At Croatia property FAQ, you can find answers to a wide variety of the most commonly asked questions from buyers looking to purchase Croatia property. We have answered the questions with the best of our knowledge at the time of writing. For further information to any of the questions below please do not hesitate to get in contact.
Croatia property FAQ
How do the utility bills get transferred into my name?
Your solicitor or local real estate agent will handle this process, once the property has been handed over to you. Prior to hand over the seller must give meter readings to the relevant utility companies to enable them to issue him / her with a final bill up to the date of hand over. The seller must settle any outstanding payments and then with a copy of the real estate purchase contract you can be registered as the new owner on the account.
When can I take possession of my Croatia real estate?
Usually the buyer can take possession of the property as soon as the following conditions have been met; the final contract has been signed and authorized by both parties; the full purchase price has been paid; and the “Clausula Intabulandi“ has been issued. Clearly this can change depending on what has been negotiated by the buyer and seller.
How do I register the title of the Croatia property I have purchased?
On signing the real estate purchase contract, your solicitor will register it with the relevant land registry and ‘note’ will be marked on the title deeds. This ‘’note’ is visible for all to see should subsequent searches be made on the property. This is called ‘pre-registration’ in Croatia, it means you the buyer are first in line to receive title. However, to make full registration, the solicitor must receive a notorised “Clausula Intabulandi” (in Croatian: “Tabularna Izjava”) from the seller. This is a document that states you, the buyer, have fulfilled all contractual obligations with regards to the property purchase, the most important of which is that you have paid the full purchase price and that the seller has received it. With this document you no longer need any further permission or involvement from the vendor to register the property in your name with the Land Registry. If you also required permission from the Ministry of Justice, both the “Clausula Intabulandi” and the confirmation of MOJ permission must be presented to the land registry for you to obtain title.
Does the buyer need to verify his signature with the notary public?
No, in Croatia the buyer is not required to verify his signature on the Croatia property purchase agreements, just the seller. However, the buyer is required to sign the contract prior to the seller verifying his signature at the public notary. If the buyer is abroad he can print the documents, sign them and send them to Croatia. Alternatively he can give power of attorney to his representative, be that his laywer, agent, friend or other to sign on his behalf.
Should I buy real estate in Croatia with a company or as a private individual?
It all depends on your personal circumstances. For clarification if you are not sure which method to use is it important to take qualified advice. However, in general it is cheaper and easier to manage the property if you buy as a private individual, this assumes you are able to do so. In fact most EU citizens, and those citizens of countries with reciprocity buy as private individuals for this reason. It should be noted that only Croatian citizens are allowed to own agricultural land and forested areas. To buy either of the former, foreign buyers must purchase with a Croatian company.
What is a Notary Public and what do they do?
The Notary Public is an important part of the legal system in Croatia. To be a Notary Public you must be a qualified solicitor appointed by the Croatian Government. Notaries Public in Croatia have several key roles: making sure that all the documents being signed at the Notary office are valid, legal and binding; to witness the signatures on the relevant contracts needed for the transaction (without a stamp from an authorized Notary Public the contracts are not legally binding in the case of a Croatian property transaction); certifying any related documents that have been translated from a foreign language into Croatian have been prepared by a registered court translator – thereby guaranteeing that the translated documents are true and valid; to provide escrow services although many do not want to provide this service.
Are escrow services available in Croatia?
Solicitors, Notaries Public and banks are able to provide escrow services in Croatia. Of these the Notary Public is the most commonly used escrow facility for XL Property Clients buying property in Croatia, should this type of service be required. The fees for an escrow facility in Croatia vary according to the value of the deposit and the length of time the funds need to be held on account. Our experience is the fee can range from 1% to 2%. For more information on this you will need to contact the office.
Can I have a building survey carried out?
If you are at all concerned about the structure of the house or apartment you are buying in Croatia then it is always better to get an opinion from a qualified specialist. However, formal building surveyors as such don’t exist in Croatia because the demand for such a service is still very limited. Therefore, people usually approach a qualified civil engineer or a Croatian architect to give an opinion or carry out a survey. However, liability for incorrect or misleading information is somewhat limited should you receive poor advice. If you are at all concerned about this you should ask the relevant professional regarding their liability insurance in case a problem arises.
The cost of a survey usually depends on the property’s size and location (Croatian Island’s being more expensive due to the time and travel costs involved). Moreover, the level of detail required effects price for example on-site testing of humidity, quality of concrete construction and construction layers, excavation to assess foundations etc. We can of course recommend independent and qualified professionals with the necessary experience to carry out an inspection if you need it. There is also a list of court appointed surveyors should you require a property survey for legal reasons. Please contact the office for more information.
Is it possible to negotiate better exchange rates with a local Croatian bank?
