Once a contractually binding relationship is created that produces debt due to the unfulfillment of contractual obligation by one party, which frequently occurs when contracts are concluded with Banks by natural and legal persons, a conduct of the enforcement proceedings is inevitable. The Bank, customarily having the role of the creditor, i.e. the enforcement creditor, takes legal action with the purpose of initiating enforcement proceedings, which represent a crucial mechanism for the realization of their rights. Enforcement proceedings enable the enforcement creditor to settle the debt resulting from the unfulfillment of contractual obligations by the other party, in this case the enforcement debtor, through enforcement over certain property items of the enforcement debtor.
Throughout the course of the enforcement proceedings, the public enforcement officer checks the property of the enforcement debtor, which is suitable for execution, and even though confiscation of earnings of the enforcement debtor represents one of the most frequent means and objects of execution, enforcement is frequently carried out over motor vehicles that are found to be in debtor’s ownership. An issue may occur in a situation when the subject motor vehicle, which is the object of execution, was sold, but the vehicle title has not yet been transferred to the buyer, with the enforcement debtor still being the registered owner.
Hence, when a person is performing the sale of a motor vehicle, but the transfer of ownership to the buyer is not performed simultaneously, this may result in serious consequences, including the option of the subject vehicle being taken in an enforcement procedure should the seller become the debtor, which may jeopardize the rights of the buyer who is not the registered owner thereof, even after having duly performed his obligations from the purchase and sale agreement, and paid the full amount for the subject of sale.
The law on income taxes (“Official Gazette of RS”, no. 26/2001, “Official Gazette of SRY”, no. 42/2002 – decision of the Federal Constitutional Court ” Official Gazette of RS”, no. 80/2002, 80/2002 – other law, 135/2004, 61/2007, 5/2009, 101/2010, 24/2011, 78/2011, 57/2012 – decision of the Constitutional Court, 47/2013, 68/2014 – other law, 95/2018, 99/2018 – decision of the Constitutional Court, 86/2019, 144/2020, 118/2021, 138/2022 and 92/2023) Article 23 paragraph 1 item 4a) provides that the tax for the absolute rights transfer is paid on transfer along with the fee for the property right over the used motor vehicle, with certain exemptions. Further on, Article 25 paragraph 1 prescribes that the seller, i.e., the transferor of property rights over the used motor vehicle, shall be the taxpayer of the absolute rights transfer. The tax obligation is created on the date of conclusion of the contract for the transfer of absolute rights (Law on Property Taxes Article 29 Paragraph 1).
Should the above stated actions fail to be taken, i.e., the payment of absolute rights transfer tax not performed, it is considered, from a legal standpoint, that the vehicle that had been the subject of sale is still in the ownership of the previous owner. The seller, as the owner of the vehicle still holds the property rights thereof, notwithstanding the fact that the vehicle was handed over to the buyer, with the buyer paying the full agreed price, can still be responsible for all legal obligations arising in connection with the property rights over the subject vehicle, including paying taxes, as well as traffic tickets. Should the enforcement proceedings be initiated against the seller, in which the seller should become the enforcement debtor, the vehicle may be taken for the purpose of settlement of the enforcement creditors debt, in the form of ban on vehicle registration or vehicle alienation, as well as inventory, estimation and sale thereof.
The buyer of the motor vehicle can, as a third party in the enforcement proceedings, file a third-party complaint in accordance with the Law on Enforcement and Security Interest (“Official Gazette of RS”, no. 106/2015, 106/2016 – authentic interpretation, 113/2017 – authentic interpretation, 54/2019, 9/2020 – authentic interpretation and 10/2023 – other law). A third party claiming to have rights over the object of enforcement that prevents the enforcement, can submit a complaint to the public enforcement officer requesting that the enforcement be determined as unlawful over that object, and until the finalization of the enforcement procedure. Along with the complaint, the third party is also obligated to enclose the relevant documents proving the existence of their right, else the complaint will be rejected as incomplete, without being returned for supplementation. In the event that the transfer of absolute rights has been performed, the third-party complaint will be adopted if the third party has submitted proof of payment for the absolute rights transfer tax, seeing as this shall prove the property rights over the subject vehicle. Otherwise, the complaint will be rejected, as mentioned above.
In the circumstances when a third party is unsuccessful with the complaint, which is customarily the case when relevant evidence isn’t submitted along with the complaint, and the public enforcement officer rejects the complaint, the third party can initiate civil proceedings within 30 days from the receipt date of the decision on rejection or denial of complaint against the enforcement creditor for the purpose of determination of unlawful enforcement. Nevertheless, it is important to emphasize that the initiation of civil proceedings will not defer enforcement, which may lead to the subject vehicle being sold in the enforcement proceedings in the meantime. The vehicle may be sold at a public auction, i.e., by direct agreement, with the third party then potentially losing the option of reclaiming the vehicle should the enforcement prove to be unlawful.
Taking all the legally prescribed actions upon the conclusion of a purchase and sale agreement for the sale of motor vehicle is of crucial importance for the protection of buyer’s rights and avoiding possible complications. The payment of the price and takeover of vehicle in itself isn’t sufficient, it is important to perform all of the administrative-legal procedures, including the formal transfer of ownership and registration of vehicle in the name of the buyer. The non-performance of the specified actions can lead to the confiscation of motor vehicle, as well as additional costs. With the given approach, the buyer would protect his or her interests and secure the unhindered enjoyment of property rights over the motor vehicle.
