As has been mentioned, the laws governing the foreign ownership of real estate in Croatia was restrictive. Indeed, through much of the country’s history, foreign nationals could not purchase or own real estate in many instances.
Beginning in the 1990s, Croatia began the process of liberalizing its laws governing the ownership of real estate in that country. In that regard, Croatia enacted what is known as a statute of reciprocity when it comes to foreign ownership of real estate in that country.
In this regard, the basic provisions of the laws governing real estate ownership by foreign nationals states that if the country of origin of the foreign citizen allows a Croatian citizen the ability to own real estate, Croatia in turn will allow that foreign national the ability to purchase and own real estate in Croatia.
In Croatia, reciprocity is presumed to exist unless a demonstration is made otherwise. Therefore, generally speaking, the presumption exists that a foreign national can legally and lawfully purchase real estate in Croatia in this day and age.
Understanding that the real estate laws have been liberalized as far as foreign nationals are concerned, there still are many unique hurdles that must be surmounted before a foreign national actually can complete the purchase of real estate in Croatia at this point in time.
With that said, prior to actually executing an agreement involving the purchase of real estate in Croatia, a foreign national must obtain permission from the Croatian Ministry of Foreign affairs. The Ministry must verify the ultimate ownership interests when real estate is being purchased by a foreign national.
On occasion, the review process by the Ministry of Foreign Affairs can be rather lengthy. The reason for potential delays is found in the fact that in its review process, the Ministry of Foreign Affairs involves the Croatian Ministry of Justice and local governmental offices where the real estate in which a foreign national is interested in purchasing is located.
As far as the real estate sales process is concerned, the first step in the process is the execution of a sales contract between the parties. (This agreement is taken to the Ministry of Foreign Affairs together with a written petition seeking approval from the Ministry of Foreign Affairs.)
Once all of the bureaucratic activity comes to a conclusion, the final contract between the parties can be entered into and a deed will be prepared for the purchaser. It is important to note that the deed cannot be filed in the Land Books of Croatia by a foreign national without the necessary papers approving the purchase as prepared and issued by the Ministry of Foreign Affairs.
Deposits are commonly required when the initial agreement for purchase of real estate is executed. The deposit generally is in the amount of 10% of the overall cost of the real estate. When approval issues from the Ministry of Foreign Affairs, when the final contract is executed, the buyer will be responsible for paying the remaining balance due and owing on the purchase price of the subject real estate.
Croatia Mortgages Options
When considering the options for a Croatian mortgage on your overseas property there are a couple of choices to consider:
Do you consider raising finance on your existing property in the UK to cover the whole cost of your purchase abroad? A good idea if the interest rate in the country in question is a lot higher than it is here in the UK as you will pay a lot less in monthly repayments.
Do you secure a mortgage against the property from a local bank in the country of purchase? This can be a wise option especially if the interest rate is lower than our current UK interest rate. Most overseas mortgage / bank lenders will require up to 30% deposit on mortgages. However, you will need to give some thought to how you will service your mortgage payments each month especially if you are not living or earning in that country as you may well lose out on exchanging money each time to cover monthly expenses.
Some Builders and developers may well offer their own mortgage facilities on their properties for sale. This can be beneficial to both parties depending on the logistics of the mortgage or loan facility. Always check and compare with the two options above before making your final decision.
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