New rules for a loan agreement over 10,000 euros – mandatory solemnization by a notary
If you lend or borrow money in the amount of 10,000 euros or more, from December 6, 2024, the Law on Public Notaries stipulates that such a loan agreement must be solemnized, i.e. certified by a notary public. The loan agreement is regulated by the Law on Obligations and the said law allows even the oral form of the loan, however the Law on Public Notaries now tightens the form when the subject of the loan is money in the specified amount or more. This was done by stipulating that in the form of a notarially confirmed (solemnized) document, a loan agreement between natural persons in the amount of 10,000 euros and more is concluded at the middle rate of the National Bank of Serbia on the day of confirmation (solemnization).
What is the solemnization of the loan agreement?
Solemnization means that the public notary confirms the legal validity of the contract and warns the parties of the legal consequences. This ensures the legal certainty of the lender and the borrower.
Why 10,000 euros?
The threshold is set at 10,000 euros due to compliance with the rule from the Law on Prevention of Money Laundering and Financing of Terrorism that the limit for cash transactions is 10,000 euros, and transactions over this amount must go through a bank.
The Register of Loans was introduced – additional control
A register of loans maintained by the Ministry of Justice was introduced, within the already existing application for recording real estate contracts. The notary public is obliged to submit a certified copy of the contract to the Directorate for the Prevention of Money Laundering after solemnization and to enter in the loan register:
-identification data about the lender and the borrower
-loan amount and currency
-return deadline
-date of certification
Does the law also apply to loans in dinars?
Yes, the law applies to all currencies – the dinar equivalent of 10,000 euros at the middle exchange rate of the National Bank of Serbia on the day of solemnization.
Can the loan funds be paid in cash?
No, the Law on Prevention of Money Laundering and Financing of Terrorism stipulates that transactions over 10,000 euros must go exclusively through a bank.
Is a verbal loan agreement still allowed?
A verbal contract for smaller amounts is allowed, but it is not valid for loans of 10,000 euros or more – in these cases, a written form and formalization is necessary.
What happens if I do not certify a loan agreement for an amount greater than 10,000 euros?
The loan agreement will not be valid before the court. Certainly, this does not affect the rules on acquisition without grounds (unjustified enrichment), however, in case of misunderstandings, delays or court proceedings, the party is at risk of not being able to fully protect its money and other rights.
Does a lawyer have to be involved in this process?
It is not legally required, but it is highly recommended. A lawyer can protect the client’s interests, draw up the contract correctly and monitor the whole process at the notary.
Attorney Danilo Babić – legal assistance with the loan agreement
Our services include:
– drawing up a loan agreement
– preparation of documentation for solemnization at the notary
– legal risk analysis and protection of the client’s interests -consultation regarding terms, interest, security and payments
– assistance with communication with the notary public and contract registration
Danilo Babić- lawyer in Novi Sad
