The most common forms of security granted are a mortgage and/or a pledge. The Rights in Rem Act (Official Gazette of FBiH no. 66/13, 100/13 and 32/19 – The Decision of the Constitutional Court) (Rights in Rem Act), which was passed on 5 September 2013 and has been in force since 9 March 2014, provides for a land debt as a type of security. A land debt is a limited property right burdening the real estate with the effect that a certain amount of money should be paid to the holder of the right from the value of the real estate and the owner of the real estate from time to time is obliged to tolerate it. However, this type of security is not yet common in practice.
Last modified 13 Mar 2025
Real estate for these purposes consists of land and/or the buildings/construction on such land as well as a "construction right" in the Federation of Bosnia pursuant to the Rights in Rem Act.
Last modified 13 Mar 2025
In Bosnia and Herzegovina, legal ownership means ownership of land and buildings as registered in the land books at the local land registry of the relevant municipal court. Beneficial ownership as such is not recognised.
Last modified 13 Mar 2025
This is not usual. Any transfer is effected by means of an assignment or loan purchase agreement.
Last modified 13 Mar 2025
There are no such restrictions. Security can be granted to foreign lenders.
Last modified 13 Mar 2025
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
No. Financial assistance and corporate benefit rules are not incorporated into local company laws.
Last modified 13 Mar 2025
No such restrictions exist.
Last modified 13 Mar 2025
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
Yes, but only in relation to the enforcement of security over real property.
Last modified 13 Mar 2025
Security interests which have not been validly perfected cannot be enforced as such.
Last modified 13 Mar 2025
We are not aware of such practice and there is no provision for such liability in law.
Last modified 13 Mar 2025
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
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:
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
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
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
Is the concept of a trust or a split between legal ownership and beneficial ownership recognized?
In Bosnia and Herzegovina, legal ownership means ownership of land and buildings as registered in the land books at the local land registry of the relevant municipal court. Beneficial ownership as such is not recognised.
Last modified 13 Mar 2025