Damages from the republic of Croatia - problem of protected rent

Damages from the republic of Croatia - problem of protected rent

The legal relationship between apartment owners and protected tenants in the Republic of Croatia is regulated by the Apartment Rental Act (National Gazette 91/96, 48/98, 66/98, 22/06, 68/18, 105/20). The status of a protected tenant was acquired by the entry into force of the said law by individuals who, in the previous socialist social order, had the legal status of occupancy right holders.

Protected tenants continued to use apartments that were never their property, while the owners were still left without the possibility of exercising authority over their property, in most cases obliged to suffer the imposed legal restrictions.

Often in such residents live socially disadvantaged individuals of the society, without owning any other real estate, thus the protected rent is largely lower than the market rental price. The situation described of apartment owners is not favorable, as the current legal regulation does not allow them complete freedom over their property rights, which are a fundamental human right guaranteed by Article 1 of the Protocol to the European Convention on Human Rights.

Excessive interference by public authorities and unjustified restriction of private property cause significant material damage to citizens. If the state did not impose this obligation to the owners to take care of certain groups of citizens, the owners could use these apartments for their own needs or for renting with conditions set at their own pace.

The case law in this area of ​​law has already laid its foundations, including the Supreme Court of Croatia in the case no. Rev-2364/16, whereas deciding on the lawsuit of the owner of the apartment in which the protected tenant was sued for damages, concluded that “the Republic of Croatia, due to the violation of the Constitution and the Convention on the guaranteed property right, must compensate the damage to the owners of apartments in which the protected tenants live". This decision greatly opens the door for other owners to initiate proceedings for damages and, thus, puts pressure on the Republic of Croatia to adequately regulate their relation with protected tenants, respecting their seemingly conflicting interests.

Finally, with the recent decision of the Constitutional Court no. UI/3242/2018 of 14 September 2020, a number of provisions of the Apartment Rental Act were repealed, including a provision that predicted  termination of the right to protected rent on September 1st 2023. Therefore, the future of the relation between apartment owners and protected tenants is currently uncertain, so the owners are left with no choice but to seek compensation in the form of material damage from the Republic of Croatia, which after 25 years of the enforcement of the latest apartment rental law did not enable fair distribution of burden of care for the protected tenants.