Credit verification by a notary public - price and procedure

Whether you are a citizen of the Republic of Croatia or a foreigner, whether you are buying or selling real estate, you are waiting for that specter that everyone warns you about: the hassle of paperwork.

The paperwork and procedures that we will talk about in this blog relate to the entire buying and selling process. This includes signing the preliminary contract, notarizing the loan, the cost of the aforementioned services, all the way to registering the ownership and paying the seller.

In other words, everything you, as a buyer or seller, local or foreign, need to know when buying and selling real estate!

Preliminary agreement on the purchase and sale of real estate

Let's start in order. You have found a buyer, and he needs to get a loan from his bank to buy your property. The first step in this case is to sign a preliminary purchase agreement - so it is not yet a "real" contract. This document serves as a kind of confirmation to the bank of the funds needed to approve the loan, and contains:

  • basic information about the property and the parties to the purchase and sale
  • the agreed purchase price and payment terms (make sure to leave enough time considering banking procedures and the deadline for the property valuation)
  • a cancellation clause, in case the loan is not approved (which guarantees the buyer the right to cancel the purchase without losing the advance payment).

After you have signed the pre-contract with the buyer, you are waiting for the paperwork to be submitted to the bank.

Documentation required to obtain a loan

This section also applies to both the buyer and the seller of the property. As for the documentation of the property itself, you will need a signed preliminary contract, a use permit, an energy certificate, a floor plan or sketch with information about the area, and an extract from the cadastre (i.e. a copy of the cadastral plan and the title deed). Keep in mind that the cadastre and land registers are often not coordinated, so it is a good idea to check the coordination of these data beforehand! We also note that if the address is not recorded on the title deed, you will also need to attach a confirmation of the house number.

The documentation that the buyer must submit is somewhat more extensive. It will prove to the bank that you are creditworthy and that they do not have to "worry" about "lending" you money. This includes:

  • ID card or passport (and of course personal identification number – OIB)
  • Marriage certificate (for the consent of the spouse) or a statement of marital status (if you are not married)
  • Bank account number and a copy of the bank card (with the IBAN specified)
  • If you are employed, submit payslips from the last three to six months, and if you are a craftsman or freelancer, submit a certificate of employment or proof of income
  • Annual statement of receipts (or income certificate form)
  • Current account statement from the last three months.

Sometimes the bank will also ask you for a certificate of no tax debt, which you can obtain at FINA branches. You will also sometimes have to pick up a certificate of employment from the Croatian Pension Insurance Institute (HZMO).

Real estate sellers must provide the following:

  • a copy of their ID card or passport and the original document with their OIB (tax identification number)
  • if they are married, they must submit a marriage certificate – if the property is marital property, the spouse must also submit their details, marriage certificate and consent to sell the property
  • a copy of their bank card with IBAN
  • a copy of the basic contract (purchase, gift, inheritance, etc., i.e. the one under which they acquired the property)
  • contact details such as email address and telephone number.

If the seller is not present (this is especially important for foreigners), the person representing him must have a valid power of attorney. Also, in some cases, the bank will request additional information about the acquisition of the property. This is to determine its legal history and the security of the transaction.

We hope that all of this was not too much for you, because we are only halfway there! 

Property valuation

In order for the bank to confirm that the amount you stated as the price of the property is realistic, it will hire an authorized appraiser. He will go to the field and compile an estimate of the market value of the property, and the whole process takes 15 to 20 days from the submission of the documentation. However, there is no rush - after the appraiser has done his part and all the documentation is complete, you will have to wait another 45 days, or a month and a half, for the final approval and payment.

Credit verification by a notary public – price and procedure

Let us immediately point out that there is a difference between the certification of a loan and the solemnization of a contract.

In classic certification, the contract as such is not certified, but the signature on the contract is certified. Therefore, the notary is not responsible for the content of the text of the contract, but only certifies the signature that you have placed! This refers, of course, to a real estate purchase contract, where the seller is obliged to certify his or her signature in multiple copies with a notary public (the buyer is not!). In doing so, he or she confirms that the party voluntarily signed the document in his or her presence.

Solemnization of a contract, on the other hand, is a valid notarial act. It is easiest to explain it as reading the contract aloud and explaining its components, whereby the participants (seller and buyer) are explained the meaning and legal consequences of the document. In this way, the notary public checks whether the contract has been drawn up properly, and whether the participants understand all its possible consequences.

This is exactly what awaits you after the loan is approved, that is, after you have concluded the loan agreement and the purchase and sale contract. The cost of the solemnization depends on the value of the property:

  • up to €150,000 approx. €700
  • up to €200,000 approx. €850
  • over €200,000 approx. €1,000
  • over €500,000 from approx. €1,200

And let's not forget to mention, the costs of this procedure are borne by the buyer!

Final procedures

You are not finished with the notary public yet, because he (or a lawyer, if you have one) will file a request for the registration of a mortgage in favor of the bank. The same person will also record the purchase contract in the land registry.

Another task of the notary public is to have you sign a statement with him confirming that the registration of ownership (of the buyer) cannot be carried out until the seller submits a statement confirming that the entire amount has been paid - the so-called Clausula intabulandi. You can verify this in advance (which is often the case, especially so that foreigners do not have to come to Croatia again), but with the note that it is valid after payment. The statement will be stored with your notary public, lawyer or real estate agent.

Ultimately, you can see that buying and selling real estate is a complex process. However, this is a good thing because all this documentation guarantees mutual satisfaction, both for the buyer and the seller. Of course, clear and open communication will also contribute to this.

Based on our many years of experience in this field, we can also give you the following advice: read the blog a few more times and prepare all the documentation in advance. If you are a foreigner who cannot be present at every step of the purchase and sale, give your consent to your representative who will take care of your interests.

And if you need additional help , we are always at your disposal!