A notation due to unauthorized construction is entered in the land register ex officio, as Article 108 of the Construction Act (hereinafter: GZ-1) stipulates that after issuing a decision imposing an inspection measure in relation to an unauthorized structure or non-compliant use of a structure, the competent inspector must immediately notify the land registry court, which, on the basis of an enforceable decision, shall ex officio enter in the land register a note of the inspection measure imposed and the specific prohibitions imposed by the competent inspector, depending on the type of structure or type of construction. In accordance with Article 107 of GZ-1, the competent inspector may prohibit the following acts:
– the connection of utilities to public economic infrastructure,
– the sale of the structure or the land on which the structure is located,
– the use of the structure or the performance of economic or other activities,
– the conclusion of legal transactions in relation to the unauthorized structure, except for credit transactions,
– the assignment of a house number.

In practice, there are frequent situations where parties are unable to dispose of real estate due to a notation of unauthorized construction, as provided for in Article 100.a of the Land Registry Act (hereinafter: ZZK-1). In accordance with Article 99 of ZZK-1, a note in the land register due to unauthorized construction is an obstacle to the registration of rights if the signature on the land register permit was certified after the moment from which the note takes effect or if the notarial record was drawn up after that moment. This means that in the case of an entry due to unauthorized construction, it is not possible to conclude a legal transaction for the property in question and, on that basis, to enter real rights (ownership, easement, real burden, and building rights) in the land register.

In case VSK Decision CDn 197/2019 of October 15, 2019, the Higher Court in Koper explicitly emphasized that due to the prohibition of unauthorized construction on the property in question, it is not permissible to grant the request for registration of building rights, as this involves the acquisition of a real right on a legal basis, and the signature on the land registry permit was certified after the date on which the prohibition took effect. Not only does the land registry court reject such proposals, but in accordance with Article 107 of the GZ, all permits, consents, and legal transactions are null and void unless permitted by law. As an exception, however, the registered annotation does not prevent further land registry entries if the application for registration is accompanied by the inspector’s decision. The latter may only be issued if the actions are necessary for the implementation of inspection measures or for obtaining permits and decisions and performing other prescribed actions under the GZ-1, whereby the seriousness of the intention is demonstrated by submitting the relevant documentation. The inspector’s decision will usually be issued when the land registry owner of the property on which the note is registered is obliged to conclude certain legal transactions and have them entered in the land register for the purpose of legalizing the building for which the decision was issued and, on that basis, the annotation for unauthorized construction.

The exception regarding the registration of real rights on real estate encumbered with a note of illegal construction only applies to mortgages that are liens on real estate, as GZ-1 expressly stipulates that a black construction notice is not an obstacle to the conclusion of credit transactions that form the basis for the creation of a mortgage.

It is also important to emphasize that Article 108 of the GZ-1 stipulates that the land registry court shall enter a note in the land register due to unauthorized construction even if the owner of the land or building is not the same person as the inspection obligor. This is a departure from the principle of legal predecessor stipulated by ZZK-1, according to which entries are permitted (only) against the person against whom the document on which the entry is based is effective and who is entered in the land register as the holder of the right to which the entry relates. This means that the inspection authority issues a decision which the land registry court will enter in the land register for the entire property, even though the unauthorised structure was built by several co-owners, one of whom, due to their insignificant share, was unable to influence the disposal and management of the property. In such a case, this co-owner will also be restricted in the disposal of their co-ownership share.¹

Since it is prohibited to conclude legal transactions relating to real estate on which a note has been entered due to unauthorised construction, situations often arise in practice that restrict not only the owner of the real estate on which the note is entered, but also the owners of neighbouring real estate. In the event of a need to establish a right of way or communal infrastructure on the property with a registered note, the latter will not be able to establish a right of way on the basis of a legal transaction. In such a case, the only option left to them is to file a motion for the determination of a necessary right of way in non-contentious proceedings, which of course represents an additional time and cost burden for the party.

[1] Decision of the Higher Court in Koper CDn 247/2016 of 7 December 2016