership again became the constitutional right which is protected before the Constitutional Court of the Republic of Croatia. Article 48, paragraph 1 of the Constitution stipulates that the ownership right is guaranteed, then paragraph 2 stipulates that ownership obliges and that the title holders, as well as the users of this right, are obliged to contribute to the general good. Article 3 stipulates that a foreign person can acquire owrnership right under the conditions determined by the law, whereas paragraph 4 guarantees the inheritance right. On the other hand, market economy has developed, and with it the mechanisms of securing the claims, especially mortgages. All this has resulted in the strengthened importance of land registers as a public registry competent for the real estate legal transactions.

The afore-mentioned strengthening of the land registers’ role was conducted through the adoption of the
Law on Ownership and Other Real Rights[2] and the Land Registration Act[3] which entered into force on January 1, 1997, whereby the transition was conducted of the legal regime of the Republic of Croatia, from the social and collective into the private and individual regime in which there is only one type
of ownerhsip right where the priciple of real estate indivisibility (superficies solo cedit) has been re-established.

LAND REGISTERS IN THE REPUBLIC OF CROATIA

Notion and characteristics of land register

Land registers are a public registry in which real properties, ownership and other real rights are registered, as well as some obligatory rights on real properties and specific relations relevant for the real estate legal transactions. It could be said for the land register that it represents a legal registry which is the only registry competent for the real estate legal transactions.

Land registers are public registers (Article 7, paragraph 1 LRA), which are kept on the basis of data obtained from cadastral survey (Article 9, paragraph 1 LRA), whereby the land registers are managed by Municipal Courts, Article 5 LRA and Article 2 of Land Registry Rules of Procedure[4].

It is important to state that land registers in the Republic of Croatia are kept according to the system of real foils, which means that the land registers are kept according to the real properties, and not according to the names of owners and other real property title holders. As a rule, land registers are still kept manually[5], however great efforts are being invested to manage land registers using the electronic data processing (Article 6. LRA).

Subject of land registration is the following:

a) real rights (ownership and all other real rights [6],
b) some mandatory rights (re-purchase rights, pre-emption rights, lease, rent, concessions),
c) personal relations of holders of real or mandatory rights which are registered in land register (which are important for legal transactions),
d) legal facts for which LRA or some other law stipulates that they be registered in land registers.

The object of rights registered in land register must be a real property, i.e. must be related to real property. If this is not the case, the registration is not allowed.

Functions of land registers

Regarding the functions of land registers, first of all it is important to emphasize two basic functions:

  • Publicity function – the entries in land register publicize that there are real rights on a certain property in favour of certain persons, therefore the registeration in land register means an external visibility of real rights on properties; what is registered in land register acts towards all third persons and no one
    can claim not to have known about the registered rights and properties,
  • Function of Protection of trust in legal transactions – in relation to fair third persons who have acquired real property rights and who trust the contents of land registers, i.e. the and complete.

Together with the above-mentioned functions, there are other functions of land registers. Therefore, in the process of acquiring real rights on the basis of a legal transaction, there is a function according to which the real property rights are acquired with the registration in land register, and equally important is the order function of acquiring real rights according to the priority order.

That means that a right which is registered earlier will have precedence in acquiring rights over those that were registered later.

Principles of Land Registration Law

The Land Registration System in the Republic of Croatia is established on the following principles. The registration principle means that with the entry in the land register, the real rights and compulsory rights which are entered in land register, become registered rights and they exist as such until they are
deleted from the land registers. Furthermore, for some rights the registration in land registers presents the modus, i.e. the legal manner of acquiring, changing and terminating real property rights (acquisition on the basis of legal transaction). In some cases when the real rights are acquired, limited or terminated on the basis of a decision passed by the court or some other authority, on the basis of a law or by inheritance, then these rights are acquired even without a registration in land register, so the entry only has a declaratory meaning.

The principle of registration antecedent means that a registration can only be allowed against a person
who, at the moment of submitting the application form for registration, was registered in land register as the title holder due to which the registration is required or who is simultaneously registered or noted as the registration right holder (Article 40. LRA).

The principle of publicity means that the land registers are public, i.e. that their contents are available and free to everybody (Article 7, paragraph 1 LRA).

Furthermore, extracts from land registers have an evidentiary power of public deeds in the sense of Article 8, paragraph 1 LRA.

