Lifetime and Death Maintenance: Cosmetic Changes to Existing Regulations That Were Not Implemented

The Ministry of Justice and Administration has submitted for e-Consultation amendments to the Law on Obligations (ZOO) and the Law on Civil Procedure (ZPP), which introduce a register of contracts for lifetime and death maintenance and limit the number of possible contracts. It has been announced that the aim of these amendments is to prevent the abuse of the institute of lifetime and death maintenance contracts.

These are contracts whereby maintenance recipients, i.e., property owners, commit to transfer their property to the maintenance provider either at the time of signing the contract or at the time of death, in return for which the maintenance provider commits to maintain the maintenance recipient, i.e., to fulfill obligations clearly stipulated in that contract. Thus, the act and counteract are clearly defined. Now, the Ministry has concluded that these institutes are being abused, so it proposes, of course, amendments to the law.

What are these ‘salvatory’ amendments

The Ombudswoman reported that in 2021, more than 7,500 contracts for death and lifetime maintenance were concluded, and ‘research’ showed that 63% of individuals who entered into such contracts did not inquire beforehand about the rights and obligations arising from them. It was also concluded that maintenance recipients do not know the difference between a lifetime maintenance contract, under which property passes to the maintenance provider at the time of the maintenance recipient’s death, and a death maintenance contract, under which property passes to the maintenance provider at the time of signing that contract.

Thus, due to ignorance of the effects of these contracts, legal amendments are now being planned. It has been announced that a register of lifetime and death maintenance contracts will be established, which will be maintained by the Croatian Chamber of Notaries and will include data on concluded and terminated contracts as well as proceedings initiated to determine nullity, annulment, or termination of such contracts. It should enable verification of whether the contractors have already entered into lifetime and death maintenance contracts and with how many. New developments also include limiting the number of such contracts to a maximum of three and stipulating provisions on ‘establishing servitudes and retaining real burdens’.

How many more warnings

However, existing legal solutions equally protect both parties and provide sufficient legal security to the maintenance recipient, both at the time of signing the contract and in the event that the maintenance provider fails to fulfill their obligations to the maintenance recipient. For example, Article 580 of the ZOO already stipulates that a lifetime maintenance contract must be drawn up in writing and must be certified by a judge of the competent court or confirmed (solemnized) by a notary public or must be drawn up in the form of a notarial act.

The same article stipulates that the judge or notary public, when certifying or drawing up, is obliged to read the contract to the contractors and warn them of its consequences. Thus, the existing legal solution has eliminated the need for legal amendments due to the fact that maintenance recipients ‘are not aware of what they are signing’. Furthermore, if the maintenance provider fails to fulfill their obligations, the maintenance recipient can demand the termination of the contract (Article 583, paragraph 3 of the ZOO). These legal provisions also apply in the case of concluding a death maintenance contract (Article 589 of the ZOO). Additionally, existing ZOO solutions empower the maintenance recipient, and even their successors, to seek judicial determination of the nullity of these contracts for many reasons indicated by the provisions of the ZOO.

Protective mechanisms

For the death maintenance contract, it is clearly stipulated that the maintenance recipient can determine that a real burden of maintenance be established in their favor on the property that the maintenance provider acquires at the moment of signing the contract. In that contract, it is also possible to agree on any servitude prescribed by the provisions of the Property Law, including the right of usufruct, the right of use, or the right of residence, which is now prescribed as mandatory.

The last amendment that limits the number of such contracts to three is superfluous, as it is common practice for maintenance recipients to transfer all their property to the maintenance provider with one contract. How partial legal interventions can raise questions and ambiguities is evident in this case as well. Parties must be responsible and aware of the rights and obligations they undertake, and the law already sufficiently protects individuals whose position and condition the other party intends to abuse.

It has also become merely a cosmetic legal amendment to prescribe the urgency of certain court proceedings, which is also proposed in these legal amendments regarding termination, determination of nullity, and annulment of contracts. How urgent the procedure will be depends on many factors that neither the parties nor the court can influence, as has been shown by previous court practice. Regulations should be applied, not frequently changed.