Contents
- When a debtor's property cannot be subject to enforcement: restrictions on creditor recovery
- How the court verifies whether enforcement against property is permitted at all
- What happens during enforcement and how a debtor can further delay the proceedings
- When protection of the sole property does not apply: key exceptions for creditors
- Do the 2025 amendments genuinely protect the right to a home: analysis of the conditions for creditors
- Frequently asked questions
Consider the following scenario: you have a claim worth tens of thousands of euros, the debtor is not meeting their obligations, and you know they own an apartment, house, or other real property. As a creditor, the natural course of action is to initiate enforcement proceedings to recover the debt. In practice, however, enforcement against real property is rarely swift or straightforward. The latest amendments to the Law on Enforcement and Security introduce protective provisions concerning enforcement against a debtor's sole property, directly affecting the prospects of debt recovery. These amendments and their practical consequences for creditors are the subject of this article.
While the 2019 amendments to the Law on Enforcement and Security were extensive and substantially reformed the course of enforcement proceedings, the 2025 amendments are less broad in scope but carry particular significance for creditors, as they introduce additional restrictions on enforcement against real property.
As a reminder, the 2019 amendments introduced a range of debtor protection mechanisms, including a prohibition on enforcement against a sole property for smaller utility debts, extended restrictions on enforcement against wages, pensions, and other income, as well as limitations on costs in cases involving multiple parallel proceedings against the same debtor. The law was also modernised through the introduction of electronic auctions and an electronic notice board, along with an expansion of the jurisdiction of public enforcement officers.
The 2025 amendments further strengthen the protection of the debtor's sole and primary property, introducing precisely defined conditions, a reinforced supervisory role for the court at all stages of the proceedings, and an exhaustive list of exceptions in which enforcement remains permitted.
Although the purpose of these provisions is to protect the debtor's primary residence, the way in which the conditions have been structured significantly narrows creditors' ability to recover debts in practice, creating additional risk and requiring careful planning of debt recovery strategy. For a broader overview of doing business in Serbia and planning commercial obligations, see our guide on company formation in Serbia.
When a debtor's property cannot be subject to enforcement: restrictions on creditor recovery
The amendments to the Law on Enforcement and Security introduced precise criteria that significantly restrict creditors' ability to recover debts from a debtor's real property. It is essential for creditors to understand in which situations enforcement against property will not be permitted, even where the debtor formally owns assets.
1. The debtor's sole property
Enforcement will not be permitted if the property is the debtor's sole property and serves as their residential home. In practice, this means that even where a creditor knows that the debtor owns an apartment or a house, that asset may be entirely exempt from enforcement.
2. Continuity of registered residence
Protection applies only if the debtor has had registered residence at that address for at least five years prior to the initiation of enforcement proceedings, provided that the address has not been deactivated. This requirement places an additional verification burden on creditors, as a deactivated registered address removes the basis for protection.
3. Floor area limit
Creditors should be aware that the protection applies exclusively to properties with a floor area of up to 60 sq m. Properties exceeding this threshold do not benefit from this form of protection and may remain subject to enforcement.
4. Ratio of the claim to the value of the property
Enforcement will not be permitted where the creditor's claim does not exceed half the market value of the property.
5. Prior disposal of other property
Protection will not apply if the debtor has disposed of other property within the past three years, whether by sale, gift, transfer, or conclusion of a lifelong care agreement. This rule operates in favour of creditors, as it prevents debtors from artificially engineering "sole property" status.
| Condition | Content | Effect on creditor |
|---|---|---|
| Sole property | Exclusively owned by the debtor, used as residential home | Asset effectively unavailable for recovery |
| Continuity of registered residence | Min. 5 years before initiation of proceedings; address not deactivated | Additional verification in Ministry of Interior records required |
| Floor area | Up to 60 sq m | Properties above 60 sq m are not protected |
| Claim-to-value ratio | Claim does not exceed 50% of market value | Smaller claims blocked regardless of asset value |
| Prior disposal of property | No transfer of other property within the past 3 years | Prevents artificial creation of "sole property" status |
How the court verifies whether enforcement against property is permitted at all: what this means for creditors
The latest amendments assign the court an active role from the very outset of enforcement proceedings. When a creditor proposes recovery from a debtor's real property in the enforcement application, the court is required to verify ex officio whether the property satisfies the statutory conditions for protection, irrespective of whether the debtor has raised this point.
