Registering Property in Croatia

Procedure 1.

Obtain a land registry extract from the competent land register court

Time to complete:

1 day

Cost to complete:

HRK 20 per extract

Comment:

Obtaining a land registry extract has become a crucial part during the preparation process for the purchase of a real estate, since the land registry extract enjoys public faith. Due diligence requires that the buyer knows the status of the land registry. Not knowing it can also result in conflicts on the property. The extract must be stamped by the Land Register Court in order to be verified. This usually does not take more than one day. Croatia has been in the process of computerizing the Registry. This process is still in its early stages, however it is possible to search some of the Land Registry Books online and obtain an electronic Land Registry Extract for a property that has been entered in the database. The digital Land Registry can be accessed through: http://e-izvadak.pravosudje.hr/mpweb/main.jsp E-Cadastre also enables online insight into the legal status properties in Croatia, according to the number of land plot and cadastral municipality data. (http://katastar.hr/dgu/ind.php)

Procedure 2.

Notary notarizes sale contract

Time to complete:

1-2 days

Cost to complete:

HRK 47 per signature verified by public notary (2 signatures required)

Comment:

The contract of sale, that contains a clausula intabulandi (i.e. the declaration by the seller that the purchaser may be entered in the land register), is prepared by the parties or by a lawyer and the signatures of the seller (the party whose right will be limited by contract) is verified by a public notary. If a lawyer prepares the sale contract, it will cost about 1.25% of the property price (plus 22% VAT) for properties with a value above HRK 500,000. For lower values, there is a fixed fee on a scale. The documentation shall include: Land register extract (obtained in Procedure 1).

Procedure 3.

Submit the sale contract to the municipal tax administration to pay land transfer taxes

Time to complete:

30 days

Cost to complete:

no cost

Comment:

The buyer shall submit the sale agreement to the tax administration on the City/Municipality level for payment of land transfer taxes. The tax administration passes a decision on the amount of taxes payable within 30 days and sends this decision to the address of the person who submitted the sale agreement. Along with this decision of the tax administration, a payment slip is attached, with the amount of the tax due, and with the bank account number indicated. The notary public shall also report the sale agreement to the tax administration on the City/Municipality level for payment of land transfer taxes. While the buyer has the legal obligation to deliver the contract of sale to the tax authority within 30 days as of the conclusion of the sale agreement, the notary is obliged to deliver the sale agreement to the tax authority within 15 days of the month in which the certification of signatures took place. Within 15 days upon receipt of the tax assessment notice, the buyer shall pay the real property transfer tax. In the event of a default by the buyer, the tax authority can hold the seller jointly liable for the payment of this tax, provided that the seller assumed the contractual obligation to pay the tax. If the buyer does not notify the tax office of all circumstances regarding the real property transaction that are relevant for the proper assessment of the real property transfer tax, he shall be subject to penalties in an amount ranging from HRK 500 up to HRK 200,000. If the buyer does not pay the tax, it will not prevent the right to register the ownership.

Procedure 4.

Pay transfer taxes, stamp duty and registration fees at a commercial bank or post office

Time to complete:

1 day

Cost to complete:

HRK 50 (stamp duty) + HRK 200 (registration fee) + 5% of property value (real property transfer tax)

Comment:

The fees and taxes can be paid in the post offices or in the commercial banks, but only to the indicated State Budget bank account number.

Procedure 5.

Register title transfer at Land Registry Court

Time to complete:

140 days

Cost to complete:

Already paid in Procedure 4

Comment:

The request for the property registration must be submitted to the Registry by the parties on the appropriate registration form approved by the Ministry of Justice. However, the request shall not be rejected just because it was not submitted on the prescribed registration form. The time it takes depends on the complexity of the case and the qualifications of the registry staff, but usually a straightforward case should take about one year. The participation of an attorney is not mandatory, but if one is involved, his fees will be about 0.5% of the property value. The Registry conducts the registration procedure and renders the decision issuing the property title. The process of recording the sale agreement with the competent land register court takes around 140 days, when the proceedings are conducted by an experienced lawyer. Depending on the various courts, this process may take even longer. It should be highlighted that only the final decision, the one allowing the registration, produces the legal effect. However, regardless of the time when the final decision is rendered, the date of applying for registration will be the date marked in the Registry as the moment of transferring the ownership title. From that moment the party is protected towards all applications submitted afterwords. This rule is called the rule of priority: the buyer has the legal right to dispose with the property (to sell, lease, bequeath, transfer by gift, mortgage the property). From that moment until the final registration the buyer has "quasi ownership". Therefore, even before the registration is completed, the first buyer - quasi owner can sell the property to another, second buyer. However there is a risk if the final registration of the first buyer - quasi owner is not allowed. In that case he will be liable for damage towards the second buyer. In practice the other contractual party will probably not be willing to enter into the legal transactions with the person who is not the legal owner of the real-estate in question (or take the risk). From 2004 the Court no longer accepts incomplete applications. If the registration form contains certain deficiencies, the court will not invite the applicant to correct the request but will immediately dismiss the application. The applicant may submit a new request, which will then have a lower rank. This has resulted in some reduction of backlog at the Courts and has also led to higher demand for professional assistance with the application process. Furthermore, recent changes in 2005 entrust the Land Registry clerks with the authority to decide on applications, with judges deciding on appeals. With registration moving from a judicial process to a more administrative process, this is a welcome change that indicates potential for decreasing the amount of time for registration. Recent internal reorganization of the Land Books also indicates future potential for increased efficiency. The documentation shall include: Notarized sale agreement Application form Certified copy of an ID or a passport