Slovakia: Acquisition of Real Estate
Transfer of ownership
Pursuant to the Slovak civil law, the acquisition of real estate is a strictly formalised process. That is, the acquisition title must have a written form and the signature of the seller must be officially verified. In order to successfully transfer ownership rights to real estate, aside from concluding a written agreement, the parties must apply for the registration of the transfer in the real estate cadastre. Afterwards, the competent district office examines the application and, unless it contains any errors or deficiencies, it issues a decision on the registration of the transfer of ownership.
Pledges, easements, pre-emptive rights
The abovementioned process also applies to the establishment of pledges, easements and “in rem” pre-emptive rights. Moreover, please note that under the Slovak civil law, not all pre-emptive rights shall be registered in the real estate cadastre. The parties have the right to choose if the pre-emptive right over a particular real estate shall be binding for the legal successor of the pre-emptive right grantor. If the pre-emptive right is agreed as “in rem”, it is established by its registration in the real estate cadastre and it does not cease even if the pre-emptive right grantor transfers the real estate to a third party by breaching the pre-emptive right. Otherwise, the pre-emptive right is “in personam” and it does not have to be registered in the real estate cadastre. If the “in personam” pre-emptive right is breached by the grantor, the pre-emptive right ceases and the beneficiary of the pre-emptive right shall merely be entitled to compensation.
Real Estate Cadastre
As mentioned above, the ownership rights, pledges, easements and “in rem” pre-emptive rights must be registered in the real estate cadastre. The real estate cadastre is an information system containing all data on all land plots and buildings in the Slovak Republic, except for the buildings that are not registered in the real estate cadastre e.g., advertising construction, utilities etc. The data registered in the cadastre is considered credible unless proven otherwise. However, in light of the most recent judicial decisions of the highest judicial authorities, one cannot unconditionally rely on the real estate cadastre´s information regarding the ownership right to the real estate. Therefore, the potential buyer shall conduct a comprehensive due diligence on the existence of the seller´s title to the real estate prior to the acquisition.
Restrictions
When contemplating a possible acquisition of real estate in the Slovak Republic, it is necessary to assess possible legal restrictions. Under the Slovak civil law, there is no prohibition on the acquisition of real estate by OECD citizens or residents. However, there are some restrictions that apply generally, e.g., the prohibition of fragmentation of agricultural and forest land outside the municipality´s built up area, restrictions on the acquisition of real estate under the Act on the Protection of the Monuments and Historic Sites, etc. In many cases the breach of such legal provisions could lead to the transfer agreement´s invalidity or ineffectiveness. In order to eliminate such risks, it is recommended to carry out a due diligence process prior to the transaction. For the sake of completeness, we shall add that the acquisition of agricultural land by third country (outside OECD) citizens shall be assessed on the basis of reciprocity.
Land Plot Registers and Duplicate ownership
In the Slovak Republic there have been several land reforms, as a result of which currently there are two types of cadastral maps, while one shows accurate data of land plots (location, area, type of land plots), these are the land plots of register “C”, the other one is based on inaccurate historical land plot data and shows the land plots of register “E”. The ownership of land plots of register “C” and register “E” is equal. Due to the obstacles caused by this, the Slovak land law aims to unify these two systems and eliminate possible risks.
However, as a result of the parallel existence of both land plots of register “C” and register “E” and the equality of ownership rights to these land plots, there are still some land plots, mainly agricultural and forest lands, that are in a duplicate ownership. Duplicate ownership of land plots is a phenomenon where the title to the same piece of land is registered in favour of two or more different individuals without forming a joint ownership i.e., one or more persons are the owners of land plot “C”, and the other(s) are the owners of land plot “E”. In such cases neither one of the owners is entitled to dispose of the land plot unless the title to the land plot is settled, usually by a mutual agreement or judicial decision.
Superficies non solo cedit
The same way as the duplicate ownership, the application of the principle superficies non solo cedit in the Slovak civil law is also a remnant of the totalitarian regime form the previous century. Pursuant to this principle, the owner of the land plot is not necessarily the owner of the building constructed on said land plot. Therefore, it is possible to construct a building on a land plot that is in the ownership of another person. Due to this, it is always important to inspect whether the land plot to-be acquired is encumbered by a building and if so whether it is in the ownership of the seller.