The most common securities in Slovak real estate financing are the following:
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The Civil Code defines real estate as plots of land and buildings, which are connected to the ground by a solid foundation. Premises such as apartments and commercial and office space are also considered real estate.
Slovak law does not recognise the principle of "superficies solo cedit" (which means that ownership of a building is considered inseparable from ownership of a plot of land beneath it). Therefore, a building is not part of a plot of land on which it stands. Consequently, the owner of a building can be a different person from the owner of a plot of land beneath the building.
Mortgage as a form of a security can be established over each type of real estate mentioned above.
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Trusts are not a recognised concept under Slovak law.
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Secured debt can be 'traded' between lenders. The Civil Code regulates the institute of 'assignment of a claim', where a creditor may assign his claim against a debtor to another party by means of a written agreement. The assignment includes accessories and all rights connected with the claim. The debtor's consent to the assignment is not required in order for the agreement to become valid, unless the debtor and the creditor agree on any restrictions of assignment in the respective agreement, eg the parties may agree that the receivable cannot be assigned without the consent of the debtor.
The creditor shall notify the debtor of the assignment without delay. Unless the creditor has notified the debtor of the assignment or unless the new creditor proves the assignment to the debtor, the debtor can perform its obligations to the original creditor.
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There are no restrictions on granting security to foreign lenders.
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There is no stamp duty that arises following the creation of a security interest. However, a mortgage shall be perfected by registration with the respective Cadastral Registry. The basic fee for the registration is EUR100, and the registration must take place within 30 days following the creation of the mortgage. If the applicant files for an accelerated registration within 15 days from the filing of the application for registration with the Cadastral Registry, the registration fee amounts to EUR300.
Moreover, there is a possibility to file for the registration of the mortgage electronically. In such a case, the basic fee reduces from EUR100 to EUR50 and in the case of an accelerated registration procedure from EUR300 to EUR150.
All of these fees are reduced by EUR15 if a notice of an intended registration is filed.
In addition, notarial fees must be paid for the verification of the signature of the transferor on the agreement for the transfer of the ownership right. The notarial fee for the verification of a signature is EUR4 plus VAT per one signature. The costs related to the enforcement of security also have to be taken into consideration, but the amount of such costs depends on the means of enforcement of the security.
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Yes, there are both financial assistance rules and corporate benefit rules which must be complied with:
Pursuant to mandatory provisions of the Commercial Code, a company cannot acquire its own ownership interests. Furthermore, a controlled company (being a company in which a party owns the majority of the voting rights, because that party holds shares in the company to which the majority of the voting rights is attached, or because a company has entered into agreements with other authorised companies and may as a result exercise the majority of the voting rights, regardless of whether or not the agreement is valid) is not permitted to acquire the ownership interest of its controlling company. These restrictions do not apply if the ownership interest is acquired through succession or if the controlled company becomes a successor in law and replaces the former ownership interest holder in respect of all the rights and duties of the former ownership interest holder.
The Commercial Code provides that managing directors must carry out their duties with due care and in line with the interests of the company and the company's members. In particular, the managing directors must collect and consider any available information to make a decision in relation to the company. Managing directors cannot disclose any confidential information and facts in respect of the company where a disclosure to a third party could cause damage to the company or prejudice its interests or the interests of its members. While discharging their duties, managing directors must not prioritise their own interests, the interests of certain members or the interests of third parties over the interests of the company. The same rules apply to the members of the board of directors of joint stock companies.
There are other corporate law issues which include rules relating to capital maintenance, restrictions on transactions between a company and connected parties (executives, shareholders and close persons) and provisions relating to transactions which take place within certain periods before the company enters into an insolvency proceeding.
As of 1 January 2016, the amendment of the Commercial Code ("Amendment") introducing new provisions with respect to companies in crisis becomes effective. The amendment has effects described below:
A “company in crisis” is a company that is bankrupt (over-indebted/insolvent) or is in a risk of bankruptcy. A company is also considered a “company in crisis” in the period from its dissolution to its entry to liquidation. There is a risk of bankruptcy if the ratio of equity to obligations is less than 8:100 as of 2018. A company which has a negative equity balance is in any case regarded as being in crisis. The Amendment also creates the concept of "Equity substituting loans", which are loans made to a company in crisis by the following qualified persons:
(collectively referred to as Qualified Persons)
If a Qualified Person provides collateral to secure the company´s debts during the crisis, the creditors may enforce their rights secured by the collateral directly against the Qualified Person.
The Amendment also proposes the introduction of a general ban on the repayments to Qualified persons during the crisis. The purpose is to promote the claims of other creditors ahead of the claims of the shareholders. Repayments made in breach of this prohibition must be returned to the company. The managing directors of the company are liable jointly and severally for ensuring the return of these funds.
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There are no restrictions on re-payments made to foreign lenders under a security document or loan agreement. However, under the Foreign Exchange Act, re-payments made to foreign lenders under a loan agreement must be notified to the National Bank of Slovakia for statistical purposes.
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The general rule is that a security created earlier has priority over a security created subsequently and thus the date and time of registration is important.
However, the creditors may agree to subordinate an existing debt to another by a subordination agreement in which one creditor agrees that claims of another creditor shall be fully paid before there is any payment to the subordinated creditor. This agreement becomes effective as of the day of registration of the agreed ranking with the respective pledge register (ie the Notarial Central Register of Pledges, the Commercial Register, the Register of Pledges to Securities of the Central Security Depository or the Cadastral Registry).
If the creditors agree on a different ranking of their pledges and this agreement subsequently causes reduced enforceability of the claim of a creditor who is not party to the agreement, the subordination agreement shall not be held effective towards such creditor.
