Q: How do I transfer the utility bills into my name?
A: When the real estate has been handed over to you, your attorney or real estate agent will take care of the transfer of the ulitily bills to a new owner. Before the handover, the seller has to make sure that all the utility bills and any arrears are paid. You can then be registered as the new owner, for what you will need a copy of the real estate purchase contract.
Q: When can I take over ownership over my real estate in Croatia?
A: In order to take over ownership of the property, you have to meet certain conditions. The final agreement has to be signed and validated both by the buyer and seller, the full purchase price has to be paid and the Permission to Register the Property Clause has to be issued (clausula intabulandi). However, these conditions also depend on what the buyer and seller negotiate.
Q: How can I register the ownership of my new property?
A: After signing the real estate purchase and sale contract, your attorney will pre-register the property rights at the relevant land registry. This means that you, the pre-registered buyer, are the first in line to receive the ownership. To make a full registration, the attorney must receive a validated Permission to Register the Property Clause (clausula intabulandi) from the seller. The Clause states that the seller has received the full payment. With this document, there is no further need for the seller’s involvement nor his permission to register the property at the Land registry. If you also required permission from the Ministry of Justice, you must present both the “clausula intabulandi” and the mentioned permission to obtain the ownership.
Q: Is it better to buy real estate in Croatia as a private individual or should I buy it through a limited company?
A: There is no general answer. Most EU citizens are buying properties as private individuals because it’s cheaper and easier. However, only Croatian citizens can buy forests and agricultural land. Foreigners are only allowed to buy them through a Croatian company. Always seek for advice from experts when you don’t know what to do.
Q: Do I have to pay in Croatian currency for the real estate in Croatia?
A: Yes, you do. Even though you may often encounter prices in euro, the payment must be made in local currency, that is in Croatian kuna. In order to close a property deal in Croatia, you have to change your currency into kuna. This applies whether you are buying as a private individual or as a company. The only way to purchase a real estate in Croatia in foreign currency is if the buyer and seller are both citizens of another country and if the transaction takes place outside Croatia.
Q: Can a purchase and sale contract be notarised and closed in a foreign country?
A: Croatian citizen can have a contract notarised in any Croatian embassy or consulate in a foreign country. Foreign citizens (those buying a property in Croatia) can also notarise all the documents regarding the purchase and sale transaction,as long as the country they are in recognizes the Hague Convention and they can provide signed notarized documents with an Apostille Seal. The process of notarization of documents and obtaining the Apostille usually takes from 5 to 10 days. Next, the documents are sent to Croatia via courier, an official court interpreter translates them into Croatian and then they are presented to a public notary in Croatia.
Q: When I sign a purchase pre-contract, do I have to pay a deposit directly to the seller, or can I give it to a third party?
A: Usually, if all the real estate paperwork is valid, after signing the pre-contract the buyer has to give the deposit directly to the seller. However, the new property registration law allows the buyer to use an escrow (third party), which is recommended to do when buying a real estate in the process of legalisation. This protects the buyer and their deposit if there is even a slight a chance that the seller might not fulfill the terms of the pre-contract. Keep in mind the buyer will bear the cost of using the third party services.
Q: What is a pre-contract?
A: A pre-contract precedes the main purchase and sale contract and it defines the terms for the completion of the property purchase; it confirms the price of the real estate, the payment structure, the latest date by which the final contract must be signed and other conditions that must be met before signing the final contract. But most importantly, it specifies the penalties for both the buyer and the seller if they choose to withdraw the transaction. Normally, in case of withdrawal, the seller has to pay double the amount of the deposit to the buyer, while the buyer loses his/her deposit. The buyer gives the deposit upon signing the pre-contract, which is usually 10% of the value of the property.
Q:Do the buyer and seller have to notarize their signature?
A. In Croatia, only the seller has to notarize his signature on the purchase agreement.The buyer only has to sign the contract before the seller presents it to the notary public. If the buyer is abroad, he/she can send the signed documents to Croatia or authorise a representative (lawyer, agent, friend, etc.) to sign on his behalf.
Q: What is the role of the notary public in Croatia?
A: A notary public is a qualified attorney appointed by the Government of the Republic of Croatia. He makes sure that all the documents signed at the notary office are valid, legal and binding. He certifies that the documents translated from a foreign language into Croatian have been prepared by a registered court interpreter and that they are valid and authentic. Also, public notary can provide escrow services. In Croatian real estate industry, the contracts are legally binding only if they have a stamp from the notary public.
Q: Can I negotiate a better exchange rate with a local Croatian bank?
A: It is possible to negotiate a better rate and we recommend it. You should call the bank you’re dealing with in the morning of the day the transaction takes place. As a result, the rate should improve around 2 points, depending on the bank. It can depend on the value of the transaction, the current market situation and whether you are established reliable customer (we find that Maris clients often get a rate a few points better than the middle rate). The mid-rate is the legal standard of currency exchange into kuna and you can also find it in the most Croatian real estate purchase contracts. However, the exchange rate can be negotiated between the buyer and seller.
Q: Is it possible for foreign citizens to buy a real estate in Croatia?
A: Since 2009 EU citizens can freely buy real estates in Croatia, as long as it is not agricultural land. If you are a citizen of a country outside the EU, the rules may vary according to your country of origin. For citizens of countries which have signed a Reciprocity Agreement with Croatia, it is possible to buy real estate in Croatia if they obtained a permission from the Ministry of Justice (MOJ), which takes 2 to 6 months. Citizens from countries that did not sign a Reciprocity Agreement are not allowed to buy property as a private individual, but can establish a company in Croatia to make a purchase. Also, EU citizens cannot own agricultural land in Croatia, but must also buy it through a Croatian company.
Q: What does OIB stand for and why do I need it?
A: An OIB is a personal identification number, which anyone entering the Croatian financial system (from opening a bank account to setting up a company) needs to procure. It is obtained from the local Tax authority, often by the attorney handling the real estate transaction as part of their fee.
Q: How to open a bank account in Croatia?
A: You need your passport or ID card and your OIB (personal identification number) to open the account, which you have to do at the bank in person. It is advisable to open an account in kuna and in foreign currency. Don’t forget to ask for Internet banking in case you need it and, while doing it, ask how you will receive your safety devices and passwords or PIN codes for the account, because most banks will not send them to an address outside of Croatia.
Q: When do I have to pay the Croatian real estate transfer tax?
A: The real estate transfer tax must be paid within 15 days of receiving the real estate transfer tax certificate.
After concluding the purchase and sale agreement at the notary public, you have 30 days to register all purchase and sale agreement documents at the Tax authority. The buyer’s attorney usually handles this process. After the document submission, the buyer or his representative will receive the demand for tax payment, which you must pay within 15 days from the delivery date. If you don’t pay within the given period, interest will be charged at a rate of 17.5% for every additional day until the payment is made.
Q: What is real estate transfer tax in Croatia?
A: In Croatia, when ownership of a property changes hands, it is necessary to pay real estate transfer tax (RETT), which is 3% of the contract value of the property. However, if local tax authority estimates that the property value is higher than stated in the contract value, tax will be charged in accordance with the higher value. The buyer has to pay the RETT. From January 1st 2015, if a Croatian company buys a property, which is already in the system of VAT (both the land and the building), there is no tax liability and the RETT doesn’t need to be paid.