A private loan against property is often advanced only after a bank has registered a lien for a mortgage over it. The law permits second and further liens over the same property. For a creditor ranking lower, however, a lien is a different kind of security than it is for the bank: it receives only what is left of the proceeds after the creditors ahead of it have been satisfied, and it has less freedom in enforcement. Anyone entering into such a loan should know the rules in advance.
How priority is determined
Where there are several liens, what is decisive for their satisfaction is the order of their registration (Section 151k(1)). In the case of immovable property that special register is the cadastre, and rights are registered in the order in which the documents were delivered to the district office, not by the date on which the office approves the registration (Section 41(2) of Act No. 162/1995 Coll.). When the application for registration is filed after signature therefore determines who will be satisfied first.
Secured creditors may also agree on a different order of priority. The agreement takes effect on registration at the request of all the creditors concerned and is ineffective against a creditor who was not a party to it and whose ability to enforce its claim it would impair (Section 151k(3)); in the cadastre the change of priority is entered by way of a declaratory record (Section 34(1) of Act No. 162/1995 Coll.).
When enforcement is commenced by the first-ranking creditor
Where enforcement is commenced by the preferential secured creditor, typically the bank, the following applies:
Where a lien is enforced by a secured creditor whose lien is registered first in the order decisive for the satisfaction of liens […], the collateral is transferred unencumbered by the liens of the other secured creditors.
— Section 151ma(3) of Act No. 40/1964 Coll. (unofficial English translation)
The second creditor’s lien is therefore extinguished by the sale and converted into a claim to the proceeds. From what exceeds the bank’s claim, after deduction of the necessary costs of enforcement, the other creditors are satisfied in order of priority and the balance belongs to the pledgor (Section 151ma(3) and (4)). Any surplus over the bank’s claim is placed by the bank in notarial custody for the benefit of the other creditors and the pledgor (Section 151ma(5)). Where the sale takes place at a voluntary auction, the auctioneer also sends notice of the auction to persons who, according to the notification of the party proposing the auction, hold a registered lien over the property (Section 17(5)(b) of Act No. 527/2002 Coll.). The second creditor should therefore make sure that its current address is held by the cadastre and by the auctioneer.
When enforcement is commenced by the second creditor
The second creditor may commence enforcement if the debtor is not paying it, even where the debtor is paying the bank duly. It must, however, give written notice of the commencement of enforcement to the creditors ranking ahead of it as well, and may sell only after 30 days have elapsed from that notice (Section 151ma(1) and (2)). In its enforcement the property is sold encumbered by the liens of the creditors ranking ahead of it, and the buyer must be informed of this (Section 151ma(6) and (7)). A buyer of property carrying a bank mortgage will pay correspondingly less. Where the preferential creditor’s claim is due at that time, it may commence its own enforcement and, if it notifies the second creditor of this before that period expires, the second creditor may not continue with its enforcement (Section 151ma(8) and (9)).
The statute also gives the second creditor a tool for turning the situation around:
A secured creditor who, after the commencement of enforcement of a lien by another secured creditor, satisfies on the debtor’s behalf the claim for the satisfaction of which the enforcement of the lien was commenced acquires, by that satisfaction, all the rights of the secured creditor in respect of that claim, including the priority decisive for the satisfaction of liens. The secured creditor who commenced the enforcement of the lien may not refuse satisfaction of the claim by another secured creditor.
— Section 151ma(10) of Act No. 40/1964 Coll. (unofficial English translation)
If the bank commences enforcement and the second-ranking creditor concludes that the sale would not cover its claim, it may pay the bank out, take over its claim together with first priority, and then conduct the enforcement itself. This is worthwhile where the value of the property is sufficient for both claims and where the creditor has the funds to make the payment.
What to consider before advancing the loan
Before signing, the current balance of the bank loan and the interest on it, the value of the property and the other encumbrances, including the statutory lien of the flat owners in the building, must all be verified. Account must also be taken of the fact that the bank’s claim with interest may grow by the time of enforcement. It is useful to check whether the bank’s credit agreement requires its consent to further encumbrance, and to agree in the security agreement an obligation on the pledgor to give notice of any default towards the bank. Enforcement against the collateral may moreover be conducted only where it is conducted by the secured creditor or with its consent (Section 151h(6)).
We prepare a second-ranking security agreement and time the filing at the cadastre as part of our security agreement service. How the enforcement and the auction themselves proceed is discussed in the article on enforcement of a lien over immovable property. Why the statutory lien of flat owners cannot be deleted is explained in the question on the lien of the other flat owners.
How this will work under the new Civil Code
On 1 October 2026, the National Council of the Slovak Republic approved the new Slovak Civil Code, which will take effect on 1 July 2027. The rules described in this article essentially remain in it. Priority will be governed by registration in the cadastre; on enforcement by the bank, the property will be sold free of later liens, on enforcement by the second creditor, encumbered; and if the bank commences enforcement, the second creditor will be able to pay it out and take over its priority. Enforcement proceedings against the collateral will still be possible only with the consent of the secured creditor; this rule remains in the Enforcement Code.
Two things will change for a creditor ranking second:
- A time limit for the bank. If, within thirty days of your notice, the bank does not give notice that it is commencing its own enforcement or wishes to be satisfied from the proceeds, its lien will remain, but as long as you duly continue with the enforcement, it may not commence its own.
- Flats. The statutory lien of the other flat owners will always rank first, ahead of both the bank and you, even without registration in the cadastre. The new code does not repeal Act No. 182/1993 Coll., and for flats that already exist it is not certain whether this priority will apply.
The new rules will apply to liens registered from 1 July 2027; for a security agreement signed earlier and registered only later, this is not certain. Liens created earlier will be assessed under the existing legislation until they cease to exist, including their enforcement. If the bank holds an old lien and you a new one, it is not certain which regime will determine your positions relative to each other.
If you are advancing a loan now and registration takes place by 30 June 2027, the rules described in this article apply to you. With a flat, request a confirmation of arrears from the building manager already now, and agree in the agreement an obligation on the pledgor to inform you of debts owed to the building.
Status as of 22 October 2026: the act has been approved and was signed by the President on 20 October 2026, but has not yet been promulgated in the Collection of Laws. Until 30 June 2027, the rules described above in this article apply.
This article provides general legal information as at 22 October 2026. It does not constitute legal services or advice on your specific matter. Laws change and the details of your situation may differ. Check the appropriate course of action or contact us before making a decision.