The principle of trust protects third persons who acted with confidence in the completeness and truthfullness of land registry status, and this principle is especially important in cases when the land registry situation and the actual (out-of-register) situation of real property are different due to the registrations which were not conducted or are invalid.

The principle of consent stipulates that registrations in land registers can only be conducted at the mutual consent of the person acquiring a right through the registration and of the person whose right is limited with the registration, transfered to another person or it is terminated. It is however important to emphasize that the entry of registry rights in land register, as a rule, depends exclusively on the disposition of the holders of these rights, therefore, so far, there is system of the Republic of Croatia for
the owners and other title holders to record their real property rights in land register.

The principle of legality stipulates that a land registry court is obliged ex officio to determine that all of the material and process legal preconditions for registration are met. In case some of these preconditions are not met, the land registry court is obliged to refuse the registration proposal.

The principle of priority is one of the most important principles of land registration law. This principle
determines legel effects of registration towards other registrations depending on the order in time when the registrations were conducted. It is correct to say that the principle of priority order in time is valid for the land register.

The principle of completeness should mean that the land registers provide an overall legal situation of a real property, which in our conditions is still an ideal to be achieved. That would actually mean that the land registers should have all limitations of a real property registered, or a holder of a registry right in the real property legal transactions, as well as all facts relevant for the real property legal transactions.

The principle of specificity requires that every entry in the land register be an independent and entirely specific legal unit, i.e. that the registration contents are completely defined. In relation to the above-mentioned it is important to warn that all entries in land register should be described in accordance with the data in cadastre.

Finally, the principle of clarity stipulates that land registers should be organized in the way that the security is ensured while determining the overall legal situation of the registered property, and that this can be conducted easily and quickly. This principle is primarily ensured by dividing the land register into the main book and the collection of deeds, and by dividing the main book into land registry files, and the
land registry files into three sheets – the possessory sheet, ownership sheet and encumbrances sheet.

The relation between land register and cadastre

In the Republic of Croatia there are two sets of records on real estate (the dual system of real estate records). On one hand there is a land register representing the records competent for the real property legal transactions, and on the other hand there is cadastre managing data on cadastral parcels and this data is the basis for land register regarding the possessory sheet – A-sheet in land register (Article 9 paragraph 1 LRA). At the same time in Article 49 paragraph 2 of the Law on State Survey and Real Property Cadastre[7] it is stipulated that the data on real property title holders is not the original cadastral
data but the land registry data, which is taken over and incorporated into the cadastral documentation of the real property cadastre.

According to Article 18 of LSSRPC, the Real Property Cadastre is defined as a register of land parcels, buildings and other structures permanently present on the land or under its surface, as well as the special legal status of the land if it is not otherwise prescribed by the law. Article 19 of LSSRPC stipulates that the tasks of real property cadastre include determining cadastral spatial units, cadastral survey and technical reambulation, development and maintenance of real property cadastre cadastral documentation, maintenance of land cadastre and its gradual adjustment to the real property cadastre, as well as sporadic transformation of cadastral parcels into the real property cadastre.

Contents of land register

A land register consists of a main book and a collection of deeds, and together with managing a land register, the necessary additional lists and cadastral maps are kept (Article 14 LRA). All this, in the wider sense, represents the land register, whereas the main book and collection of deeds represent the land register in the more narrow sense. Main book is a part of land register in which the real properties are registered, as well as all changes occurring on real properties, then real rights on the properties, as well as any changes of these rights.

According to Article 17, paragraph 1 LRA, one main book is kept for all land parcels of one cadastral municipality.

According to Article 18, paragraph 1 LRA, the main book consists of land registry files, whereby one land registry file holds only one land registration entity. A land registration entity consists of one cadastral parcel or several parcels, but it is imperative that these land parcels are located in the same cadastral municipality and have the same legal position in legal transactions.

Regarding the land registration entity, it is important to state that the basic characteristic of land registration entity is the principle of legal entirety, therefore in Article 19, paragraph 4 LRA stipulates that a land registration entity is a legal unit whose contents can only be changed through a land registration write-off or add-on of cadastral parcels.

