New Act encourages state loans of 100-300 euros per square meter to purchase a flat. The amount of the loan depends on the price, the longest repayment term is 30 years and the longest grace period 20 years, the annual interest rate is 2% for the grace period and 5% for repayment period. The interest will not be taxed. The user may at any time terminate a grace period or repayment and pay the balance as a whole.

During 2009 there has been a stagnation in the real estate market in Croatia, and similar continued in 2010. One of the main reasons for stagnation is the decline in the purchasing power of citizens. This Law regulates the granting of loans from state funds when purchasing a flat. State funding was secured from the State budget and the final amount will be determined by the Croatian Government. The loan, of course, is repayed in the favor of the State budget. Enactment of the Act should enable the builders to use funds obtained from the sale to start a new cycle of building and give favorable credit terms to customers with state help.

The loan is approved by the Agency for Transactions and Mediation in Real Estate, which performs all other duties related to Loan Agreement. An applicant for a loan must submit a copy of the identification card, purchase agreement for the flat, proof that he has secured funding, a copy of the document for the use of buildings and public notary certified statement that he owns no flat or has only one apartment that is for sale, and if you are married a statement that the spouse has no flat. Complete application for a loan is one that from the time of submission contains all the contributions required by law. Users of the loan that do not respond to the invitation to contract loses the right to contract. The Loan Agreement shall contain a statement which allows registration of a mortgage on the property.

The amount of loan that is granted in any particular case depends on the price per square meter:
€ 300 to € 1000
€ 250 from € 1,001 to € 1,150
€ 200 from € 1,151 to € 1,300
€ 150 from € 1,301 to € 1,450
€ 100 from € 1,451 to € 1,600

Co-ownership is a situation in which several subjects appear as owners of one thing, in this case a real estate. In such cases the facility is not physically “divided,” but legally speaking “shared” in several parts of the total value. This means that an individual co-owner can not claim to have exclusive rights of management over the property, and no one can usurp a single part of the house/apartment, for example bedroom, kitchen and so forth.

Property can also be distributed differently, for example, by content, which would mean that one co-owner may have the right of disposition, and others for use of the property. Co-ownership creates a special community among individuals, and it can occur by legal affairs, decision of the authorities or by certain laws. The way in which they co-manage the property is agreed between them or by voting. Such situations often lead to disputes and because specific actions are necessary to maintain the property, and some emergency actions to prevent its deterioration or make a sale, the decision may come through the courts. A good idea to facilitate decision making is that all co-owners decide to appoint a joint manager of the property.

Each co-owner of can dispose of his part and that means he can sell it. In such cases other co-owners usually have a right of first-buy, but it is not an obligation.

Your land is registered in the books, but the house built on it is not and you want to sell everything. What now?
The new Croatian Law on Property introduced the principle of unity of real estate by which unregistered property on registered land is also considered as registered. Property is considered unregistered if the land it is on is unregistered. Therefore, the principle of legal unity says that the subject of the sales contract is the whole property, land and the building.
This means that any agreement related to the building and land must respect the principle of legal unity, or that contract will not be possible to implement in the land registry and the buyer will not be able to register as the owner. In such situations it would be wise to contact a lawyer or a Croatian real estate agent.

We already explained how this crisis on the real estate market that hit Croatia can bring something good, but that is not everything, however.
All agencies are now required to have a working license and their work must be in accordance with the law. Only every fourth of all real estate agencies in Croatia were aligned with the new law before the 27th April when it came into force. After the expiry of an 18 months deadline for qualification, the terms were met by 298 agencies and 554 people. Real estate agency in Croatia must now have a minimum of one employee with a professional examination, it must operate in a space separate from the housing with at least two bedrooms and must have a contract of insurance liability. Although conditions are not too strict, it is expected that not many of the Croatian real estate agencies will be able to fulfill them. Most “agencies” that are operated in the past few years have actually represented unfair competition because they had almost no characteristics of real companies, but were led by individuals out of the basement or from their kitchen, and the state tolerated this out of fear that doing the opposite could negatively affect the market. Today users of services can check anything in the real estate registry and these are important as a direct source that can verify whether the agency in question is legal or involved in “gray area” mediation. It is estimated that currently only one quarter of agencies operating in the market are listed.
Banks have also adapted their business to new conditions, including various actions and benefits trying to actively contribute to improving the situation on the market.
Share of internet real estate business in Croatia also grew significantly. Quality internet marketing of property through blogs and the official website is a good way to attract customers who know what they want. The future of advertising real estate definitely lies in the new technologies.
Despite all troubles, the crisis will still introduce a little order to the almost chaotic property market in Croatia, which will ultimately serve both sellers and buyers.

