ln conformity with Article 88, Point 2 of the Constitution of Montenegro, I declare the
E D I C T
PROMULGATING FIDUCIARY TRANSFER OF PROPERTY ACT
Promulgated is the Fiduciary Transfer of Property Act, adopted by the Assembly of the Republic of Montenegro on the third sitting of the first regular session of the year 1996, held on July, 9, 10, 11, 12, 15, 17, 18 and 24, 1996.
No: 01-613
Podgorica, July 26, 1996
President of the Republic of Montenegro
Momir Bulatovic,
FIDUCIARY TRANSFER OF PROPERTY ACT
Article 1
Notion of contact (for movable things)
With the contract of fiduciary transfer of property on a movable thing the debtor or a third party transfers the right of ownership to the creditor in order to secure discharges of claim and the creditor assumes the obligation, after settlement of his claim, to enable the debtor an undisturbed enjoyment of the right of ownership.
Notion of contract (for immovable things)
With the contract of fiduciary transfer of property on an immovable thing the debtor or a third party assumes the obligation to transfer the right of ownership to the creditor in order to secure discharges of claim and the creditor assumes the obligation, after settlement of his claim, to enable the debtor an undisturbed enjoyment of the right of ownership.
Made of acquisition of the right of ownership
Right of ownership on an immovable thing is acquired by registering into hand registers or other public registers and by an entry concerning fiduciary transfer of property.
Form of contract
The contract of fiduciary transfer of property must be concluded in written form, and in the case of immovable objects the contract must be authenticated by the court.
Article 2
Security for future or conditional obligation
Fiduciary transfer of property may be executed in order to secure a future or a conditional obligation.
Article 3
Extension of security to other obligations of a debtor
With fiduciary transfer of property which secures the fulfillment of some obligations, also secured are other obligations which may arise between creditor and debtor after conclusion of the contract on fiduciary transfer of property, which may mature for discharge before the pagement of obligations because of which the transfer of property has been performed, if the parties have not agreed otherwise.
Article 4
Prohibited provisions
Null and void is the provision of fiduciary transfer of property which prescribes that the things which are the object of this transfer will definitely become the property of the creditor if his claim is not discharged on maturity, without a prior procedure prescribed by this Act, as well as a provision which allows the creditor to use the burdened thing, to collect fruits of a thing, or use the thing in any other way.
Allowed provisions
Contracting such provisions is allowed only after eight days have elapsed since the inception of claim.
Article 5
Specification
Things which serve as security must be precisely specified (principle of specialty)
Object
Fiduciary transfer of property refers to the thing in its entirety, its fruits while they are not separated and all other component parts and accessories.
Article 6
Commodities supplies
Contract of fiduciary transfer of property may refer to supplies of end products (machines, automobiles and other supplies of commodities).
Minimum commodities for security
The contract obligatorily stipulates the existence of minimal quantity of commodities in the supplies, the value of which secures the claim.
Article 7
Informing the creditor
The debtor has a duty to inform the creditor by appropriate commercial paper about every affair of his, concerning commodities in the supplies.
Article 8
Depriving of supplies of commodities or premature sale
If the debtor does not take care of the supplies of commodities or commodities as required and generally behaves in a manner which is contrary to contract and law, at the request of the creditor the court will order the supplies of commodities or commodities to be taken away from the debtor and be delivered to a third party or will order a premature sale of things when it is so justified.
Article 9
Specification of supplies commodities
Commodities which serve as security must have a fixed value, must be marked and located in a special place.
Replaceability of commodities
After having obtained the consent of the creditor the debtor may replace the commodities in supplies with other commodities of equal value.
Article 10
Right of possession
In the case of fiduciary transfer of property the possession of things rests with the debtor or with a third party who is the transferor of the right of ownership.
Custody by a third party
Creditor and debtor may agree that the things which are the object of the contract or that the document bestowing on the holder exclusive right of disposition be delivered to the custody of a third party.
Mutual custody of things or a document
The parties of the contract may agree to mutually take care of things or a document.
Article 11
Duty of custody of things
The debtor has a duty to take care of the things a holder in good faith and a prudent administrator.
Delivery of things
The debtor has a duty to deliver things to the creditor in case he does not pay the debt on the expiration of the time limit agreed upon.
Article 12
Information concerning the changes on things
The debtor has a duty to inform the creditor about all changes which befall the burdened things, and specially about their deterioration or loss of value, otherwise he will be liable for damages produced.
Article 13
Using the thing and collecting the fruits
The debtor has a right to use the burdened thing and to collect fruits of a thing but does not have a right to deliver a thing to be used by a third party, unless allowed by the creditor to do so.
Liability of debtor
If the debtor delivers a thing to be used by a third party without permission of the creditor, he is liable even for a fortuitous distribution of a thing or a damage which would befall in such a circumstance.
Article 14
Right of creditor to fruits
The creditor has a right to the fruits which the burdened thing yields from the moment of the final acquisition of a thing.
Article 15
Sequestration
At the request of the creditor the court will order the burdened thing to be dispossessed from the debtor and be delivered to a third party in case the debtor does not take care the thing appropriately or delivers the thing to a third party to use it without permission of the creditor or generally treats the thing contrary to contract or law.