Each land registry file consists of three parts: the possessory section (sheet A or evidentiary sheet),
ownership section (sheet B or ownership sheet) and encumbrances section (sheet C or encumbrances
sheet). The possessory sheet consists of two parts. All cadastral parcels that make up one land registration entity are registered in the possessory sheet, as well as all cadastral changes referring to the change of number, surface, construction development or name of cadastral parcel. Also, all initiations of procedures to change this data are made visible in the possessory sheet. Equally, all public and legal limitations in legal transactions regarding a particular land registration entity are registered in the
possessory sheet. The ownership sheet holds data on real property owner, co-owners, joint owners, as
well as all changes related to ownership, and also all limitations of the real property owner such as being
a minor or a guardian, a situation of bankruptcy, etc. The ownership sheet also contains records of the
construction right holder. The encumbrances sheet holds records of real and other rights that encumber
the real property, then rights acquired on the basis of these rights, as well as real and legal limitations in disposing with the land registration entity that affect the daily owner (e.g. mortgage, servitude, real encumbrances, construction right, temporary measures, etc.).

The collection of deeds is a part of land register consisting of all documents on the basis of which the land registration entry is allowed (Article 26, paragraph 1. LRA). Namely, while deciding upon the registration proposals, regarding the cases when the registration is approved, the land registry office retains at least the authenticated copy of the documents which are then stored in the collection of deeds which is bound in volumes. It is important to emphasize that the collection of deeds is managed jointly
for all main books in each land registry court (Article 27, LRA).

Registration preconditions

The registration preconditions are divided into material and process preconditions of registration. The
material preconditions of registration are the existence of a valid clausula intabulandi and a registration
antecedent, whereas the process preconditions of registration are a submitted registration proposal, a
decision passed on a registration and the registration conducted in the land register.

Clausula intabulandi can be a public or private document, and for every registry entry that is requested, a clausula intabulandi must be attached in the appropriate form and contents.
Therefore, Article 43, paragraph 1 LRA stipulates that the registrations in land ocuments collected in the form prescribed for their validity, and paragraph 2 stipulates that a legal basis must be visible in the document for the registration of right, its changes, limitations or termination. In order to approve a registration in land register, the registration must be requested against the registration antecedent who
could be defined as the person registered in the land register at the moment the registration proposal is
submitted (Article 40 LRA).

Land registration entries

The land registration entries are registration, pre-registration and notice, and this is stipulated by the provision from Article 30, paragraph 1 of LRA. Therefore, Article 30, paragraph 1 LRA stipulates that a registration is an entry by which registry rights are acquired, transferred, limited or terminated without any special additional justifications. A preregistration is, according to Article 30, paragraph 3 LRA, an entry by which the registry rights are acquired, transferred, limited or terminated only under the condition of additional justification and in the scope in which they are additionally justified. A notice is, according to Article 30, paragraph 4 LRA, an entry by which the competent circumstances are made visible, and for which it is stipulated by the law that they can be recorded in land registers. The notice can be used to establish certain legal effects when this is stipulated in the law.

The decision-making in the land registration procedure

In order to make decisions in the land registration procedure, the relevant situation is the status in land registers at the moment of submitting the registration proposal, i.e. at the moment when the decision on land registration entry was submitted to the land registry court, and this decision was passed by another court or body in the framework of its competency. The decision on registration is passed by a licensed land registry clerk who decides upon the registration proposal. Also, the decision can be passed by a land registry judge, and if this is the case, the decision proposal on the registration is made by a land registry clerk who does not have the license to make decisions independently.[8]

The licensed land registry clerks were introduced in the land registration system of the Republic of Croatia in 2004. This step has significantly reduced the number of unresolved cases. The Article 120 of LRA stipulates that the decision in the land registration procedure is delivered to the applicant or its legal representative and to the persons whose real property is the basis for acquiring registry right and whose rights are being transferred, encumbered or terminated, as well as to the person against whom the notice was recorded, and all this is conducted according to the rules on personal delivery[9]. It also
important to deliver the decision on registration only after the registration is conducted, and before the decision becomes legally valid.

Legal remedies in land registration procedure

The function of legal remedies is to protect real rights on real properties registered in land register. This
protection of real rights against any violation conducted by an incorrect registration or a refusal to conduct the registration in land register, is provided to the holders of these rights by means of land registration law rules aimed at protecting registry rights.

A registration is invalid or inaccurate when, at the moment the registration proposal is submitted, the preconditions for the registration prescribed by the rules of land registration and material law were not met.

