Support contracts

Support contracts – for lifetime support and support until death – are regulated by the provisions of the applicable Obligations Act. Frequent abuses of these contracts have led to their perception as risky agreements. Although the purpose of these contracts is to protect elderly and disabled individuals regarding their support, care, and assistance, they have, in certain cases, become instruments of fraud and a means to deprive such vulnerable groups of their property. Therefore, recognizing the need for greater control over the conclusion of these contracts and the fulfillment of the obligations undertaken by them, the latest amendment to the Obligations Act has altered the regulation of these contracts.

Contracts for support: Difference between contracts for support until death and lifetime support

The primary difference between these contracts lies in the timing of the transfer of the supported person’s property to the provider of support. In a contract for lifetime support, this transfer occurs after the death of the supported person, whereas in a contract for support until death, the property of the supported person transfers to the support provider upon the conclusion of the contract, i.e., during the lifetime of the supported person.

Limitation on the number of supported persons

A provider of support may simultaneously support a maximum of three (3) recipients of support. Before notarizing or drafting the contract, the authorized person must verify the number of supported persons with whom the provider of support has concluded contracts.

Form of the cntract

The contract must be in written form and notarized by a judge or certified by a public notary, or it must take the form of a notarial deed. If the contract is not in the specified form, it is void.

Informing the parties of the contract’s content and obligations

The authorized person is now required to ensure that both parties understand the rights and obligations arising from the contract by posing direct questions. Previously, the authorized person was only required to read the contract and warn the parties of its consequences. Thus, the introduction of the obligation to verify the understanding of the rights and obligations arising from the contract provides a higher degree of security for the contracting parties.

The authorized person must specifically warn the contracting parties about the timing of the transfer of the supported person’s property to the provider of support. This is particularly important in contracts for support until death, as the property of the supported person transfers to the provider of support simultaneously with the conclusion of the contract. Additionally, it is essential to note that ownership of real estate is acquired by registering this right in the land registry. Therefore, regarding real estate, the transfer of property to the provider of support occurs by registration in the land registry.

Establishing servitude / Real burden

When concluding a contract for support until death, the authorized person should point out the advantages of establishing personal servitude and retaining a real burden in favor of the supported person.

In other words, if the subject of a contract for support until death is real estate, the contract establishes a right of residence servitude in favor of the supported person, unless they object. It is crucial to note that the real estate must be suitable for habitation.

The registration of ownership rights based on a contract for support until death and the registration of servitude rights are simultaneously entered into the land registry.

Additionally, if the subject of a contract for support until death is real estate, the contract may stipulate that a real burden of support be established on it in favor of the supported person. This means that the real burden of support encumbers the current and any future owners of the encumbered property. Thus, with the transfer of ownership rights to the real estate, the obligation to fulfill the content of the real burden of support also transfers to the new owner of the property.

Annotation in the land registry

If the subject of a contract for lifetime support is real estate, the authorized person submits the contract to the land registry court for the registration of an annotation of the contract. If the subject of the contract for lifetime support is movable property or a right recorded in a public register, the authorized person submits the contract to the authority responsible for maintaining the register for the annotation of the contract.

Introduction of a Register

The latest amendments to the Obligations Act provide the introduction of a Register of contracts for lifetime support and contracts for support until death, which will be established and maintained by the Croatian Notary Chamber.

This register will include information on concluded contracts, amendments, and terminations of contracts, proceedings initiated for their modification, termination, declaration of nullity or annulment, the manner of final resolution of these proceedings, and the cessation of obligations under them.

This article provides general legal information and cannot be considered legal advice for specific situations. If you require legal services regarding legal advice or for the initiation of compensation proceedings, please contact us with confidence.