An issue of whether a real estate purchase agreement assembled by the notary as an authentic instrument (notarial act) is a form valid for the inscription of ownership into the real estate cadastre in Serbia, became the matter of dissagreement among the legal professionals after the recent rulling of the Supreme Court of Cassation.
The Civil Department of the Supreme Court of Cassation, at its session held on 25 October 2016, gave the following ruling thereon:
„in case of an authentic instrument, a public notary as a professional enjoing public trust is drawing the legal document, satisfying himself of the identity of the parties, explaining rigorously the implications of the instrument, thus generating higher level of trust comparing to the mere authentication of an agreement. Parties are free, in accordance with the principle of autonomy of will (‘autonomie de la volonté’), to opt, with regards to the form of the contract, for more than a mere minimum of formal requirements. There’s no harm in doing so, neither to the public, nor to the private interests.Form is not a goal in itself. If the formal requirements are interpreted systematically and teleologically, it is clear that an authentic instrument is valid for the inscription of ownership into the real estate cadastre and that a public register (cadastre) may not dismiss or reject the request for inscription solely due to such presumed ‘shortcoming’.”
In other words, the Supreme Court of Cassation held that since additional or more strict formal requirements consume fewer or less strict formal requirements, the contract that in accordance with the law must be concluded in the form of an authenticated private deed, should also be valid if concluded in the form of an authentic instrument.
The form of an authentic instrument as a form required for a real estate purchase agreement was introduced to the Serbian legal system with the 2013 Ammendments to the Law on the Notariate. The ammendments provided that the real estate purchase agreements were to be completely assembled by notaries, thus carving the legal work related to such agreements out of the scope of legal assistance provided by the lawyers – members of the Bar Associaton.
Not so long after the Ammendments to the Law on the Notariate, the members of the Bar went on strike that frozen almost all administration of justice in Serbia and lasted more than four months. The strike was called off only after the government accepted to table the new Ammendments to the Law on the Notariate to the Parliament, that would erese the real estate purchase agreements from the list of agreements for which the form of an authentic instrument was required.
Two years after the compromise that ended the strike, the rulling of the Supreme Court of Cassation may renew the conflict between the licensed legal professions, lawyers and notaries.
The Bar and its memebers are mostly at the position that a real estate purchase agreement assembled by the notary as an authentic instrument is not a valid form for the inscription of ownership into the real estate cadastre. Their arguments are based on the Real Estate Transfer Act, general principles of the State Survey and Cadastre Act, as well as on the fact that erasing the real estate purchase agreements from the list of agreements for which the form of an authentic instrument in the Ammended Law on the Notariate, was a compromise accepted by both lawyers and notaries. The same line of arguments led number of cadastral administrations to their decisions dismissing requests for the inscription of ownership into the real estate cadastre based on the authentic instruments.
On the other hand, the position of the Supreme Court of Cassation, besides its sound theoretical basis, appears to be pragmatic as well. There appaers to be a significant number of the real estate purchase agreements assembled by notaries as authentic instruments, and those who have opted for such form will now be in position to inscribe their ownership into the real estate cadastre.
However, while the ruling of the Supreme Court of Cassation solves an issue of importance for the judiciary and the administration and upholds the legal certainty, it does create a new confrontation arena for the lawyers and the notaries. This is even more the case after the Bar Association of Serbia required the Supreme Court of Cassation to set aside its own ruling, under the threat of another strike.
If you have any questions regarding the above, please contact Živković Samardžić Dispute Resolution Associate Jovan Pjevač (firstname.lastname@example.org), or any of your regular contacts at Živković Samardžić. In preparing this insight, Jovan was assisted by Tihomir Vlaović, trainee attorney at law.