In the land registration procedure, an appeal is a regular legal remedy, whereas the so-called extraordinary audit is the extraordinary legal remedy.

The deadline for filing an appeal is preclusive and is set at 15 days from the receipt of the decision copy. In case the appeal deadline is missed, it is not possible to ask for its extension or to return to the previous situation (Article 125, paragraph 1 and Article 94 LRA). Atimely filing of an appeal is appreciated according to the provisions of civil procedure (Article 112 and 113 LCP).Article 124, paragraph 2 LRA stipulates that no new facts can be stated, nor any new documents attached in the appeal. Furthermore, this means that an appeal can be filed due to a significant breach
of procedure provisions, and due to an incorrect implementation of material law.

An extraordinary audit can be announced only in case the decision on a dispute depends on resolving an
issue related to a material and legal law or process law, which is important for ensuring a uniform implementation of the law and equality of citizens. The highest court of law, Supreme Court of the Republic of Croatia, decides if an extraordinary audit is allowed and justified. An extraordinary audit can be filed within 30 days from the day the second instance court decision is received.

EDP – land register

The definition of EDP –land register is given in Article 163, paragraph 1 LRA specifying that the EDP– land register records are kept using an electronic data processing regarding the legal situation of real properties competent for legal transactions. It consists of cadastral data on form, area and land development, as well as the land registry court data stored in the Land Database (LDB).

From such a wording in the provision, it is clear that EDP-land register presupposes the existence of a single land database which would store the land registry court data competent for the real property legal transactions. However it is also required that the same database stores the cadastral data on the form, area and land development.

In order to understand accurately the notion of EDP-land register, it is important to distinguish this register from the manually kept land register which has been transcribed and is now kept in digital form. It can often be heard in public that with the transcription of manually kept land registers into computers, the land registers have been organized and regulated. However, it is very important to warn here that the data in the manually kept land registers which are now kept digitally, is accurate and up-todate as much as it was in the manually kept land registers.

The basic parts of EDP-land register are the main book which consists of the list of entries (the existing legal situation of real properties) and the list of deleted entries (which shows the history of real property legal transactions after they are kept in electronic form only). Equally, regarding the EDP-land register, there are additional lists which include the collection of deeds, collection of land registration decisions, and other additional lists, whereby according to the current provision of Article 167 LRA, the collection of deeds is kept manually, however a decision can be passed to keep the collection of deeds also in electronic form.

Real Property Registration and Cadastre Project

It has been mentioned in the introduction how the land registers in the Republic of Croatia were systematically neglected for 50 years. In this period a great number of real property legal transactions were not recorded in land registers, but only in cadastre. The land cadastre had primarily a fiscal role related to charging the taxes, and was not concerned about whether the real owner was recorded in cadastre or not. Such a situation caused legal insecurity and prevented investments (domestic and foreign), or to be more precise, the land registers did not display the real legal situation of real properties competent for legal transactions.

All this led to the development of the National Program intended to regulate the land registers and cadastre. The program has been in implementation since 2003. The financial sources of the project itself are the funds from the World Bank loan, the European Bank for Reconstruction and Development, the
Republic of Croatia State budget, and grants from many other countries.

The most important result of this Project is that the land registers (managed by the courts with the organizational authority of the Ministry of Justice of the Republic of Croatia) and cadastre (headed by the State Geodetic Administration) started acting like partners, since they depend on each other. Namely, it has already been mentioned that the data on real property is not the original data from
land register, but from cadastre, whereas the data on owners and other real property title holders is exclusively the data from land register which is taken over by cadastre.

Since 2003 until today, many activities have been implemented such as training for judges and employees in the land registry and cadastral system.

Then, a range of legal regulations and by-laws that regulate this field have been passed, many new land registers have been established and a whole range or new cadastral surveys is underway.

In the field of land registers, one of the most significant results is the reduction in the number of unresolved cases by about 75% as compared to the situation in August 2004[10]. It is equally important that the transcription and verification of manually kept land registers have been conducted into digital form. This has greatly reduced the time necessary to issue land registry extracts.

The end-goal of the real property registration and cadastre reform is the development of the Joint Information System of land registers and cadastre. In this system, two sets of real property records will be connected at the IT level, but each institution, courts and cadastre (state administration) will retain its clearly stipulated authority.

