Real Estate Law in Croatia | Legal Matters | Purchase Contract
Real estate law in Croatia - on this page we explain some of the legal basics of buying property in Croatia. Topics include purchase costs, the purchase contract, land registration and setting up a Croatian company.
Real estate law in Croatia: overview and general points
The Croatian constitution provides that foreigners can acquire ownership of property in Croatia - under the conditions laid down by law - which are set out in the Ownership Act. Under this act, natural or legal persons from the European Union can acquire ownership of property under the same conditions as Croatian natural or legal persons. Note - restrictions apply to some types of property, such as agricultural and forestry land, woodland and nature reserves. Property in Croatia can be acquired in 2 different ways:
a) as a foreign natural or legal person, or
b) through a Croatian legal entity.
To sign a contract for the purchase of a property in Croatia, both foreign natural persons and foreign legal entities need a Croatian tax number, the OIB number, which the competent tax office usually issues within 24 hours. Once the OIB number has been issued, you can sign a purchase contract with the seller and have the seller's signature certified by a notary.
Important information on the purchase contract when buying property in Croatia
For a purchase contract for a property in Croatia to be valid, there must be a Croatian version of the contract. The Croatian version is always the legally binding one.
In Croatia there is often a kind of preliminary contract before the actual purchase contract, with a deposit of 10%, because the seller often still has obligations to fulfil before the actual purchase contract is concluded - for example: removing mortgages, providing proof that the land is building land, providing proof that the property has access to a public road, etc. It is usual for the buyer to have a certain level of security through
a) a priority notice of ownership and / or
b) a mortgage.
The registration consent for the ownership is then certified together with the purchase contract, and the registration consent (clausula intabulandi) is deposited with the notary. Only when all obligations under the purchase contract have been met is the full purchase price paid. Only then is the registration consent handed over by the notary , after which the foreign natural or legal person can be registered as owner at the land registry. The purchase contract must be in writing and must be certified by a notary. The foreign natural or legal person only acquires ownership once the purchase contract has been registered at the land registry. International lawyers experienced in real estate law in Croatia recommend this procedure to give buyers security, so that they do not put themselves in the hands of Croatian sellers and large sums are not paid on a "basis of trust". If, for example, there is a contract without registration consent, the buyer can sue the seller - but experience shows that this is not very effective, and such proceedings can easily take more than 10 years.
Additional costs when buying a property in Croatia
Property transfer tax | Agency commission | Legal fees / cost of the purchase contract | Land registration costs | Notary certification costs | |
|---|---|---|---|---|---|
3% | 3% + VAT | 1-1.5% + VAT | approx. 60 - 100 EUR. | approx. 70 EUR - 90 EUR |
How long land registration takes
The time it takes to register in the land register varies from area to area. In larger towns, registration of ownership can take 1-2 weeks, while in small villages and on the islands it can take longer. Registrations tend to be quicker in the north of Croatia than in the south. It is important that the application to change the owner is submitted to the competent court immediately after the contract is signed.
Which documents are needed for registration in the land register?
To be registered at the land registry in Croatia, the buyer needs the following documents:
» the purchase contract or another contract on real rights, in original or as a certified copy
» a confirmation (original only) from the local building authority that the property lies within the building zone.
» proof of the foreign buyer's nationality
» for natural persons: a certified copy of the passport
» for legal entities: an extract from the commercial register
Setting up a d.o.o. - a Croatian company for acquiring property
Advantages: a) unrestricted acquisition of agricultural and forestry land / woodland b) tax reasons, e.g. no tax is payable in Croatia on the resale of company shares, which avoids property transfer tax. Under Croatian law it is also possible to contribute a property to a company as share capital, which is likewise not subject to property transfer tax.
More information on setting up a Croatian company / d.o.o.
Once the legal questions are settled, it is time to choose: buy a house in Croatia, buy a flat in Croatia or buy a plot of land in Croatia.