Retention of Title in Slovenia

Yes, the concept of retention of title (pridržek lastninske pravice) exists under Slovenian law.

A retention of title is a specific contractual clause, typically included in a sales agreement involving movable property. Under this clause, the seller retains ownership of the goods until the purchase price is paid in full, even if possession has already transferred to the buyer. During this time, the buyer assumes the risk of accidental loss or destruction but may use and enjoy the goods. The clause serves as a form of security for the seller.

However, issues can arise if the buyer resells or transforms the goods. In such cases, the original seller’s ownership may be extinguished despite the retention of title, as the buyer acquires title to the newly created item. To address various risks, Slovenian law recognizes several variations of the retention of title, including the extended retention of title and the retention with a transformation clause.

• Extended retention of title: If the buyer resells the goods to a third party, the original seller acquires a lien over the buyer’s claim against the third party.
• Retention with a transformation clause: If the goods are transformed, ownership of the new item passes to the original seller (contrary to the general rule where the buyer becomes the owner).

While retention of title clauses are commonly included in the seller’s general terms and conditions, caution is needed. An agreement that includes such a clause is only effective between the parties (inter partes) unless the buyer’s signature is notarised. Without notarisation, the clause has no effect against third parties (erga omnes), including creditors or in insolvency proceedings.

Under private international law, rights in rem (i.e. ownership rights) are governed by the law of the country where the property is located (lex rei sitae). Therefore, if the movable property is located in another jurisdiction, the legal effectiveness of the retention clause against third parties is determined by the law of that country.

Retention of title clauses may be included in framework agreements and/or in the general terms and conditions of sale. For the clause to be valid between the parties, the goods must be described with sufficient precision.

For the clause to be enforceable against third parties, in addition to adequate specification of the goods, formal requirements such as notarisation of the buyer’s signature must also be met.

To ensure that a retention of title clause is enforceable against third parties in bankruptcy or enforcement proceedings, certain formalities must be satisfied in addition to the general requirements (e.g. the clause must be permissible, and the goods must be clearly defined or identifiable).

The key formality is notarisation of the buyer’s signature on the agreement. This notarisation may be performed by either a Slovenian or a foreign notary.

Only a properly formalised agreement will have effect against third parties, such as:

• In enforcement proceedings against the buyer, the seller retains a third-party claim to the goods.
• In bankruptcy, the seller has the right to separate recovery or set-off of the goods.

No specific formalities are required for the clause to be effective between the contracting parties.

However, if the clause is intended to be effective vis-à-vis third parties—especially in execution or insolvency situations—the buyer’s signature must be notarised. Without notarisation, the retention of title clause will not be enforceable against third parties.