Buying Property in Croatia - FAQ's
We'e compiled what we hope will be a useful resource for clients - a set of Frequently Asked Questions
(and their answers!) as a result of the numerous emails and telephone calls we've been getting,
asking for general information related to buying property in Croatia. This list is not an exhaustive
one, but we will be adding to it as and when interesting questions come up. It should be read
in conjunction with our Buying Guide Overview.
If you don't see your question below, do contact us and ask away.
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- Can I have a building survey carried out?
- Building surveys are not that common in Croatia and formal building surveyors as such don’t
exist. Having said that, a qualified civil engineer can carry out a survey - as can an architect.
The cost of a survey usually depends on the property’s size and location and is likely to cost
from EUR 500 upwards. If you wish to have a survey carried out, we would be happy to recommend
an independent and qualified Croatian civil engineer, with experience of carrying out surveys
- What choice of solicitors do I have?
- There are two choices – find a Croatian solicitor you are comfortable dealing with or alternatively
use an in-house solicitor employed by our partner agents in Croatia. There are advantages and
disadvantages to both options:
Own solicitor advantages:
- No potential conflict of interest
- Can easily be given power of attorney should the situation require
Own solicitor disadvantages:
- Can be much more expensive than in-house solicitor (up to 2% of purchase price)
- Choosing the “wrong” solicitor, i.e. someone without good experience of property sales
Agent's in-house solicitor advantages:
- Generally cheaper than independent solicitor (1% of purchase price)
- Proven experience in property sales, particularly to non-Croatians
Agent's in-house solicitor disadvantages:
- Ultimate loyalty is to the agent and for the sale transaction to go through
Our recommendation is that you choose your own solicitor to avoid any potential
conflicts of interest, despite this being a more expensive route to take. This route also allows
you assign a power of attorney to your solicitor should you need to do so during any stage of
the buying process.
- How do I find a reputable solicitor to look after my interests?
- If you wish, we’re happy to compile a list for of English speaking Croatian solicitors based
locally to the property you are thinking of buying. All of the solicitors we source are listed
by the Croatian Bar Society. It will then be up to you to contact solicitors from that list,
make your choice and agree fees.
- What is a Pre-Contract?
- A Pre-Contract is similar to the exchange of contracts stage (in the UK), but there are differences.
The Pre-Contract is a legally binding document that defines the terms of the property purchase – in
particular it effectively fixes the purchase price; it specifies the schedule of payments, including
(usually) a 10% deposit payable to the vendor on signing the Pre-Contract; and it fixes the
Final Contract settlement date as well as the penalties should either party withdraw from the
transaction after signing the Pre-Contract. In Croatia these penalties usually specify that
should the vendor withdraw from the transaction after signing the Pre-Contract, they are obliged
to return double the deposit to the buyer. If the buyer withdraws from the transaction after
signing the Pre-Contract, they will lose their deposit.
- Can I skip the Pre-Contract and go directly to the Final Contract?
- Yes, it is possible to skip the Pre-Contract and go directly to the Final Contract stage,
but we would not recommend it. Skipping the Pre-Contract may result in lower legal fees and
personal expenses, but the major disadvantage is that the property could be sold to another
buyer whilst the Final Contract is being drawn-up – and in the meantime, you the buyer will
have incurred a number of costs. The Croatian system therefore effectively stops possible gazumping
once the Pre-Contract has been signed, by making the Pre-Contract legally binding. Also, as
the Pre-Contract fixes the final purchase price, there is no room for a vendor to change the
asking price at the last minute without having to think seriously about the financial penalties
built into the Pre-Contract.
- Who drafts the Pre-Contract and Final Contract?
- Your own solicitor will draft the contracts. If you use an independent solicitor then the
charges for contract preparation will normally be included in their overall fees. If you choose
not to use your own solicitor and let the agency solicitor draft the contracts then you may
have to pay an additional agency fee for this service.
- What is a Notary Public and what do they do?
- The Notary Public is a qualified solicitor appointed by and working for the Croatian Government.
Their role is to ensure that all the documents involved in the property transaction are valid,
legal and binding. Specifically, it is a requirement within Croatian Property law that the Notary
Public witnesses the signatures on the Final Contract – without this witnessing stage the Final
Contract is not legally binding. Also, the Notary Public will certify that any documents that
have been translated from a foreign language to Croatian have been prepared by a registered
court translator - thereby guaranteeing that the translated documents are true and valid. Notary
Publics will also usually provide Escrow Services if required.
- How does the financial part of the property buying process take place?
- Usually the funds are transferred to the vendor’s account; the Final Contract is signed;
and the vendor signs a confirmation that they have received the funds. Most people quite understandably
are uncomfortable with the thought of sending money to someone in a foreign country with no
apparent guarantees - in which case an Escrow Service can be used.
- Are Escrow Services available?
- Yes, they are available and provided by some solicitors and most Notary Publics. Fees vary
- for instance a typical cost chargeable by a Notary Public is 4000 Croatian Kunas (approx EUR
550) to hold EUR 75,000 in Escrow for up to a year. It may be that an independent solictor you
appoint can provide this service for no additional cost, so it would would be a good idea to
ask any solicitor you are thinking of appointing whether they can offer Escrow Services or not,
and whether they charge extra for the service.
- How do I open a bank account in Croatia ?
- Opening a bank account in Croatia is a fairly straight forward process but you will be required
to do it in person and you will need your passport to prove your identity. We suggest that you
open a foreign currency account to handle the transfer of payments for the property transaction
as well as a local Kuna account which you will need for smaller expnses once the transaction
- I’ve heard I can buy a property either through a Croatian company I set-up or as a private
individual. Which route should I take?
- Each route has its advantages and disadvantages and there are differences in costs, the time
it takes to register the property in your name and your future plans for the property.
