Liberalization of the Croatian Real Estate Market for EU Citizens

   The end of 2008 brought some long awaited legislative changes to the Croatian Law on Ownership that are inter alia expected to facilitate foreign investment in Croatian real estate market.

    As of 1 February 2009, with the exception of some special categories of real estate, citizens of EU member states will be treated as Croatian citizens for the purposes of acquiring ownership of real estate in Croatia "Amendments to the Law on Ownership (National Gazette 146/2008)". Restrictions on acquiring ownership of real estate will continue to apply to non-EU citizens.

    The recent amendments to the Law on Ownership do not apply to agricultural land and protected areas of nature (i.e. national parks).

    The amendments represent a significant step towards liberalization of the Croatian real estate market, as EU citizens will now be able to avoid the lengthy administrative procedure of having to apply to the Ministry of Justice for permission to acquire real estate in Croatia.

    Marinela Mostić, Director and leader of KPMG in Croatia's Real Estate Practice, says „the timing of the removal of this obstacle for EU citizens could be the shot in the arm for many real estate projects in Croatia in these difficult global times“.
 

LEGALITIES

Ownership of real estate property of foreign citizens in Croatia is regulated by Articles 354 - 358 of the Croatian Property Law (Zakon o vlasnistvu i drugim stvarnim pravima). The law has been published in the Official Gazette No. 91 in 1996 (Narodne Novine 91/96). U.K. citizens may, under condition of reciprocity, acquire real estate property in Croatia either as inheritance or by other legal transactions such as purchases, deeds, trusts etc. Reciprocity is presumed to exist unless proof to the contrary becomes evident. Inheritance - U.K. citizens may inherit property in Croatia. No additional approvals are necessary.

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Legal transactions - When acquiring real estate other than by inheritance U.K. citizens need to obtain the approval of the Ministry of Foreign Affairs of the Republic of Croatia. Prior to reaching a decision the MFA will seek an opinion from the Ministry of Justice, Administration and Local Self - Government, thus the whole process might take several months. In Croatia the ultimate proof of ownership is entry of the owners name in the local Land Books (Zemljisne Knjige) on that specific property. The local courts will not allow a foreign citizen to be entered in the Land Books without the MFA approval.

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The following is a list of the documents which have to be supplied to the MFA when requesting an approval to purchase property in Croatia:

1. A written request signed by the petitioner;
2. The sales contract;
3. An excerpt from the land books for the particular property (In Croatian ZK izvadak). This document is usually obtained in each municipality (Opcina) at the local municipal court (Opcinski Sud); it's land book division (Gruntovni Odjel);
4. A document from the local municipality (Opcina), from the following department: "Ured za prostorno planiranje". The document is called "Uvjerenje o namjeni", for the particular property;
5. Proof of citizenship for both buyer and seller (photocopy of passport);

Any photocopies have to be notarized by a Croatian Notary Public.