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Croatia's Real Estate: The Most Common Legal Issues

September 06, 2022
2022-09-06
Croatia is too much of a beautiful paradise for you to get stressed in. How could you ever enjoy its white sandy shorelines and sparkling seas if your mind is too racked with many problems? This can easily be you if you go ahead and buy a property in Croatia without knowing the legal matters behind it. If you're more aware of the legalities surrounding it, then you can easily avoid getting into trouble, right? So before you spend any money or talk to any broker, learn about legal issues regarding real estate in Croatia. The Principle of Reciprocity is a good example, as is the legal right of property ownership in Croatia.

Croatia's Real Estate: The Most Common Legal Issues


Non-Residents Buying Property in Croatia

Since Croatia is part of the EU, it's easy to assume that it follows its fellow member-states in allowing foreigners to own land in its territory. But the reality is more complex than that. Generally speaking, not all foreigners and non-residents are allowed to purchase real estate in Croatia. Even those coming from fellow EU nations face some sort of restriction as well. For EU/EEA citizens, they can buy a property in Croatia as long as it's not agricultural land. Nationals of the Swiss confederation, on the other hand, are also allowed provided that they've gotten permission from the Ministry of Justice.


The Principle of Reciprocity

Whether citizens from non-EU/EEA countries are allowed to purchase real estate in Croatia or not depends on the 'Principle of Reciprocity.' Called the “uzajamnost za stjecanje prava vlasništva na nekretninama u Republici Hrvatskoj” in Croatian, this is a mutual agreement between Croatia and countries outside of the EU. According to Expat in Croatia, Croatia allows the citizens of a country to own real estate in its territory, then Croatian citizens are also allowed to own properties in the said country. But the degree of this agreement differs from country to country. In the US, for instance, different states have varying degrees of the 'Principle of Reciprocity.'

Croatia's Real Estate: The Most Common Legal Issues



Getting Permission from The Ministry of Justice

Now, let's say your country does have the 'Principle of Reciprocity' with Croatia. This means that you're free to purchase any property in Croatia for sale, right? Well, not yet! Though you can already start some of the steps in the real estate process—i.e. choosing a property, negotiating with the seller, drawing up contracts, etc.—you're not officially allowed to buy it until you get permission from the country's Ministry of Justice. That in of itself is a lengthy process which includes showing the purchase contract, submitting required documents, and more. It usually takes around 60 days for the ministry to grant you permission.


Ownership Structures in Croatia

One of the first things you need to decide when you plan to purchase a property for sale in Croatia is your ownership structure. According to DLA Piper, there are three main property ownership structures to choose from. The first is full ownership, which grants all rights to the property to the listed owner on the title deed. The second is co-ownership, a structure that equally divided the rights to the property to two or more owners listed on the title deed. And third is owning a condominium. Here, the ownership rights are divided between the listed owner of the condominium and the association of owners of the building where the condo is located.

Croatia's Real Estate: The Most Common Legal Issues



The Legal Right of Ownership

Let's say you're practically done with the purchasing process. You moved to Zagreb, for instance, and bought a new property here. You negotiated with the seller, signed the contracts, settled your mortgage, and paid the final price in full. Does this mean you're now the proud new owner of a home in Croatia? Not yet! You still have to register your purchase with the “zemljišna knjiga” or the country's Land Registry. Submit your request to be listed as the owner of the property complete with the notarized contracts, proof of payment, and other important documents.


What Aktivna Plomba Means

Speaking of Croatia's Land Registry, this is one of the main entities you have to deal with during the first steps of the purchasing process. Especially when you have to deal with the “aktivna plomba.” But what is it, exactly? “Aktivna plomba” refers to a status of a property in Croatia wherein the Land Registry received a request about it yet it remains unresolved. This oftentimes means that process of buying said property was already started by someone else but was either stopped, terminated, or possibly even completed without the knowledge of the Land Registry. And you can't continue with your purchase of said property until this is resolved.

Croatia's Real Estate: The Most Common Legal Issues



Drawing Up and Signing The Purchase Contract

One of the most important and legal steps of the purchasing process is drawing up and signing the purchase contract. For your benefit, you ought to include certain terms and conditions that will allow you to legally terminate the agreement in light of certain situations. Your application for a mortgage was denied, for instance, or something happened that forced you to stop the transaction altogether. Setting these sorts of conditions is important because once you sign the purchase contract, you'll be legally bound to the purchase. You'll also have to pay a 10% deposit. And if you ever bow out of the agreement after signing, you won't see that deposit ever again!


Building Near The Sea

Let's say you bought land along the coast and you want to build a villa with great seaside views. Are you allowed to do just that here in Croatia? It depends on the specific location. In undeveloped and largely untouched areas along the coasts of Croatia, land owners are not allowed build properties that are less than 70 meters from the sea. You'll only be permitted if plan to build certain structures such as a hotel, commercial spaces, ports, shipyards, and the like. But if it's a private residence, it should be placed more than 70 meters from the sea.

Croatia's Real Estate: The Most Common Legal Issues


When you deal with real estate in Croatia, you're gonna have to face a few legal issues along the way. Learn more about them now so that you'll know what to do if ever something happens. It might be hard to fix it if you're not careful!




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