Yes it is possible and in fact recommended. The treasury or retail dealing desk of the Croatian bank you are banking with, usually based in Zagreb, should be called on the morning of the day the transaction needs to take place and a rate booked. Usually this results in an average improvement of around 2 points but it varies from bank to bank. It often depend on a variety of circumstances for example whether you are an established customer, the value of the transaction and the current market situation. Sometimes currency spreads are much greater depending on the time of year and supply and demand of the relevant currency on that day. We find XL Property Croatia clients are often able to get a rate that is a few points from middle rate. The middle rate is the legal standard for currency exchange into Kuna and is often quoted in Croatia real estate purchase contracts. However, the rate of exchange is sometimes a point of negotiation between the buyer and seller, with the seller agreeing to a price so long as they receive enough Kuna to buy the agreed Euro price on the day of signing the contract.
Is it possible to pay in Euro when buying property in Croatia?
Even though the price of real estate in Croatia is often quoted in Euro, payments for property in Croatia must be made in Kuna. Therefore whichever currency your funds are denominated in you must exchange them into Kuna to complete the real estate sales purchase in Croatia. This is the same whether the transaction takes place between private individuals, companies or a combination of both. It is possible to close a property deal in Croatia in a foreign currency if both buyer and seller are citizens of another country, so long as the transaction takes place outside of Croatia.
Is it possible to verify and conclude a real estate sales contract from outside Croatia?
Yes a contract can be verified abroad by a Croatian citizen in any Croatian embassy or consulate in the country they are currently located (this assumes there is one). A foreign citizen can also verify a contract or other legal document for the purposes of purchasing properties in Croatia, if they are in a country that recognizes the Apostil Convention and are able to provide signed notarized documents with an accompanying Apostil Seal. See here for more information http://en.wikipedia.org/wiki/Apostille_Convention. The process of notarizing and obtaining Apostil Seal usually takes from 5 to 10 days depending on the country. Documents must then be sent via courier to Croatia, must be translated into Croatian (assuming they have not yet been done so) by an official court translator, prior to presentation at the notary or other relevant body. For more information on this process contact the office.
What are the advantages of singing a pre contract?
It provides the buyer with an option to purchase at some point in the future under a given set of conditions.
It secures the price.
Either party is penalized if they do not meet their contractual obligations.
It gives the seller confidence that should he resolve any outstanding issues with the property he has a buyer at the end of the process.
Is it always necessary to sign a pre contract before the final property purchase contract is signed in Croatia?
A pre contract is usually signed when:
The buyer wants to secure the property at a given price but cannot complete because the seller must fulfill certain obligations before the completion can take place.
When the buyer needs more than the usual amount of time to complete for his / her own personal reason’s and the seller is happy to oblige.
The seller must go through the process of ‘first refusal rights’. This is always the case with properties situated in protected areas, especially old stone house in the core center of Croatian seaside towns. In such cases, the seller must give the relevant authorities 60 days to refuse the right to purchase and only thereafter can the buyer complete on the property.
If I sign a pre-contract do I have to give the deposit to the seller or can I give it to a third party / escrow?
In general if the paperwork relating to the property is clear, on signing the pre contract buyers will give Vendor’s the deposit directly. However, as a result of the new law of legalization, where buyers want to buy properties which are in the process of being legalized, buyers are being recommended to use an escrow agent, usually a public notary, sometimes a lawyer. Sellers understand that until such time that the property is legal, they cannot expect to receive any money and are therefore open to this method of payment. In fact an escrow agent can be used at any time when the buyer is at risk of not getting their deposit back because there is a chance a seller might not be able to fulfill certain obligations provided for in the pre contract. It is important to note that using an escrow is a cost to the buyer.
What is a pre-contract?
A pre-contract is a document that lists the terms and conditions for the completion of the property purchase. It is followed by the main real estate purchase contract. Most importantly the pre contract confirms the price of the property, the payment structure, completion deadlines (when the final contract must be signed) as well as any additional conditions that must be met by either party during the agreed contractual period of the pre contract. Perhaps most importantly it details the penalties applied to either party should they withdraw from the transaction. In most cases, but not all, if the Vendor withdraws he must pay the buyer back double the deposit paid and if the buyer withdraws he/she loses his deposit. The usual deposit given on signing a pre contract is 10% of the value of the property but it can very depending on the specific conditions relating to the sale / negotiation.
How do I find a reputable attorney to represent me in Croatia?
We usually recommend a few lawyers with whom we have experience and who are able to provide references if required from foreign clients they have worked with and with whom they have closed property deals in Croatia. Moreover, we can supply a list of English speaking solicitors based locally as well as those international law firms that have offices in Croatia (although most are based in Zagreb) if necessary. There are several lawyers in Split who can speak German.
