5 Risks of Buying Property in Croatia

An aerial photograph of The Old Town of Dubrovnik in Croatia. It shows dozens of white walled buildings with orange terracotta tiles. The city is surrounded by blue ocean water

Croatia is a beautiful country with a real estate market that’s seen some growth in recent years. Whether you’re looking to move to Croatia, buy a vacation home there, or invest in a growing real estate market, there are many great things about buying property in Croatia.

If you’re looking for a vacation home or place to live, Croatia is beautiful; with thousands of islands, plenty of coastlines, and near-perfect weather. It can also be a great place to set up a business. Its membership in the EU, investment opportunities, and multilingual workforce make it quite appealing.

However, as with any property purchase, there are some risks associated with buying real estate. It’s up to the buyer to do their due diligence to make sure they’re making a wise decision. Some risks are specific to buying property in Croatia. Read on to see what you need to know before making a purchase.

1. Not Everyone Can Buy Property in Croatia

Before you begin to think about buying property in Croatia, you need to check if you’re allowed to purchase property in the country. If you’re a Croatian citizen, you’re in luck. You should have no issue buying property. If you’re from a country that’s a member of the EU, you may have to take a few more steps, but you should still be able to purchase property without too much issue.

If you’re from a country that isn’t a member of the EU, things are a little more complicated. Croatia will only allow people from countries with a reciprocity agreement to buy property in their country. If your country doesn’t have a reciprocity agreement with Croatia, then you’re out of luck. 

Quite a few countries have reciprocity with Croatia, but it’s essential to check continually, as the list changes frequently. It’s also important to note that the United States does have reciprocity; it’s only for some states’ residents, and there are different conditions based on each state.

Buying Property as a Croatian National or Member of the EU

If you’re a member of the EU, you shouldn’t have any difficulty buying property in Croatia. You’ll go through the typical steps of finding a property, securing finances, signing contracts, and closing on the property. You’ll need identification to prove that you’re a member of an EU country.

Buying Property as a Citizen of a Country with Reciprocity

If your home country has reciprocity with Croatia, you can typically get permission to buy property, but you may only be allowed to live in the country for nine months out of the year. You’ll need to apply for permission from the Ministry of Justice. This process can take up to six months.

When securing a property, you may want to sign a pre-contract that’s contingent on getting permission to buy in Croatia, especially if you’re only from a country with reciprocity. If you sign a full contract before you’ve gotten permission to buy, you’ll still have to pay the full cost of the property. You can get your money back, but you’ll have to go to court and it can take some time.

Buying Property as a Foreigner with No Reciprocity

If your native country doesn’t have reciprocity with Croatia, you only have two options:

The one option is you can wait until your country establishes reciprocity, which isn’t guaranteed. However, it is possible, as Croatia does add new countries to their list. 

Your other option is to establish a business in Croatia. Once you own a business there, you can buy property pretty much anywhere.

An image showing a court gavel and the scales of justice

Although it’s become easier to purchase property in Croatia in the past few years, there are still some legal issues to overcome. After World War II, land in Croatia was considered socially owned, so there weren’t a lot of records of land held by individuals. This tradition continued for about 40 years. 

Families conventionally pass down land from father to son. The main issue is that land titles and records aren’t always updated. It can often be difficult to know exactly who owns a piece of property. In the past, land couldn’t even be registered unless the tax was paid, so many landowners chose not to register.

If the property you choose has information in the land registry, it should be okay. These are generally considered a good-faith purchase and you’ll need to file a claim to get ownership put in your name. The owner will have a three-year period to appeal, after which point the property will become yours.

Socially-Owned Property

If the property was previously socially owned, you’re more likely to run into problems. They don’t go by the records to establish ownership of the land, and you may find yourself in the middle of a struggle if you purchase socially-owned property and a Croatian citizen lays claim to it.

Restitution Claims

During the socialist regime, many Croatians had their land confiscated. After the regime ended, the “Law on Restitution of Property Confiscated During the Yugoslav Communist Regime” was put into place to help people reclaim their land. While people are no longer able to file restitution claims, some are still being processed. You’ll want to make sure your potential property isn’t tied up in any of these cases.

Related: Fun Facts About Croatia

3. It Takes Time

An aerial shot of Rovinj, Croatia. It shows several large outcroppings of land surrounded by blue ocean. The city features dozens of tightly packed rustic buiildings surrounding a large church

The process of buying property doesn’t move quickly in Croatia. You’ll first want to take time to find the right property, which can be difficult, especially if you’re from out of the country. You likely don’t know the country well enough to know exactly where you’ll want to buy, so you’ll need to research and explore to find the area that feels right to you.

You’ll also need time to do your due diligence and make sure you’re getting a good price for the property. It may take some time to check out other properties and compare. You’ll likely need to meet with an agent and may even want to hire a lawyer to make sure the property is free of any other claims, such as being involved in an ongoing property case.

Lastly, getting permission from the Ministry of Justice may take the most time of all. It usually takes around six months for the Ministry to do a check to make sure you’re from a country that has reciprocity with Croatia. Overall, you may want to give yourself a year from the time you start your search to the final closing on the property.

4. Inconsistencies in the Real Estate Market

Croatia doesn’t have a robust, mature real estate market, as you’ll find in some parts of the world. While it’s growing and it’s becoming a more popular place to buy property, there are some inconsistencies. The market is difficult to read, especially if you’re buying larger properties or property near the ocean.

These areas have many inconsistencies and little data, so it can be difficult to figure out if you’re getting a deal, a fair price, or if you’re getting ripped off. When you find a property you like, you’ll want to also look at several similar properties to try to get some sort of comparison. If you haven’t already, you may want to hire a real estate agent to advise you on your purchase.

5. Issues with Croatian Banks

An image of Croatian currency meant to symbolize banking in Croatia

If you don’t plan to buy your property with cash and will need to finance, you may run into trouble with Croatian banks. Unless you’re a Croatian citizen, banks will be highly reluctant to lend you money. The main concern is that you may not pay them back, especially if you haven’t been in the country long and haven’t established a life there.

If you’re a member of the EU, you may have a better chance, as people from EU countries are supposed to be treated the same as Croatian citizens in every respect. If you’re from a country outside the EU, it’s highly unlikely that you’ll get a loan, especially if you’re new to the country. If you’re lucky enough to get alone, don’t expect to be able to finance the entire property. Instead, it’ll likely be a small percentage of the cost.

If you need to finance your property, you may need to find a bank outside of the country and may want to look at banks in your native country. These banks will be more likely to help you with finances.

Related: Cost of Living in Croatia

Final Thoughts

If you’re set on buying property in Croatia, you shouldn’t let the risks deter you. There are many wonderful things about the country, especially now that it’s a member of the EU. It’s a beautiful place to live, and you’ll feel like you’re on vacation year-round. It’s also centrally located, so you can get to almost any European country in three hours or less.

You should just be aware of the risks and know all of the pitfalls so that you can make educated decisions. With the right knowledge, you can find the perfect property for your family or business and make the transition to life in Croatia go as smoothly as possible.