We give you the answers to questions concerning purchase of real estate in Croatia.We have plenty of legal acts and laws concerning traffic of real estate and in connection with real estate in general. It is our intention to give answers on issues that might be of interest to you. Feel free to contact our agency directly in order to find out more.

Are foreigners allowed to buy and sell real estate in Croatia?

Citizens of the European Union are equal to domestic population when it comes to buying real estate. Others need consent from the Ministry of legal affairs and the Ministry of foreign affairs. These are issued to citizens of those countries Croatia signed a contract on reciprocity with. Otherwise, they need to have a business registered in the country.
When it comes to selling, foreigners sell real estate in Croatia with no legal problems.

What is the real estate purchase tax in Croatia?

Croatia has a unified tax rate of 5% for all types of real estate and respective transactions. The tax is defined based on the price of the real estate in the contract and the value estimate by the tax authority. Tax on purchase of real estate is paid by the customer or the seller on behalf of the customer.

When must this tax be paid?

After conclusion of the sales contract the customer is obliged to register the purchase at the authorized tax authority within 30 days. The customer is obliged to pay real estate purchase tax within 15 days from the day of reception of the decision received from the tax authorities. If this tax is not paid within this term, interest are charged for every day of delayed payment.

Does the seller need to pay taxes?

No. Only in the case the real estate is sold prior to the expiration of three years after it has been purchased and if its sold at higher price than purchased. In such cases the seller has to pay a 35% income tax on the difference in value of the real estate increased by local taxes.

Is it possible to verify and conclud the contract abroad?

Yes. In such cases it is best to have it verified in a Croatian embassy or consulate. If you verify such a contract before a public notary, then this verification  has to be translated into Croatian by an appointed interpreter.

Is it possible to pay the tax in foreign currency?

The tax is to be paid by bank or post office money transfer. The amount is converted into Kunas at the middle exchange rate by the National bank of Croatia at the day of payment.

Here you go! There will be more facts on buying and selling real estate in Croatia soon at this blog.

Citizens of the European Union will be interested to know that the new real estate law in Croatia makes them equal to domestic population when it comes to buying real estate. The law will be in effect from February 1st 2009, which is less than two weeks from today.
This means that European buyers will from now on be able to buy real estate in Croatia without any of the previous limitations and special rules, which will now only aply to residents from other countries that are not yet members of the European Union. Up until now, foreigners were only able to buy real estate by founding companies in Croatia, which made the whole procedure much more complicated and time consuming. Well, from now on all Europeans can start investing in real estate in Croatia freely!
This may be the solution for the current situation at the market, which started to slow down to a point of standstill. In these times of crisis, the new law may prove to be just what it takes to light up the spark on the Croatian real estate market!

The new Law concerning agricultural land in Croatia cause quite a debate during the last week. Investors and large construction contractors believe that it will make their business more difficult and their investing efforts substantially more expensive.
The Law is intended to protect agricultural land in Croatia from extensive urbanization by introducing a new fee which every investor must compensate in order to turn agricultural land areas into urban areas. The size of the fee is determined by the size of the squared surface of the land, and not by the size of the land used for building. The category of the land, or its farming quality, is also taken into concern when establishing the fee. Some investors and real estate experts say that this Law will only lead to even more expensive apartments, which will then in turn lead to loss of jobs in the construction sector due to smaller demand for apartments on the market. They also say that there will be more extensive building in the new urbanized areas.
Predictions of new Law’s effects are different depending on the source, so all we can do now is to be patient and wait to see what the New Year of 2009 will bring us in the end!