Remove mortgages on repaid loans in Serbia
Under the new Law on the Protection of Financial Services Users, all credit providers, including banks, are required to unilaterally delete registered mortgages and pledges on loans that have been fully repaid, no later than July 1, 2025. This obligation is automatic and unconditional — banks are not allowed to request any initiative from clients, such as filing applications, submitting documentation, or paying fees. The law explicitly prohibits banks from requiring notarized statements, collecting additional documents, or charging any service-related costs for the removal process.
This legislative change represents a significant shift in consumer protection policy in Serbia, aiming to reduce administrative burdens on clients and ensure greater legal certainty in property and banking relations. The measure addresses a long-standing issue in which banks left mortgages and pledges registered even after loans had been fully settled, forcing clients to bear the cost and effort of initiating their removal. Now, the duty is entirely on the bank or credit institution to handle the deregistration process in a timely and efficient manner.
What Are Banks Required to Do?
Banks and other credit providers are legally obligated to:
- Independently verify that the loan has been fully repaid;
- Obtain all necessary internal and external documentation related to the mortgage or pledge;
- Issue a discharge statement;
- File a request for removal with the competent land registry;
- Notify the client upon completion of the deregistration.
This legal requirement applies not only to new loans repaid after the law enters into force, but also retroactively — including loans that were repaid years or even decades ago but where the encumbrance remains registered.
Retroactive Effect and Legal Certainty
One of the most important aspects of the new regulation is its retroactive effect. Regardless of when the loan was fully repaid, if the encumbrance remains registered, the bank must initiate and complete the deregistration process by July 1, 2025. This provides a clear legal remedy for thousands of individuals and businesses who, despite fulfilling their loan obligations, still have active mortgages registered on their real estate or movable property.
Potential Challenges and Legal Risks
While the legal framework is clear, implementation may face practical obstacles. Clients should be aware of possible delays, particularly in cases involving:
- Mergers or acquisitions of banks where original loan documentation may be archived or lost;
- Legacy IT systems that do not have automated access to old loan records;
- Institutional reluctance or administrative backlogs in larger banks.
In such cases, if a bank fails to remove the mortgage or pledge by the deadline, clients may have the right to:
- Demand immediate compliance through legal notice;
- File complaints with the National Bank of Serbia or other competent bodies;
- Initiate civil proceedings and seek compensation for damage or delays caused by the bank’s failure to comply with its legal obligations.
Whether you are a private individual who paid off a housing loan years ago, or a company managing assets that still carry encumbrances, our firm is ready to ensure your rights are protected and that banks meet their legal duties.
The information provided in this document does not constitute legal advice on any specific matter and is provided for general informational purposes only.