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The EC Regulation No. 593/2008 of 17 June 2008 on the law applicable to contractual obligations (Rome I Regulation) which applies in Slovakia as of 17 December 2009 regulates that contract shall be governed by the law chosen by the parties. The choice of law applies to security documents as well. The Slovak courts must then recognise the choice of law. However, the application of a provision of the law of any country specified by this Regulation may be refused if such application is manifestly incompatible with the public policy of the country in which it is being applied.
Given that the statutory requirements for registration of a pledge/mortgage with the respective register must be complied with, it is advisable to choose the law of the country where the real estate is situated.
In the case of proceedings, the subject of which is
the matter will be settled exclusively by the Slovak courts.
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Where a pledge has not been registered correctly in the respective register or another form of security has not been validly perfected, we are of the opinion that the bankruptcy trustee would not recognize the existence of the security and therefore the creditor of that invalid security interest could only be satisfied within bankruptcy proceedings as an unsecured creditor and not as a secured creditor.
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A holder of security over land is not liable for environmental damage provided it does not take possession of the land and does not itself cause, or knowingly permit, damage to the environment.
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The most common security used in Slovakia is a pledge. According to the Slovak Civil Code, a pledge may be established over an asset, right, other property value, flat, non-residential premises, set of assets, rights or other property values, on-going enterprise or its part, as well as over an asset, right, other property value, flat or non-residential premises, which shall be acquired by the pledgor in the future. The pledgee (being the lender) will be entitled to demand satisfaction of its claim under the pledge where it remains unpaid by the pledgor.
Following the due date of the claim, the pledgee is obliged to:
After the notification, the pledgor is not entitled to transfer the security without the prior consent of the pledgee. After the expiry of at least 30 days following the notification of the enforcement to the pledgor and the pledge debtor, the pledgee shall then be entitled to sell the secured assets at auction or by means agreed with the pledgor in the agreement establishing the pledge. However, the pledgor and the pledgee may after the written notification agree that the pledgee shall be entitled to enforce the security before the expiration of the 30-days' period.
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The Bankruptcy Act regulates bankruptcy proceedings and court-protected restructuring. The purpose of restructuring proceedings under the Bankruptcy Act is to enable legal entities (except for financial institutions) that are in financial difficulties – even if they are already insolvent or over-indebted – to continue carrying out their activities after having undergone a restructuring. The primary motivation for restructuring is to try to ensure that the debtor can continue to carry out a substantial part of its operations. At the same time, creditors' claims are more likely to be satisfied if restructuring proceeding has taken place as opposed to in the case of bankruptcy of the debtor.
The commencement of the restructuring proceedings prevents the lender (security creditor) from beginning and/or continuing in execution of its security right. The execution of the security rights after the commencement of restructuring proceedings is ineffective.
The Act No. 111/2022 Coll. on Resolving Imminent Bankruptcy and on Amendments to Certain Acts provides protection to entities prior to insolvency. It is a tool intended to help creditors to secure their claims. It does not prevent the debtor from conducting business. Temporary protection is provided by court after the consent of majority of debtors calculated according to the amount of their unaffiliated claims.
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The Bankruptcy Act distinguishes between the following security rights
A security right over debtor's property which forms part of insolvency proceedings will not become void following the commencement of bankruptcy proceedings. However, security rights cannot be executed during insolvency proceedings. This does not apply to the execution of security rights to
In these cases, the security right can be executed until the bankruptcy declaration. In cases when the execution of a security right has commenced prior to the bankruptcy proceedings, the execution proceedings shall be suspended. The pledgee will then have to file an application within the insolvency proceedings in accordance with the Bankruptcy Act.
Some assets, in particular assets secured by means of a pledge, a transfer of right serving as security (securing transfer of right), or the securing of an assignment of claims, have priority status in relation to other claims in bankruptcy proceedings. The bankruptcy trustee will discharge those claims prior to the other claims by distributing the proceeds from the secured assets. If the proceeds from the secured assets are not sufficient for the full discharge of all secured claims, then the remainder of those claims will be classified as unsecured claims and will then be discharged alongside other unsecured claims.
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The assets of the debtor in insolvency proceedings constitute the "estate" which can be either:
The number of separate estates depends on the number of secured creditors.
An established claim of a secured creditor will be satisfied from the proceeds of the sale of the assets which comprise the separate estate, following any required deduction from that estate of other assets. Where a secured claim of a secured creditor cannot be satisfied in full in this way, the outstanding part of the claim will be treated as unsecured.
Unsecured claims will be satisfied from the proceeds of the realisation of the assets constituting the general estate that remains in existence after the claims against the estate linked to the inventory items of the assets constituting the general estate have been deducted. Where unsecured claims cannot be satisfied in full, they will be satisfied proportionately according to their value.
The proceeds of a debtor's estate will either be distributed on a deduction basis (ie the claims of creditors are satisfied every time a certain asset is realised), or by means of an "end distribution" (ie the distribution of the realised proceeds occurs once all the assets have been realised).
If more than one creditor holds the same security interest over the same real estate, then the order of payment will be dealt with in accordance with the order set out in the mortgage registered with the Cadastral Registry. Therefore, the mortgage of the mortgagee first registered with the Cadastral Registry will be satisfied first from the proceeds of the sale.
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Which assets and rights are considered to be real estate or real rights over which security can be granted to a lender?
The Civil Code defines real estate as plots of land and buildings, which are connected to the ground by a solid foundation. Premises such as apartments and commercial and office space are also considered real estate.
Slovak law does not recognise the principle of "superficies solo cedit" (which means that ownership of a building is considered inseparable from ownership of a plot of land beneath it). Therefore, a building is not part of a plot of land on which it stands. Consequently, the owner of a building can be a different person from the owner of a plot of land beneath the building.
Mortgage as a form of a security can be established over each type of real estate mentioned above.
Last modified 13 Mar 2025