Public enforcement officers customarily conduct enforcement through the transfer of monetary assets from accounts that are the property of the enforcement debtor, kept in commercial banks, then through the attachment of earnings, sale of financial instruments of the debtor, transfer of monetary claims and company shares. However, enforcement is also possible against immovable property in accordance with the Law on Enforcement and Security (“Official Gazette of RS”, no. 106/2016 – authentic interpretation, 113/2017 – authentic interpretation and 54/2019) which regulates the enforcement against immovable property in its third section and is related to enforcement for the purpose of collection of monetary claims – in chapter one.
Along with the motion for execution, the public enforcement officer must submit the cadastral excerpt or excerpt from other public register proving that the enforcement debtor is registered as the owner of the immovable property which the execution is proposed against. In the event that the enforcement debtor is not registered in the cadastre as the immovable property owner, this is then the case of an unregistered owner and the public enforcement officer and enforcement creditor must submit the document proving that the registration of ownership can be performed in favour of the enforcement debtor.
However, the real question is what happens when a third party deems to have an ownership right which prevents enforcement against the subject immovable property. In this case the third party can submit to the public enforcement officer a complaint before the finalization of enforcement, requesting that the enforcement in that case be declared illegal. They are obligated to state in their complaint the reasons for filing a complaint and to submit along with the complaint the documents proving the existence of their right, otherwise the complaint will be rejected as incomplete, without prior return for amendment. In practice, when a third party files a complaint, what often happens is that the third party submits, as evidence for their claims, only the purchase and sale agreement or gift agreement, which represent legal grounds for cadastre registration, but do not represent proof of ownership over immovable property which is the subject of enforcement.
In accordance with the principle of registration provided by the Law on Procedure of Registration in the Real estate Cadastre and Utility Cadastre (“Official Gazette of RS”, no. 41/2018, 95/2018, 31/2019 and 15/2020) ownership and other property rights over immovable property are acquired through cadastre registration.
Hence, a third party in this case is a party which had duly purchased and paid for the immovable property, but had not registered it in a timely manner, therefore the enforcement is executed against the immovable property which the third party only has registration rights over, but not the ownership right, so the enforcement debtor is registered as the owner of subject immovable property in the cadastre.
When a third party only possesses the legal grounds for cadastre registration of immovable property, the public enforcement officer will reject the third party complaint as incomplete. As there is no effective legal remedy which the third party can invoke should the assigned public enforcement officer reject or dismiss their complaint, he will instruct them to litigation through filing a lawsuit against the enforcement creditor, to prove their right over the subject property in accordance with Article 11 of the Law on Enforcement and Security. However, seeing as how the Law on Enforcement and Security prescribes the principle of urgency which states that enforcement is urgent and therefore no standstill in proceedings is allowed, the litigation proceedings which might be initiated by the third party will not defer enforcement. Since the enforcement would not be deferred, the third party, now the litigation plaintiff, could be left without the subject immovable property which had been the reason for entering into litigation, as it could be sold through oral or electronic bidding or direct agreement in the meantime, and since the law protects diligent persons which are the buyers of subject immovable property, the third party, i.e., the plaintiff, would only be left with the option of initiating litigation for compensation for damages. Considering the costs of the proceedings incurred that might borne by the third party, as well as the passing of time between the complaint during enforcement proceedings and the compensation for damages, the question remains whether the compensation for damages would in that case provide sufficient gratification for the third party.