If the court finds that the property meets all the legally prescribed conditions for protection (sole property, floor area, registered residence, proportionality of claim and value, etc.), the enforcement application will be dismissed at this stage. For creditors, this means that enforcement proceedings may be terminated before they have effectively begun, with no further action possible against that property.
What happens during enforcement and how a debtor can further delay the proceedings
Even where the court has permitted enforcement and the public enforcement officer has issued an order for enforcement against the property, the creditor must still account for additional procedural obstacles. The law retains for the debtor the ability to subsequently invoke the protection of the sole property.
The debtor has eight days from receipt of the public enforcement officer's order to file a request with the court, through the public enforcement officer, for a determination as to whether the property is exempt from enforcement. The court decides on that request within a short period; in the event of an objection, the decision is made by a three-judge panel.
When protection of the sole property does not apply: key exceptions for creditors
Although the amendments to the Law on Enforcement and Security introduce a strong protection mechanism for the debtor's sole residential property, that protection is not absolute. The law simultaneously provides for situations in which a creditor may still enforce against the property, even where it meets the conditions for "protected home" status.
1. Debtor's consent to enforcement
Where the debtor has given express consent to enforcement against their property, in the form prescribed by law and notarised, the protection does not apply. In that case, the debtor's will prevails and the creditor retains the full right to recover from the property.
2. Registered non-judicial enforcement mortgage
Of particular significance to creditors is the exception concerning a registered non-judicial enforcement mortgage. Where such a mortgage has already been registered against the property, the creditor has the right to recover from that asset regardless of the statutory protection of the sole property. For context on securing commercial obligations and opening accounts in Serbia, see our guide on non-resident bank accounts in Serbia.
In practice, this exception primarily benefits banks and other financial institutions, which almost invariably register a non-judicial enforcement mortgage against the property used as security when granting a loan. This ensures priority and more reliable recovery, in contrast to creditors who have not secured their claims in advance.
3. Claims from specially protected categories
Protection of the sole property does not apply where the claim arises from specifically sensitive and legally privileged situations:
- claims arising from a criminal offence,
- statutory maintenance obligations,
- compensation for damage to health,
- monetary annuity for permanent or temporary incapacity to work,
- annuities lost as a result of the death of a person who provided maintenance.
In these cases the law gives precedence to the nature of the claim and the creditor's interest, permitting enforcement even against property that would otherwise be protected.
Do the 2025 amendments genuinely protect the right to a home: analysis of the conditions for creditors
Although the 2025 amendments to the Law on Enforcement and Security were presented as a response to the need for stronger protection of the right to a home, in line with Article 8 of the European Convention on Human Rights, the legislator chose to introduce this protection through amendments to legislation rather than through constitutional change. Their stated purpose is to protect the most vulnerable members of society from losing their only home.
From a creditor's perspective, however, the critical question is not merely what these amendments aim to achieve, but what their actual effects are in practice. Legal professionals have therefore voiced substantial criticism of the way in which the conditions for exempting property from enforcement have been framed, with legitimate questions raised about whether these rules genuinely deliver on their stated objectives or produce inconsistent and selective outcomes.
Conditions 1 and 2: sole property and registered residence as formal rules with limited reach
The conditions requiring that the property be the debtor's sole property and that the debtor have registered residence there for at least five years prior to filing the enforcement application, with the additional requirement that the address has not been deactivated, significantly narrow the range of cases in which protection can be established in practice.
From a creditor's perspective, this approach produces a dual effect. On the one hand, it prevents abuse and fabricated invocations of the right to a home. On the other hand, the strictly formal criteria (particularly the five-year registered residence requirement) deny protection even in cases where the debtor objectively has only one property but fails to satisfy the administrative conditions. This leaves the court with limited room for manoeuvre, even where it might in practice weigh a broader set of circumstances relevant to determining whether the property is genuinely the debtor's sole home.
Condition 3: floor area as a rigid threshold without room for individual assessment
The cap of 60 sq m further narrows the application of the protection. Because this criterion is not linked to the number of household members or actual living circumstances, the protection is recognised in favour of individuals with greater economic capacity, while simultaneously being withheld from families with an objectively greater need for it.
