REALWorld Law

What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?

There are no such restrictions. Security can be granted to foreign lenders.

Last modified 13 Mar 2025

What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?

Notary's fees and registration fees apply in such instances.

Registration and notary's fees are determined in accordance with the cantonal Law on Court Tax and the Law on Notaries and the Notary’s Tariff. These vary on a case by case basis. For instance, for the enforcement of a security valued at KM 100,000, the notary's fee would amount to 378 KM (excluding VAT) and the court fee would amount to KM 3,000.

The Constitutional Court of Federation of Bosnia and Herzegovina rendered a decision no. U-22/16 on 6 March 2019 deciding that the provisions of the Law on Registration of Companies are not in accordance with the Constitution of FBiH. This decision is already applied in the practices, to that the registry courts do not require the delivery of incorporation documents in the form of a notarial deed.

Last modified 13 Mar 2025

What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?

No. Financial assistance and corporate benefit rules are not incorporated into local company laws.

Last modified 13 Mar 2025

What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?

No such restrictions exist.

Last modified 13 Mar 2025

What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?

This can happen only by agreement where the creditor holding the secured debt agrees to the arrangement. Tax liabilities owed to the local tax authorities (even if not registered) may in certain cases have priority over secured debt.

Last modified 13 Mar 2025

What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?

Yes, but only in relation to the enforcement of security over real property.

Last modified 13 Mar 2025

What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?

Security interests which have not been validly perfected cannot be enforced as such.

Last modified 13 Mar 2025

What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?

We are not aware of such practice and there is no provision for such liability in law.

Last modified 13 Mar 2025

What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?

The security becomes enforceable immediately upon the occurrence of a default provided that debtor and notary are notified of the default. It is important that the notary is notified since he or she will provide the official document on the basis of which enforcement will be implemented.

Enforcement is effected through the court by the judge with responsibility for execution matters. Repayments of the loan must be in default and the loan itself must be declared due and payable in full by the creditor. 

Last modified 13 Mar 2025

What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?

The procedure laid down by the Law on Bankruptcy provides for a reorganisation plan to be drawn up which may deviate from the provisions of the laws governing the distribution of bankrupt estate. A reorganisation plan may specifically:

• allow the bankrupt debtor to retain all or part of its property so that its business operations can continue;
• transfer all or part of the bankrupt debtor’s property to one or more existing legal entities or new legal entities that will be established;
• merge the bankrupt debtor with one or more legal entities;
• sell all or part of the bankrupt debtor’s property, subject to or free of any lien; distribute all or part of the bankrupt debtor’s property among the creditors;
• convert debt to equity; determine the manner in which the creditors will be satisfied;
• satisfy or modify the rights of secured creditors;
• reduce or postpone payment of the bankrupt debtor’s liabilities;
• turn the bankrupt debtor’s liabilities into credits;
• issue a guarantee or provide other kinds of security for the satisfaction of the bankrupt debtor’s liabilities; and
• determine the bankruptcy debtor’s liability after the termination of bankruptcy proceedings; issue new shares etc.

The reorganisation plan is deemed to have been accepted if in each class of creditor, the majority of creditors with the right of vote have voted, and the sum of the claims of the creditors who voted for the plan is greater than the sum of the claims of the creditors who voted against the plan.

Last modified 13 Mar 2025

What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?

Yes. In accordance with the Law on Bankruptcy, interests created over real estate which becomes part of the bankrupt estate are declared void if the interest was obtained in the 60 days in F BiH and Brcko District, respectively 90 days in RS, immediately before the filing of the petition to commence bankruptcy proceedings or if the interest was obtained on the basis of a court order.

Last modified 13 Mar 2025

What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?

Bankruptcy creditors are classified according to the nature of their claim. The creditors with a subordinate right to payment may have their claims paid only after the creditors with greater priority have had their claims paid in full. Creditors with equal priority have their claims paid pro rata. Claims incurred during period of preliminary administration which neither the interim trustee nor the bankruptcy trustee was able to pay have priority over any other claims against the bankruptcy trustee.

Creditors with general payment priority are creditors who, at the time of the opening of bankruptcy proceedings, had proven claim against the debtor. Bankruptcy creditors with lower payment priority include those who have claims in the form of an interest incurred after the opening of the bankruptcy proceedings and the costs of particular creditors incurred during their participation in the proceedings.

Last modified 13 Mar 2025