Amendment to the Slovenian Property Code – will the management of property under co-ownership be easier from now on?

On 20 June 2019, the Slovenian Ministry of Justice published a bill amending and supplementing the Slovenian Law of Property Code (the “Code”). Article 3 of the Bill adds a new sixth paragraph to the Code’s existing Article 67, which reads as follows:

“(6) Co-owners who together represent more than half of the total shares may invite the court to determine a non-litigious matter on an affair that goes beyond the scope of regular management. When making its decision, the court will take into account in particular the character of the property, the interests of the co-owners, the ability of other co-owners to effectively manage the property and the amount of remuneration that co-owners will receive in the event of disposing of the whole property.”

The current provisions of the Code regarding the management of property under shared ownership are insufficient and the proposed amendment is a consequence of this. Since it is not reasonable to expect co-owners to reach consensus on all management affairs, the Code at present distinguishes between those affairs which form part of regular management and those that exceed regular management.

Affairs forming part of regular management are those necessary for the operation and maintenance of the property in order to achieve its purpose. If the co-owners cannot reach an agreement and the affair is necessary for the regular maintenance of the property, then a co-owner may propose that the court decide whether to accept or reject such an affair.

In the case of affairs that go beyond regular management, however, there is no such option to seek a decision of the court. However, each co-owner does have the right to request in such a case the division of the co-owned property and thus the termination of the co-ownership relationship (Articles 69 and 70 of the Code). The latter is rarely in the economic interests of the co-owners.

The problem of shared real estate ownership is a particular challenge in Slovenia, where a large number of properties are under the co-ownership of several owners. Some of these owners are inactive or even unknown. In such cases, the management of the property beyond the so-called regular management (for example, renting real estate) is even more difficult.

The proposed amendment would allow those co-owners with more than half of the total shares to seek the court’s ratification of an affair that goes beyond regular management. The court’s decision would replace the otherwise required consensus of all co-owners.

If the proposed amendment is accepted, the question arises as to how the court will proceed in practice. The amended criteria show an individualized and restrictive approach, which seems appropriate, given that the amendment represents an encroachment on constitutional property rights.

Source: Bill on amendments and supplements to the Slovenian Law of Property Code of 18 June 2019