Main advantages of buying as a private individual
- Cheaper than buying through a company as there won't be any company set-up costs or on-going
company running costs involved
- If you keep the property for at least 3 years before selling, then when you sell you won't
be liable for any Croatian Capital Gains Tax
Advantages of buying through a company
- You don’t have to apply for Ministry of Justice permission to own the property – a process
that can take up to 24 months, though usually this takes between 6 and 12 months
- If you want to rent your property out you have to buy through a company
- Its quicker to get registered title deeds in the Land Registry if you purchase through
a company, however you will obviously have to factor in the time to form the company and the
associated costs involved in setting up a company
- If buying a new build from a developer then you can subsequently reclaim the PDV (Value
Added Tax) of 22%
There are other advantages which you should discuss with your solicitor before
making any decisions.
- Why do I need Minsitry of Justice (MoJ) approval to own the property if I’m buying as a private
- Only approved nationalities are currently allowed to own property in Croatia and only certain
types of property can be owned by a non-Croatian. The MoJ ensures that these criteria are fulfilled
and that’s why you have to get their permission. Non-allowable purchases are those on forest
land and farmland. Other properties that will be scrutinised are those which may be of historical
and cultural importance.
- How long do I have to wait for the Ministry of Justice’s approval?
- Approval periods can vary greatly. There are buyers that have had to wait for more than two
years, whereas others have managed to get permission in less than 6 months. In our experience
you should generally get your approval within 6 and 12 months of application provided it has
been prepared correctly by your solicitor and with all the required documents.
- What happens if I don't get approval from the Ministry of Justice ?
- If you have been correctly advised by your solicitor on the type of property you can and
cannot purchase, then it is unlikely that Minsitry of Justice (MoJ) approval won’t be granted.
However, it would be wise to protect yourself in the unlikely case that MoJ approval is not
granted, or in the instance where you may wish to sell the property whilst still waiting for
MoJ approval (and after having purchased it from the vendor). For this reason your solicitor
should ensure that the vendor signs a Power of Attorney (PoA) over the purchased property and
assigns it to you. The PoA is a document in which the vendor grants the buyer permission to
sell the property to a third party regardless of whether the buyer has been formally given ownership
by the Land Registry. Any financial gain (or loss!) from such a sale would be yours, and not
the vendor’s, who continues to “own” the property until you have been declared the registered
owner by the Land Registry.
- At what point can I register my property ownership in the Land Registry books?
- If you are buying as a private individual, once Ministry of Justice (MoJ) permission has
been granted, you can register your ownership with the Land Registry. If you are buying your
property through the formation of a Croatian company, then the MoJ’s permission is not required
and you can register ownership as soon as you form your company and the company purchase completes.
- What guarantee is there that the property won't be “sold” again or that the Final Contract
becomes invalidated whilst I'm waiting for Ministry of Justice approval?
- There are two steps your solicitor should take to ensure against this. Firstly, the Final
Contract should be registered with the Land Registry as a “charge” against the property. This “charge” would
then show up in any subsequent searches made on the property and would therefore deter any other
buyer, as the property title would not be declared “clean”. Secondly, your solicitor should
ensure that the vendor signs a “Clausula Intabulandi”
(in Croatian: “Tabularna Izjava”). This is a document that states you, the buyer, have fulfilled
all contractual obligations with regards to the property purchase and that you do not need any
further permission or involvement from the vendor to register the property in your name with
the Land Registry (once Ministry of Justice permission has been granted). The “Clausula Intabulandi”
must be signed by the vendor and witnessed by a Notary Public.
- When can I take possession of my property ?
- This is dependent on the terms written into the Final Contract. Usually the buyer can take
possession of the property as soon as the sale has completed, ie, the Final Contract has been
signed by the buyer and the vendor; the full purchase price has been paid; and the “Clausula
Intabulandi“ (see above) and Power of Attorney over the property have been signed. As long as
these steps have been completed and you have a Powerof Attorney signed, you can take possession
even if you have to wait for Ministry of Justice approval before registering your ownership
with the Land Registry.
- How do utility bills get transferred to my name?
- Transfer of utility bills will be organised either by your solicitor or our local agent after
completion. However, the utilities cannot be transferred to the buyer until they have been registered
as the rightful owner with the Land Registry. This is only an issue if buying through the private
route and waiting for Ministry of Justice (MoJ) approval. There are a few ways of ensuring that
utilities are not disconnected whilst waiting for MoJ approval. One method is to create an agreement
with the vendor that allows utilities to remain in the vendor’s name, but payment of bills are
debited directly from the buyer’s Croatian bank account. The other method is to arrange for
all utility bills to be sent to the buyer’s solicitor, who can then organise payment of the
bills - usually for an additonal fee.
- Can I start restoration and building work on the property whilst still waiting for permission
from the Ministry of Justice?
- Yes, the property can be restored and improved within the existing plot's footprint. Note,
however, that building permission will not be issued until your name has been registred in the
Land Registry. Before starting any building work, you should carefully consider the fact that
any improvements you make may increase the eventual Real Estate Transfer Tax (RETT) which is
payable after the Ministry of Justice (MoJ) grants their approval. After you get MoJ approval,
local government (council) officials will inspect your property and take a decision on whether
the price you paid for it was a fair one for its condition at the time of the sale. They will
then base the final RETT fee on this estimate. If have made alterations in the interim, they
could value your property at a higher market price than that which you paid, in which case you
could end up facing a higher RETT than you had anticipated. One tip to bear in mind therefore
is to take plenty of photographs of your property immediately after the purchase and before
any house improvemens have been carried out. In this way, when you do pay the RETT you can demonstrate
to the taxman that the price you paid was a fair price for the property in its original condition.