Real estate ownershipi Planning
Spatial planning policy in Slovenia has a national and local dimension and is included in strategic documents: the Spatial Development Strategy of Slovenia, the Spatial Order of Slovenia and the National Housing Programme. The National Spatial Plan is a spatial act that includes spatial arrangements of national importance. On a local level, each municipality has a Municipal Spatial Plan that needs to be in accordance with the National Spatial Plan and Spatial Planning Act. It can also be divided into more detailed plans for a certain area – a Municipal Detailed Spatial Plan. For any construction, reconstruction and change of use of the real property, a building permit shall be obtained in accordance with the Building Act. As a pre-condition to obtain a building permit, the investor may be required to pay communal fees to the competent municipality, for the use of existing infrastructure. Alternatively, the investor may enter into an agreement with the municipality according to which the investor builds and finances infrastructure; the building costs are in such case set-off against the communal fee.
A constructed building shall generally only be used after obtaining a use permit, whereas the Building Act foresees certain exceptions to this requirement (e.g. non-complex building objects).ii Environment
Environmental liability in Slovenia is regulated by the Environmental Protection Act, which stipulates that in an event of any pollution on a real property, the 'polluter pays principle' applies, meaning that the person that caused a pollution is liable for remedying such pollution. This way the person that caused the damage or the direct danger of damage is encouraged to take appropriate measures and develop procedures for protection of the environment.
According to Slovenian case law, liability is limited only to abnormal environmental burdens (i.e. environmental burdens that exceed maximum levels of emissions, environmental standards, codes of conduct or legitimate use of the environment as stipulated in environmental legislation). If an environmental burden is not abnormal, the person cannot be held liable for the damages under the provisions of the Environmental Protection Act. This is also the case if a person that causes the pollution proves that it has acted in accordance with mandatory instructions of the competent public authority or in accordance with a permit authorising it to carry out certain activities.
If more polluters have caused pollution and the liability of individual polluters could not be determined, the polluters are jointly and severally liable for remedying the pollution and damages in this regard.iii Tax
Real property transactions are generally taxed with a 2 per cent land transfer tax, which shall be settled by the seller upon the ownership transfer of real property in accordance with the Real Property Transaction Tax Act, except if the parties agreed that the land transfer tax shall be borne by the buyer. The transfer of real property shall be exempt of real property transaction tax in case the transfer is taxed with VAT.
In accordance with Article 44 of the VAT Act, the following real property transactions are exempt from VAT charge:
- purchase of land, except construction land;
- the purchase of buildings or building parts and land, on which the buildings are located, except if such purchase is performed before the buildings or building parts have been accommodated or used or if the purchase has been performed before the expiry of a two year period from the first use or accommodation; and
- the lease of real properties (including leasing), except:
- accommodations in hotels or similar hospitality providers, including the accommodation in holiday houses, holiday camps or areas intended for camping; and
- the lease of garages and areas intended for car parking.
Nevertheless, a taxable person – with the ability of full VAT deduction – performing real estate transactions, which are tax exempt, may agree with the opponent party (lessee or the buyer of real property) that the transaction is subject to VAT (general tax rate: 22 per cent), in lieu of payment of the real property transfer tax. This may be agreed on in the relevant transaction document and VAT statements no longer have to be submitted to tax authorities.iv Finance and security
The most common form of security granted over real property in Slovenia is a mortgage. Under Slovenian law, a mortgage or a pledge is an accessory right and is therefore subject to the same legal consequences as the secured obligation; if the secured obligation is terminated, not valid or unenforceable, the same applies to the mortgage. Furthermore, the mortgage can not be separated from the secured obligation, which means that it can only be held and enforced by the creditor of such secured obligation.
The mortgage is validly established, if registered in the land register in favour of the creditor of the obligation secured with the mortgage, all on the basis of the mortgage agreement. The mortgage agreement may be concluded in a simple form (which only requires the mortgagor's notarised signature on the mortgage agreement) or in form of a directly enforceable notarial deed. Maximum mortgages that secure receivables up to an agreed amount may not be directly enforceable.
If a mortgage is not directly enforceable, the creditor must first file a lawsuit demanding the sale of the mortgaged real property to obtain an enforcement title, based on which an enforcement procedure can be initiated. If the mortgage is concluded in a form of a directly enforceable notarial deed, this first step is not required as such directly enforceable notarial deed is a valid enforcement title pursuant to Slovenian law.
In addition to the mortgage, lenders often require the fiduciary assignment of receivables under the sale and purchase agreement or lease agreements. It is not a perfection requirement to inform the third-party debtors (tenants). Rather, the duty to inform the tenants is usually triggered by an event of default. It is market practice to conclude the fiduciary assignments as notarial deeds, to have the assignment acknowledged in case of insolvency as a right to separate satisfaction or in case of an enforcement of third parties (Article 209(2) and Article 206 of the Property Code).