For creditors, this criterion brings a degree of legal certainty, while also opening the door to arguments about unequal treatment, which may lead to prolonged proceedings and additional litigation.
Condition 4: the claim-to-value ratio as protection dependent on market value
The rule excluding enforcement where the principal of the claim does not exceed half the market value of the property, determined by reference to local authority acts, has particularly significant consequences for creditors. This approach in practice favours owners of higher-value properties, while debtors with more modest assets are more readily exposed to enforcement, even though their debts are often smaller in absolute terms.
For creditors, this means that the prospect of recovery will depend not only on the amount of the claim but also on the location and assessed value of the debtor's property, adding complexity to risk assessment when granting credit or entering into commercial relationships. For companies planning operations in Serbia, this risk deserves careful consideration in the context of Serbian company law and the structuring of commercial arrangements.
Condition 5: prior disposal of property as an exception in favour of creditors
Unlike the preceding criteria, the condition relating to prior disposal of property within the past three years is a mechanism that operates in creditors' favour. It prevents debtors from artificially engineering "sole property" status through sale, gift, or renunciation of other assets, including renunciation of an inheritance.
However, this condition may also produce unintended consequences in practice, as it captures situations where the disposal of property was motivated not by a desire to defeat creditors but by family or traditional considerations. Regardless, from the perspective of enforcement proceedings, the law draws no such distinction, which for creditors means a clearer but stricter rule.
Despite the legislator's intention to strengthen debtor protection through these amendments to the Law on Enforcement and Security, a clear problem remains in practice: the strictly and narrowly defined conditions for exempting the sole property from enforcement mean that enforcement will in the majority of cases continue unimpeded. From a creditor's perspective, this confirms that the legislator has nevertheless sought to preserve the ability to recover debts, at the cost of legal inconsistency and a limited reach of the protection itself.
In other words, although the new provisions formally introduce additional protection mechanisms, their application will be the exception rather than the rule. For creditors, this means that the prospect of enforcement will continue to depend heavily on the specific circumstances of each case, as well as on the ability to identify in good time the situations in which protection cannot be invoked.
In conclusion, the 2025 amendments to the Law on Enforcement and Security represent a limited and partial improvement to the system. While they do not lead to a complete exclusion of enforcement against the sole property, they introduce an additional layer of legal complexity and uncertainty, requiring creditors to plan their debt recovery and security strategies with even greater care.
Frequently asked questions
Can a creditor recover a debt from a debtor's apartment if it is their only property?
It depends on whether all five cumulative conditions introduced by the 2025 amendments are met. If the property is not the debtor's sole property, if its floor area exceeds 60 sq m, if the debtor has not had registered residence there for five years, or if the claim exceeds half the market value, enforcement is permitted. All conditions must be satisfied simultaneously for protection to arise.
What is a non-judicial enforcement mortgage and why does it matter for creditors?
A non-judicial enforcement mortgage is a security interest registered in the real property cadastre. Its key significance is that it removes the protection of the sole property entirely: a creditor who holds a registered mortgage may recover from that asset regardless of all other conditions. This is precisely why banks and financial institutions almost invariably require registration of a mortgage as a condition of lending.
How can a debtor delay enforcement against their property?
The debtor has eight days from receipt of the public enforcement officer's order to file a request with the court for a determination of the property's protected status. Enforcement is obligatorily suspended during those proceedings. In the event of an objection, the decision is made by a three-judge panel. This means that the recovery process can be prolonged even in situations where protection is ultimately not confirmed by the court.
Does the court always verify protection of the sole property, or only at the debtor's request?
The court is required to verify the protection ex officio, regardless of whether the debtor has raised it. This review takes place at the very outset of the proceedings, when the enforcement application is being considered. If the court finds that all conditions are met, the application is dismissed at that stage, before an enforcement order is even issued.
Which categories of claims are not subject to the protection of the sole property?
The law provides five privileged categories that override the protection: claims arising from a criminal offence, statutory maintenance claims, compensation for damage to health, monetary annuity for incapacity to work, and annuities lost due to the death of a person who provided maintenance. In these cases, enforcement against the sole property remains permitted.
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