Buying property in Croatia

[aloe]

Hi

I have been reading through the requests posted and got a lot of information. However, I would like to have more clarity and advice about the process of buying a property in Croatia to get the whole picture. Are you able to outline the process to us.
The situation is as follows:
We founded a UK registered company. The members are all UK citizen which means that approval from MFA is not required. Is this correct?
Once a property has been identified you need the get the registration at the land registry. By doing that you have to ensure that all the owners are approving to the sale which could be cumbersome if it is an older property due to emigration related issues.

We are planning to go to Croatia soon with the goal to identify a property with the help of a reliable real estate agent and are willing to open a bank account in Croatia and to get copies of passports authorised.

What we also like to know is what costs are involved until the closure of sale.
We are aware of the 6% real estate agent fees.
What are the costs to engage a lawyer who would represent our interest?
Any other costs we have to take into account eg. surveyor, planning permission, court fees, land registry costs, tax, deposit to conclude a pre-contract, any other costs?

Having founded a UK company is this an advantage or is there anything else we have to consider?
Do you have reliable contacts in terms of real estate agents in the area of Split and surroundings as far as Makarska?
Your website indicates that you could facilitate the process from a legal perspective. What are your costs if we would engage one of your lawyers?

We would welcome any other information necessary to start the process.

Thank you for your assistance.
Regards
Alexandra Oeda

[Peter Ellis]

Hi Alexandra

There appear to be a number of misconceptions here. Founding a UK company in no way facilitates buying property in Croatia. The point of founding a company for property purchase in Croatia is to create a Croatian entity, with responsibilities in Croatia, that would have similar rights to a Croatian natural person. Only a Croatian entity would avoid the need for MFA approval.

6% estate agents' fees are not the norm. We charge 2%, as do most of the better agents, although no one seems to charge less.

Any contract to purchase property would need the approval of all the owners, as it would anywhere. It is therefore important to establish, prior to parting with any money, that the paperwork is OK and that the existing ownership, as recorded in the Land Registry, is the same as the people offering it for sale. Certainly older property does often have deficiencies in this respect, often because of emigration, but not all of it does. A search, which we can do for you, similar to one in the UK,will establish this.
Our legal department, run by my wife, a Croatian lawyer working under the supervision of a member of the Croatian Bar Association, Nino Martinovic, charges 1% for doing the Pre-Contract and Contract (altogether), which is effectively the scale fee here. Fees for submission to the MFA, registration in the Land Registry and various disbursements add up to a further, approximately, 0.5%. A full survey will depend on the location, size and value of the property and we can quote for this, but could be in the region of Euro4-500. Property Transfer Tax of 5% will be payable at the time that the Land Registry entry is accepted. If the property is newly built, this will be on the value of the land, not the building, but if the building is older, this will be on the full property value. Deposits are, typically, 10%, protected by the Pre-Contract, with the balance following around 3-4 weeks later when the full contract is done.
We know a number of agents in the Split area.

Hope this helps.

[aloe]

Hi Peter

thank you for your feedback. I would like to ask more question re a Croatian entity.

- can the UK Ltd Company own the Croatian entity as a holding company?
- is a Croatian national required to participate in the Croatian entity?
- Does it need a local Croatian address?
- how long will it take to set up a Croatian company and what is required in?
- what are the costs involved?
- is there a mortgage system in Croatia?
- when opening a bank account in Croatia do you need a local address?

In relation to the fees you quoted below, the % is always of the purchase price?

Thank you for your assistance.
Regards
Alexandra

[Peter Ellis]

hi Alexandra

A UK company can hold 100% of the shares in a Croatian company, although we have not, as yet, configured one this way, so are not speaking from experience.

A Croatian national is supposed to be involved, although when we set up companies for individuals, the condition is satisfied by one or more of the directors applying for a business visa. This is normally granted on the strength of their forming a company, so it is a bit chicken and egg, but the authorities seem willing to go along with it. A foreigner with a business visa substitutes for the need for a Croatian national.

It will need a local Croatian address. Since time sensitive mails might arrive there, it should be somewhere where mail is collected daily and not somewhere, perhaps a property you have bought, which is only visited intermittantly. A lawyer or accountant will usually offer a suitable facility.

The time to set it up varies. It is still relatively complex here, involving verification of the name, submission to the Trade Court, tax office, statistical office etc. The Trade Courts in some places have fewer applications than others and can have shorter queues, but as you must register in the district in which you propose to operate, you cannot cherry pick and choose a court like Slavonski Brod, which is reputed to take just a couple of days. Generally, I would allow 4-6 weeks, particularly now, as the court staff have been on holiday and come back to a backlog.

Costs are as per fee scale on our other website, www.croatiapropertyservices.com

Commercial

Initial consultation (Up to one hour) FOC
Founding of a Croatian limited liability company €1500
plus disbursements*
(This was recently increased by the Croatian Bar Association)
Additional Work @ hourly rate (aggregated)² € 100
Acting as local personal agent for receipt of official correspondence € 200pa
or
Providing Registered Office € 200pa

*including Court Fees, Translation, Travel, Gazetting, Couriers &etc.


There is a mortgage system in Croatia but it is difficult for foreigners to access.

It is not essential to have a Croatian address in order to open a bank account although you may find that the bank will not post statements, etc., to a foreign address and will retain them pending your next visit to them.

Yes, the percentage is of the purchase price.

Kind regards

[Peter Ellis]

I missed off the second footnote. Sorry!

²including removal of liens, regularisation of defective titles, attendance at trade court &etc.