Joint Information System – Land Registers

At the session of August 25, 2006 the Government of the Republic of Croatia gave support to the Real
Property Registration and Cadastre Joint Information System (JIS) Establishment Project by which it was planned to develop a database within three years which would store all data of land registers and cadastre in one place. That means that the JIS should store the data of all land registers and cadastral documentation (graphic and alphanumeric parts) for about 17 million parcels, in the total of 4.147.783 land registry files, and 56 000 cadastral maps.

An international tender was launched for that purpose and after the selection of the most favourable bidder, on May 29, 2007 the Contract was signed for the Development and Implementation of the Real Property and Cadastre Joint Information System between the Ministry of Justice and State Geodetic
Administration as the Purchaser, and the consortium headed by Ericsson Nikola Tesla company (Republic of Croatia) together with the IGEA company from Ljubljana (Republic of Slovenia) and Center for Legal Competence (CLC) from Vienna (Republic of Austria).

The establishment of JIS at two pilot locations (Požega and Zadar) should be completed by June 2010 and after that the system would be gradually implemented in all land registry courts and cadastral offices in the next few years. It is important to emphasize that the JIS will store the harmonized data of land registers and cadastre which can present the single land database. It will also contain the  on harmonized data in which the land registers and cadastre differ and where it will be necessary to conduct the procedure of regulating the land registers and cadastre.

There are two ways of developing the single land database in which the land register and cadastre data will be entirely harmonized. The first one requires a systematic approach by which the cadastral municipalities would be organized and regulated one after the other. Such an approach requires a lot of funds together with staff capacities in courts and state administration. The other approach is sporadic, meaning that the land registers and cadastre would be organized at the request of the real property owner and at the initiative and expense of the owner, for the real property that the owner is interested in.
Our opinion is that the other approach should prevail, because it is the only feasible one in the current recession (financial) circumstances that the Republic of Croatia is in.

Closing Remarks

With the introduction of modern information technologies, the land registration system of the Republic of Croatia is at the crossroads. However, we believe that the modern technologies should never be the
purpose itself, but it is important in the future modern system to ensure primarily the security of real property legal transactions, then to ensure that the land registers present the only competent register for the real property legal transactions and that the land registers guarantee ownership and other real rights. That is why the experience from other European countries is very important for the future development of land registers because it can help the Republic of Croatia in the process of organizing its
land registers and cadastre and creating the single land database.

[1] Official Gazette, no. 56/90, 135/97, 8/98, 113/00, 124/00, 28/01, 41/01, 55/01, hereon: the Constitution.

[2] Official Gazette no. 91/96, 68/98, 137/99, 22/00, 73/00, 114/01, 79/06, 141/06, 146/08, 38/09, 153/09, hereon: LO.

[3] Official Gazette no. 91/96, 68/98, 137/99, 114/01, 100/04, 107/07, 152/08, hereon: LRA.

[4] Official Gazette no. 81/97, 109/02, 123/02, 153/02, 14/05.

[5] In the Republic of Croatia land registers have been transcribed into digital form, however since the single land database is still non-existent, currently there is no EDP Land Register, i.e. land register kept using the electronic data processing. The transcription of land registers has been conducted within the Real Property Registration and Cadastre Project which is financed by the World Bank loan funds.

[6] The principle of a closed number of real rights (numerus clausus) is valid in the Republic of Croatia, therefore together with the ownership right, there are also usufructs, real encumbrances, construction right and lien as real rights.

[7] Official Gazette, no. 16/07, 152/08, hereon LSSRPC.

[8] It is important to emphasize that the licensed land registry clerks are an attempt to introduce the institute of rechtspfleger into the legal system of the Republic of Croatia, whereby it is necessary to develop further this system, especially in relation to education and the necessary knowledge that these persons must have.

[9] Regarding the delivery, the rules of court litigation and the Law on Civil Procedure (Official Gazette no. 53/91, 91/92, 112/99, 88/01, 117/03, 88/05, 2/07, 84/08, 96/08, 123/08, hereon LCP) are indirectly applied in the land registration procedure.

[10] According to the data from the Land Registration Management Sector at the Ministry of Justice, there were 359 500 unresolved cases in 2004, whereas in December 2009 this number was reduced to 67 624 cases. Also, the average number of incoming cases per month is about 40 000, and about 120 000 land registry extracts are issued monthly.