Suspended Family Law and Credit Impact

On Monday, January 12, 2015, the Constitutional Court suspended the new Family Law, adopted in June 2014.

All legal proceedings that took place under the established family law, which was put into effect on the first day of September 2014, have been suspended. Until the final decision of the Constitutional Court is rendered, the old 2003 Family Law applies.

Objections to the New Family Law

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According to judges and attorneys, but also the general public, the new law is fraught with deficiencies in almost all areas regulated by family law (marriage, parent-child relationship, adoption and child custody).

The new family law emphasizes the peaceful resolution of disputes, and thus the relief of the courts. Those in the know believe that our society is not ready to solve problems in this way without some education.

The main argument for the suspension of the law is the fact that the new law is difficult to apply and certain legal provisions are unclear even to experts. The biggest problem is operating procedures that have not been fully developed.

A large part of the institute at the time the law was enacted did not even exist in practice (eg institute of special guardian).

The objection was also raised to the law-making process itself, which did not include the necessary professional staff.

Application for a loan with the new Family Law

Application for a loan with the new Family Law

The application of the new family law also affected banks when granting loans (housing and mortgage loans) which use real estate as an instrument for securing the collection of claims.

Under the new family law, the bank is required to register the lien on the property, to seek the consent of the spouse or extramarital spouse of the landowner of the property.

A spouse or spouse may not, without the written consent of the other partner, sell or encumber a lien on a joint property (eg a family home).

Banks’ view on the application of the new family law

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Most commercial banks have for many years required the signature of the spouse of the seller of the property seller on a separate form, most commonly called the Pledge Debtor Statement, in the process of loan realization.

The said Statement remained in the bank’s archives but was not authenticated by a notary public because the seller’s spouse had not entered into the loan agreement.

In addition to the standard large-scale documentation required to obtain a loan, with the entry into force of the new family law, the property owner (the mortgagee) had to prove the origin of the property.

Thus, the owner of the property being purchased or pledged had to additionally attach to the bank:

  • Statement that the property is not a marital / extra-marital property.
  • The written consent of the spouse for the alienation and / or encumbrance of the real estate constituting the matrimonial property.

The signature of the spouse must have been certified by a notary public.

This law is also subject to the rental of real estate, and for a lease longer than 12 months, the owner of the real estate was obliged to submit the consent of the spouse.

Real Estate Owner Reactions

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Today’s owners who have acquired the property in a marriage or extramarital union often have only one of the partners registered as owners.

In this way, they save time and reduce the supporting documentation needed to buy a property.

When selling the same property, even though only one of the partners is a registered book owner, under the new family law, both partners must sign the documents required for the sale.

The situation is the same with the realization of a mortgage loan for the registration of a lien.

Disadvantages of the New Family Law

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Given the increase in the number of participants in a home and mortgage loan, in addition to the certification of consent, the higher price of the notary public is also affected by the number of certification of the loan agreement.

Namely, each participant has the right to request a copy of the loan agreement, and solemnization is paid by the loan beneficiary.

Potential problems are also complications related to obtaining documentation to prove the manner and timing of the acquisition of the property.

Property owners were further aggravated by the circumstances and the fact that both spouses had to come to the bank and be certified by a notary public.

Benefits of the New Family Law

Benefits of the New Family Law

Under the new law, the ability of one spouse to sell or encumber common property without the knowledge of the other is minimized.

The new family law represented a transparent relationship between the seller and buyer of the property, the bank and the borrower.

The fact that the spouses had to participate in the realization of the loan, ie the registration of the lien, guaranteed the bank greater security of regular repayment of the loan.

As things stand now, some changes will have to wait. With the suspension of the New Family Law, some lost and some profited.