For everyone planning to lend more than EUR 10,000, recent amendments to the Law on Public Notaries now require the involvement of a public notary. These changes introduce the obligation for loan agreements between individuals to be formalized as notarial deeds when the amount exceeds EUR 10,000. Previously, such transactions were not required to undergo notarial certification, leaving many dealings beyond the oversight of the authorities.
Under the new provisions, public notaries will convert private documents into public ones through the process of certification (solemnization). Failure to formalize such agreements as notarial deeds will render them null and void, potentially leaving parties unprotected. Additionally, a registry of these agreements will be established, allowing the Administration for the Prevention of Money Laundering to monitor transactions in real time, significantly enhancing the supervision of financial dealings between individuals.
While loan agreements can still be either oral or written, they must now be solemnized exclusively by a public notary if the amount exceeds EUR 10,000. In accordance with the Law on the Prevention of Money Laundering and Terrorism Financing, cash transactions exceeding EUR 10,000 are prohibited and must be conducted through a bank account. However, these amendments will not provide absolute oversight for the Administration over all transactions between individuals, as existing regulatory mechanisms are primarily designed for legal entities.
With the establishment of the registry, public notaries will be obliged to immediately submit a certified copy of the agreement to the Administration for the Prevention of Money Laundering, along with information on the lender, the borrower, the loan amount, repayment terms, and the currency of the loan. This will ensure a higher level of transparency and control over such transactions.
It is important to note that these requirements apply exclusively to loan agreements between individuals, while loans provided by banks and financial institutions remain governed by separate regulations.
The Ministry of Justice, which already maintains a registry of real estate contracts, has announced that it will develop, in collaboration with a specialized service provider, a new module for the registry of loan agreements, further securing the oversight of these transactions.
These legislative changes mark a pivotal move toward enhanced transparency and oversight of significant financial transactions between individuals. It is essential for everyone considering a loan agreement exceeding EUR 10,000 to be aware of these new obligations moving forward.
For more information, please contact Doklestic Repic & Gajin associate Mr. Luka Stojiljkovic.