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 transference. Before the handover, the seller has to make sure that all utility bills and any outstanding payments up to the date of handover are taken care of. You can then be registered as the new owner of the account with a copy of the real estate purchase contract.
Q: When is it possible to take control over my real estate in Croatia?
A: In order to take possession of the property, you have have to meet certain conditions. The final contract has to be signed and notarised 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 the property I have purchased?
A: After signing the real estate purchase and sale contract, your attorney will pre-register the property rights with the relevant land registry. This means that you, the pre-registered buyer, are the first in line to receive title. To make a full registration, the attorney must receive a notarised Permission to Register the Property Clause (Clausula Intabulandi) from the seller. The Clause states that the seller has received full payment. With this, there is no further need for the seller’s involvement nor permission to register the property with the Land Registry. If you also required permission from the Ministry of Justice, you must present both the “Clausula Intabulandi” and the confirmation of Ministry of Justice permission to the land registry for you to obtain title.
Q: Is it better to buy real estate a in Croatia s a private individual or should I buy it with a company?
A: There is no general answer. Most EU citizens buy as private individuals because it’s cheaper and easier. However, only Croatian citizens can buy forested areas and agricultural land. And foreigners are allowed to buy them only with a Croatian company. Be sure to always seek for qualified advice when not sure about 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 often may encounter prices in Euro, the payment must be made in Kuna. Accordingly, you have to change your currency into Kuna in order to close a property deal in Croatia. This applies to both private and company buyers. 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 purchase and sale don’t take place in Croatia.
Q: Can a purchase and sale contract be notarised and closed from a foreign country?
A: A Croatian citizen can have a contract notarised in any Croatian embassy or consulate in a foreign country. A foreign citizens (buying a property in Croatia) can also have all documents regarding the purchase and sale transaction notarised, as long as the country they are in recognizes the Apostil Convention and if they can provide signed notarized documents that have an Apostil Seal on them. Procuring the Seal and notarisation takes from 5 to 10 days. Next, the documents are sent to Croatia via courier, an official court translator translates them into Croatian and then they are presented to a notary in Croatia.
Q: When I sign a purchase pre-contract, do I have to give the down payment directly to the seller, or can I use an escrow (third party)?
A: Usually, if all real estate paperwork is clear, after signing the pre-contract the buyer has to give the deposit directly to the seller. Nonetheless, the new law of registration allows the buyer to use an escrow, which is recommended to do when buying real estate that is in the process of legalisation. This protects the buyers and their deposit if there is a chance a seller might not meet the obligations from the pre-contract. Keep in mind that using an escrow is going to cost the buyer.
Q: What is a pre-contract?
A: A pre-contract precedes the main purchase and sale contract and it defines the terms and conditions 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 states the penalties for the buyer and seller if they choose to withdraw from the transaction. Normally in case of withdrawal, the seller has to pay the buyer double the deposit and the buyer loses his/her deposit. The buyer gives the deposit on signing the pre-contract, which usually amounts to 10% of the value of the property.
Q: Do the buyer and seller have to notarise their signature?
A. In Croatia only the seller has to have his signature on the purchase agreement verified.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 give power attorney to his 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 Croatian Government. He makes sure that all documents that are 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 translator and that they are valid and true, he can also provide escrow services. In Croatian property transaction 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 on 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 an established customer (we find that Maris clients often get a rate a few points from the middle rate). The middle rate is the legal standard of currency exchange into Kuna and you can also find it in most Croatia 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 real estate in Croatia?
A: Since 2009 citizens from the EU can freely buy real estate in Croatia as long as it is not agricultural land. Rules vary if you are a citizen of a country outside the EU according to the citizen’s country of origin. For citizens of countries which have signed a contract of reciprocity with Croatia it is possible to buy real estate in Croatia as long as a permission from the Ministry of Justice (MOJ) is obtained, which takes 2 to 6 months. Citizens from countries that did not sign a contract of reciprocity are not allowed to buy property as a private individual but can set up a company in Croatia to make a purchase with. Also EU citizens cannot own agricultural land in Croatia, but must also buy it with 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 Office, 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 a foreign currency account. Don’t forget to ask for Internet banking in case you need it and while doing it ask how you will receive your security equipment 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 Croatia real estate transfer tax?
A: The real estate transfer tax must be paid within 15 days of receipt of the tax demand. After concluding the purchase and sale agreement at the Notary Public, you have 30 days to register all purchase and sale agreement documents with the Tax Office. The buyer’s attorney usually handles this process. After the submission the buyer or his representative will receive the demand for payment of the tax, which you must pay within 15 days of the delivery date. If you don’t pay 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
Q: What is real estate transfer tax in Croatia?
A: In Croatia when the ownership of a property changes hands it is necessary to pay real estate transfer tax (RETT), which is 5% of the contractual value of the property. However if local tax authority estimates the value of the property to be higher than the contractual value, tax will be charged according to 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), it doesn’t have tax liability and doesn’t pay the RETT.