PROPERTY PURCHASE PROCESS IN CROATIA - by Mateja Bogdanić
You have probably been thinking about buying a property in Croatia for some time, and you almost certainly visited many websites about Croatia, studied real estate ads, dreamed about your perfect location, compared prices, and collected information from your friends and acquaintances. In order to start the property purchase process, the action needs to be taken; now is time to turn your imagination into reality and to move on. The process of searching for and selecting a property is quite similar all over the world, while the process of buying and selling, transfer of property ownership to the buyer and customs vary greatly from country to country, even among EU members. So, what is needed to buy a real estate in Croatia, what are the procedures and what steps should be taken?
NARROWING THE CHOICE
Without this step, you may never buy a property even though you really want to. In Croatia, there are many properties available for sale and numerous beautiful locations, so it is completely understandable that it is difficult to make the right choice. Before taking any concrete step in looking for a property it is highly advisable to consider what you really expect. So, ask yourself whether you want your future property to be easily accessible, modern or traditional, close to the sea or with sea view, etc., Or do you prefer privacy and comfort of your house more than ease of owning your own apartment. What locations do you like - Dalmatia, Istria, Kvarner, islands, Crikvenica, Opatija?
You just have to narrow down your choices; otherwise you can wander and look around for your perfect property for years. And time goes by so fast, right?
Before you start searching for real estate, it is important to assess your financial situation accurately - how much money you are willing to invest in real estate, in what time you can manage your money and possibly examine the possibility of borrowing the funds from the bank. It should be noted here that banks in Croatia do not grant loans to foreign nationals, except in rare cases. We therefore recommend that you examine the possibilities of obtaining a loan from your bank abroad. When you determine how much money you have at your disposal to buy a property, it will significantly affect the process of searching for it.
CONDITIONS AND ORGANISATION OF REAL ESTATE SIGHTSEEING
Although you can look for a property on your own, due to lack of time and need for professional guidance through the process of buying and selling, most people engage real estate agents. Just as you chose the location and the type of real estate, here you can and must choose, because there are numerous real estate agencies in Croatia. When choosing an agency, every buyer has his own criteria; by choosing the right real estate agency, your search for real estate will be a pleasant experience. Open communication is extremely important here; buyer and real estate agent determine buyer's expectations, conditions of the property search, real estate agency fees, they define deadlines and further steps.
REAL ESTATE SIGHTSEEING
If you have gone through the previous three steps well, this phase of the property purchase process should be fun. The properties you are touring should be in line with your expectations, in the places you prefer and within budget. Here again the importance of communication should be mentioned. It is very important that your real estate agent knows your expectations and your impressions of the property, so that he can walk into negotiations with the seller in time if you are genuinely interested in buying or get additional information which will help him in property search.
TENDERING AND NEGOTIATION
Now that you have found a property you like, it is common to offer a price for it to the seller. That's what a real estate agent does for you, of course. Understandably, buyers are often not sure what price to offer. Sometimes a significantly lower price can be achieved than the one advertised, and sometimes sellers do not want to lower the price even for 1 EURO. So, the decision on how much to offer is up to you, and it is up to the real estate agent to negotiate with the seller and try to achieve a win-win situation.
When the purchase price has been agreed with the seller, a down payment is required. It serves as a guarantee for both parties. For the buyer, meaning that the seller will not sell the property to someone else and for the seller that he has a genuine buyer. If no intermediary is involved, the down payment modality is agreed directly between the parties or with the real estate agency, with the consent of both the seller and the buyer. When making the down payment, it is important to take into account the real estate deadlines which must be met. If there are some preconditions that must be met before concluding the main real estate purchase contract, the deadline for concluding the pre-contract shall be agreed, and if such preconditions do not exist, it is necessary to define the deadline for concluding the main contract. It is commonly accepted practice that, if the buyer withdraws from the pre-contract/contract within the defined period of time, he loses the down payment. If the seller withdraws from the pre-contract/contract within the defined period of time, he is obliged to return a double down payment to the buyer.
PRE-CONTRACT ON THE SALE OF REAL ESTATE
If there is a precondition for concluding the main real estate purchase contract, the buyer and the seller sign a pre-contract. The above mentioned preconditions can include obtaining the required documentation, permits, letter of intent from a bank, borrowing funds from a bank by the buyer, etc. The real estate purchase pre-contract clearly defines the preconditions and deadline for concluding the main contract. If the buyer and seller are immediately ready to conclude the main real estate purchase contract, i.e. if there is no need to meet some preconditions, this step is skipped.
REAL ESTATE SALES CONTRACT
The contract on the sale of real estate defines the pace of payment of the purchase price, the moment of taking possession of the property, seller's guarantee, etc. If the complete purchase price is paid to the seller at the time of concluding the contract, the contract shall also contain the permission to register the property clause (Tabular statement - 9). The real estate sales contract needs to be certified by a notary public. The common practice is that both the buyer and the seller certify their signatures on the contract; the contract is also valid if only the seller certifies his signature. If the buyer is a foreign person, the precondition for concluding the real estate sales contract is that he/she has a Personal Identity Number (OIB), which can be obtained from the competent Tax Administration; the buyer can also ask his real estate agent for help.
TABULAR STATEMENT AND REGISTERING THE TITLE IN LAND REGISTER
A tabular statement is a document by which the seller declares that the real estate has been paid in full and that he/she allows the registration of ownership rights in the land books to the buyer. If the buyer has fulfilled his obligations in a proper manner, i.e. paid the agreed price, the seller is obliged to issue a tabular statement. The tabular statement must be notarized. After the buyer receives the Tabular statement from the seller, he can submit a request to the competent court (land register) for registration of ownership of a property in his name. If the sale is made through an intermediary, this process is usually done by an agency or an authorized lawyer.
TAKING POSSESSION OF THE PROPERTY - PROPERTY TAKEOVER
In practice, the buyer takes possession of the property after the seller pays him the full purchase price. At that moment, he assumes all obligations related to the use of the property - utilities, taxes, etc. Also, it is the moment when the buyer gets the keys to his new property. The takeover of the property is usually attended by a real estate agent.
TRANSFER OF THE OBLIGATION TO PAY UTILITIES TO THE NEW OWNER
The formalities of transferring all utilities: electricity, water, gas, utility fees, garbage collection, etc., are transferred to the new owner of the property. If the buyer bought the property through the real estate agency as an intermediary, the transfer can be made with the help of the agency, with the power of attorney given by the buyer.
ENJOYING A NEW PROPERTY
Hopefully, this will be the longest and happiest phase. Croatia is a great place to live and relax. We are always happy to see how much our customers enjoy their new properties, and we wish you the same.
Please note that the above stated process is a standard property purchase process in Croatia. However, it can be somewhat different, longer or shorter, with additional intermediate steps, depending on the specifics of the situation and of the property and the documentation, expectations of the parties and the like. It is defined by good coordination and mutual respect of both the parties, with or without a real estate agency as a mediator. If you are not an expert in buying and selling properties, our advice is to hire a mediator or at least a lawyer to ensure safe purchase. Direct buying can result in success for all parties, but can sometimes be risky.
We wish you a safe purchase and lots of nice days spent in your new property.