Law on Conversion of Housing Loans Indexed in Swiss Francs
As one of the most heavily debated issues in the recent years, the housing loans indexed in Swiss Francs (“CHF”), especially triggered interest of the public in April of this year when the Supreme Court of Cassation issued a legal opinion holding the currency clause of such housing loan agreements null and void (under certain conditions), and providing for the conversion thereof into Euros (“EUR”). After the issuance of this legal opinion, it was decided to resolve this issue by enacting a special statute by the legislature. Thus, the Law on Conversion of Housing Loans Indexed in Swiss Francs (“Official Herald of RS“, No. 31/2019, the “Law“) was enacted and came into force on 7 May 2019.
The Law shall apply to the loan agreements indexed in CHF provided that, at the effective date of the Law, the repayment of the loan is still ongoing (unless the conversion into EUR has already taken place), as well as to the loan agreements and housing loans where the loan debt matured in full but no enforcement proceeding or out-of-court settlement has been initiated, as well as to the cases where the debt has not been paid in full. Hence, the Law does not apply to CHF borrowers who have already paid their respective loans.
In relation to the method of implementation of the conversion and the debt reduction, the Law prescribes that all commercial banks have to, within 30 days as of the effective date of the Law, offer to their CHF-indexed loan borrowers the conversion of any outstanding amount into an EUR-indexed loan, using the middle exchange rate of the National Bank of Serbia as at the conversion date. The Law provides that the debt upon such conversion shall be reduced by 38%, where the state shall, on request, reimburse the banks 15% of their loss. Interest rate applicable to EUR as at 31 March 2019 shall apply to the converted and reduced amount of the loan, if applicable.
All pending litigations related to the CHF currency clause shall be stayed, while enforcement proceedings shall be postponed.
For all questions and legal assistance in relation to the Law, you may contact us at email@example.com.