Article 16
Right of supplement of security
The creditor has the right to request from debtor or a third party another thing if the burdened thing has material of legal defects which renders it insufficient for discharge of claim.
Article 17
Premature sale of a thing due to its deterioration or loss of value
When the burdened thing deteriorates or loses value so there exists the danger that it becomes insufficient to secure creditors claim the court may, at the request of creditor or debtor and after having heard the opposite side, order the thing to be sold at a public auction or at a stock market or market price if there is one, and that the price or a sufficient part of it be deposited at the court in order to secure the creditors claim.
Replacement of a thing
The court will reject the request of the creditor if the debtor offers to transfer right of ownership to the creditor on some other thing which is at least of equal value and this thing takes the place of a previously burdened thing.
Replacement of thing at the request of debtor
Under the terms from Paragraph 1 of this Article the court will allow the replacement of the burdened thing at the request of the debtor even in the case when the creditor does not request its sale.
Article 18
Right of creditor to sell the thing
The creditor acquires the right to sell debtors things when the debtor does not perform his obligation on maturity.
Premature sale of a thing
With the consent of the debtor the creditor may, after inception of claim, sell the burdened thing to a specific person, if he concludes that the price is reasonable.
Real subrogation
The realized price or a sufficient part of the price comes into the place of the burdened thing and is deposited at the court in order to secure discharge of creditor's claim.
Article 19
Creditors request for delivery of a thing
The creditor may request the delivery of a thing the moment the claim matures for discharge.
A retransfer of property to debtor
If the debtor discharges the performance he owns the property is automatically retransferred back to the debtor.
Article 20
Sale or retention of a burdened thing
If the creditor's claim is not discharged upon maturity the creditor may sell the thing at a price assessed by an expert or if he so wills retain the thing at such a price.
Sale of a thing in case of commercial contracts
If the debtor does not discharge upon maturity the claim originating from a commercial contract, the creditor may proceed to sell the burdened things at a public auction, only after eight days have elapsed since the cautioning made to the debtor or a third party who is the transferor that he shall so proceed.
Informing about the sale
The creditor has a duty to inform both persons in due time about the date and place of the sale.
Sale of thing at market or stock market value
If the burdened things have market or stock market price the creditor may sell them at such price only after eight days have elapsed since the cautioning of debtor or the third party who is the transferor, that he shall so proceed.
Article 21
Commercial customs and commercial standards
All the measures the creditor takes in order to settle his claim must be in conformity with existing commercial customs and must be commercially reasonable.
Article 22
Right of settlement
The creditor has a right to settle his claim, matured interest and expenses concerning settlement of claim from the price realized by the sale of the burdened thing.
Duty to restitute surplus
If the value of the thing is greater than the value of the claim the creditor has a duty to restitute the difference to debtor or a third party who is the transferor within eight days from the day of the settlement.
Article 23
Registration of contract
The contract on fiduciary transfer of property is registered into public registers which the specialized agency keeps.
Nullity of contract
The contract which is not registered is null and void.
Time period for registering the contract
The contract must be registered within eight days from the day of the conclusion of contract.
Article 24
Filing the declaration
Declaration to register the contract is to be singed by both parties.
Contents of declaration
The declaration contains name and address of the parties and data concerning the things which must be described.
Signing the declaration
The debtor has to sign the declaration which states the entire amount of his debt with its situation on a certain date.
Confirmation by creditor
The creditor has a duty to confirm this declaration.
Issuing the certificate at the request of third person
Specialized agency has a duty to issue the certificate with all data contained in the declaration at the request of every third person.
Article 25
Publicity of register
The register is public.
Contents of registration
The registration must contain the description of particular marks of the burdened thing.
Minimal data for registration
In case such marks do not exist, in the registration then must be marked the type and number of the burdened thing.
Article 26
Marking the things
Specialized agency performs the marking of burdened things.
Assessment by an expert
Agency from Paragraph 1 of this Article performs the assessment of burdened movable and immovable commodities in the supplies and registers the corresponding data in the register (assessment by the expert)
Article 27
Informing tax authority
Specialized agency has a duty to inform the competent tax authority about definitive acquisition of the right of ownership on immovable things within the time period of eight days from the day of definitive acquisition.
Article 28
Cessation of the right of ownership
Creditor’s right of ownership on burdened thing ceases to exist.
Cessation of claim
1) when the claim whose fulfillment has been secured ceases to exist;
Renunciation by the creditor
2) when the creditor renounces the right of ownership on immovable things with a written declaration given at state’s competent organ which keeps the cadastral survey or real property, while in the case of movable things a written declaration will suffice.
Destruction of a thing
3) when the burdened thing is destroyed and is not reconstructed.
Article 29
Cancellation from register
When the claim ceases to exit the debtor may request the cancellation of contract from register.
Declaration of creditor
In the case from Paragraph 1 of this Article the debtor shall demand from creditor a declaration stating that the claim has ceased to exist and that his security does not exist any more.
Liability for damages
In case the creditor refuses the declaration he is liable for damages produced by such an act.
Document concerning the cessation of claim
The declaration of the creditor can be substituted with a document which clearly demonstrates that the claim has ceased to exist.
Article 30
The coming into force
This Act comes into force on the eight day after publication in the “Official Gazette of the Republic of Montenegro”