Which services do solicitors usually include in their fee?
Clearly it varies from attorney to attorney, however the following services are usually included: checking the ownership and legal status of the property in Croatia; checking the legality of the project documentation for the building; drafting of Croatia real estate sale & purchase pre-contract (if required); applying for approval for ownership of the real estate from the Ministry of Foreign Affairs, (if needed); applying to the Land Registry for registration of a mortgage (if needed); drafting the Croatia real estate sale & purchase Contract; applying to the Land Registry for registration of new owners of the purchased property; informing the competent tax authorities of the liability to pay property transfer tax; managing and coordinating the entire Croatia property purchase process; any other legal services that might be necessary during the real estate purchase process and which are of no great scope or value. For example a power of attorney to sign administrative documents on behalf of the client.
How much does a solicitor in Croatia charge for property transactions?
A Croatian solicitor will usually charge from 1% to 3% of the property transaction value although 1% to 1.5% is more commonplace. Moreover, some will have a minimum fee. Payment terms are often made according to the number of contracts that need to be written. For example if a pre contract is required, the lawyer might charge 50% of the fee on pre contract and the remaining 50% on the completion of the main and final contract. If a pre contract is not required and only the main real estate purchase contract is needed then they are likely to charge on completion of that contract. Often included in their fee, but not always, is the responsibility of being given power of attorney should you be unable to attend contract signings or other necessary administrative procedures. It is also imperative that legal fees must be agreed between the buyer and the solicitor prior to the solicitor starting work.
Should I hire legal representation when buying property in Croatia?
Yes, you should always hire an independent solicitor when buying property in Croatia. It is essential that you get impartial advice and your interests are represented properly. It is not advisable to work with an in-house agency solicitor, even though they maybe cheaper, because of the potential conflict of interest. It is very unlikely you will get independent advice and would therefore be putting yourself and your Croatian property investment at unnecessary risk.
Can a foreign citizen buy a property in Croatia?
Since February 1st, 2009 citizens of EU countries are able to freely buy a property in Croatia without being required to obtain permission from the Ministry of Justice. However, the property being purchased must be in the designated residential or tourist construction area. Rules relating to ownership of real estate in Croatia by Citizens from countries outside of the EU vary according to the citizen’s country of origin. Citizens of countries with which Croatia has signed a contract of reciprocity are allowed to buy property in Croatia but must obtain permission from the Ministry of Justice (MOJ). The process of obtaining consent from the MOJ takes from 2 to 6 months. It is important that the solicitor handling your case contacts the MOJ on a regular basis for an update. Citizens from those countries where reciprocity does not exist are not allowed to buy a property in Croatia as a private individual and must set up a Croatian legal entity / company with which to make the purchase. It is important to note that EU citizens are not allowed to own agricultural land in Croatia, they must buy it with a Croatian company.
What is an OIB?
An OIB is a personal identification number that must be obtained by anyone who enters the Croatian financial system. This is anything from opening a bank account to setting up a company. The OIB is obtained from the local tax office. It is often a service the solicitor handling the property transaction will do as part of his / her fee. For more information see here:
How do I open a bank account in Croatia?
To open a bank account in Croatia you will need your passport or ID card and your OIB (personal identification number – see next question). When you open your account it is advisable to open a Kuna denominated account and foreign currency account and make sure you ask for Internet banking should you need it. When ordering internet banking make sure it is clear as to how you will receive security equipment or documents (passwords / pin codes) needed to use with the account. Most banks are not prepared to send security devices or documents to an address outside of Croatia. It is important to note that you must be at the bank in person to open an account.
When must Croatia real estate transfer tax be paid?
Croatia real estate purchase tax should be paid within 15 days of receipt of the tax demand from the relevant authority. All sales purchase agreements must be registered with the local tax authority within 30 days from the day the contract is concluded at the public notary. This procedure is usually handled by the buyer’s lawyer. After the submission the buyer or the buyer’s lawyer / representative will receive the demand for payment of the tax. It must be paid within 15 days from the date of issue. If payment is not made within the given 15 days, interest is charged on the balance at a rate 17.5% for every additional day until the payment is made.
What is real estate transfer tax in Croatia?
Real estate transfer tax in Croatia (RETT) is a transfer tax, which is levied against any property purchase where the ownership of the property changes hands. The tax is 5% and is charged according to the contractual value of the property. However, if the value of the property is estimated by the local tax authority to be greater than the given contractual value tax will be charged according to this value. The person buying real estate in Croatia is the person to whom the tax is charged. From January 1st 2015 Croatia Real Estate purchase tax is only liable on property purchases that are outside the system of VAT. In other words properties that are owned by a Croatian company and are in the system of VAT.