Foreign Ownership Issues in Croatia
As a foreign buyer, you are free to purchase real estate in Croatia provided an application is approved by the Ministry of Foreign Affairs. Acquiring this approval may take up to 12 months. However, this process can be avoided easily and legally if you purchase your property through a Croatian corporation.
It is important to note that the system by which the Ministry of Foreign Affairs operates in Croatia is not uniform. In the southern part of the country, things tend to go a lot slower because they still rely heavily on manual systems for the processing of the applications, and they don’t necessarily have the required manpower dedicated to the task.
There is one significant benefit of waiting for the Ministry of Foreign Affairs: The purchase goes through a myriad of checks and there is a much slimmer chance of running into any problems with title or validity of the sale. But, being paperwork obsessed, if there is one paper or formality that is missing or incorrect, the Ministry of Foreign Affairs will send your whole application back. And you may have to start again, from the beginning, which can be extremely frustrating.
Furthermore, there is a statute of limitations on the age of your documents in Croatia. If any document is over six months old at the time of submission, it will be rejected and a new one will be required. Not having all the correct paperwork at the time you submit your application could set you back up to a year.
Before parting with your money, it’s absolutely vital to ensure a property comes with clean papers. Croatia’s emigration problems are almost on a par with how Ireland’s used to be, and multiple ownership is a common problem. Dozens of people, many living abroad, can have claims on a property. Rural properties were sometimes bequeathed to sons and daughters in equal shares, but never registered as such. Although they never expected to live in the property, the heirs then bequeathed their shares to their own offspring.
It’s not just a case of tracking down relatives who might have a claim on a property. In the past, and on occasion to avoid taxes, properties were sometimes bought and sold without proper registration and documentation.
Then there’s the Serbian question. According to U.N. figures, between 1991 and 1995, some 280,000 ethnic Serbs fled Croatia. Relatively few have returned. One of the key issues that Croatia must deal with before it is allowed to join the EU pertains to the return of Serbian refugees and property restitution. Before buying a property, you need to find out if it belonged to a Serb. The vendor may not be the legitimate owner, so it follows that, after restitution, you might not be, either.
Be absolutely sure to ask your agent lots of questions about the titles on properties you are interested in. The real estate market isn’t highly regulated, so it's important to make sure your chosen agency uses a reputable lawyer.