Mr. Teo Ranić on the Real Estate boom in Croatia: „Natural beauty and reasonable pricing make foreign buyers flock to my country”

WOLEP: Please introduce yourself to your esteemed colleagues in the WOLEP community.

Teo Ranić: I am a lawyer in Rijeka, Croatia, and have been practicing law for almost four years now. Recently, I successfully established my own law office, which I am proud to oversee.

My primary area of expertise is real estate law, with extensive experience handling a variety of cases within this field. Additionally, I am also well-versed in commercial law, labor law, and other areas, aside from criminal law.

WOLEP: Could you please share with us what drew you to specialize in Real Estate? What do you find most compelling about it from a legal perspective?

Teo Ranić: Real estate law is an area of law that is constantly evolving and provides a wealth of opportunities. In my particular location, Rijeka, there are significant employment prospects as it is connected to surrounding islands including Cres, Mali Lošinj, Krk, and Istria. From a legal perspective, it is a captivating area to practice since it is mutually beneficial to both the buyer and seller, providing the satisfaction of a successful transaction. One of the benefits in this type of work is that it rarely results in unsatisfied clients, and it often ends with a celebratory dinner after the agreement is made. Ultimately, I aim to build my specialized area of expertise in this field as I look towards the future.

WOLEP: Croatia has become a highly sought after destination for those looking to purchase real estate over the last two decades. What advice do you have for foreigners who are interested in buying property in Croatia and what key factors should they consider?

Teo Ranić: I believe the most crucial factor is the incredibly beautiful land that Croatia has to offer, with picturesque mountains and stunning coastlines all within an hour's drive. Additionally, the price of real estate in Croatia is still relatively affordable for those hailing from wealthier European countries such as Germany or Switzerland. For instance, the cost of one apartment in Germany can buy an entire house and the second row to the sea here in Croatia. I believe this is a significant contributing factor for why many foreigners, drawn to the country's natural beauty and reasonable pricing, choose to purchase real estate in Croatia.

WOLEP: What are some common challenges that foreigners may face when trying to purchase property in Croatia?

Teo Ranić: I would like to first describe the short process for buying real estate here in Croatia. In the beginning, of course, you need to find the real estate that is good for you. Secondly, you would be looking for an excerpt from the Land Court. This active excerpt shows any existing mortgages or encumbrances on the property. This step is crucial and ensures that the buyer is not liable for any outstanding debts or penalties on the property. Third step would be looking in the history books in the Land Court for this specific real estate. And then only after you investigate the whole situation about this property, can you go and write the contract, and enroll the buyer as an owner in the Land Court. That would be the process of buying real estate in Croatia, in brief.

Regarding your question, foreigners from the European Union have the freedom to purchase buildings, lands, apartments, and houses in Croatia. However, it is still not permissible for foreigners to acquire agricultural land in Croatia. Nonetheless, the Croatian government has announced that from July of this year, European Union citizens will be permitted to purchase agricultural property in Croatia. However, there is limited information on whether this will occur, or if it will be postponed to another date.

As for foreigners from outside the European Union, there are specific regulations for acquiring real estate in Croatia. Such individuals need to obtain permission from the Ministry of Justice. Once an agreement has been reached between the buyer and seller, the buyer will then require authorization from the Ministry of Justice. Only after receiving permission from the relevant authorities, will the owner be able to enroll their property in the Land Court and secure legal ownership.

WOLEP: How difficult is it for foreigners from outside the European Union to obtain a permit from the Ministry to purchase real estate in Croatia?

Teo Ranić: The difficulty of obtaining permission from the Ministry of Justice to purchase real estate in Croatia depends on various factors such as the country of origin and the personal background of the foreign buyer. The grounds for seeking permission will also have an impact on how the request is processed.

The duration of the entire process of obtaining permission from the Ministry of Justice lasts between one to three months, depending on the specific circumstances.

WOLEP: Can you explain how property taxes for foreign buyers work in Croatia, and are they generally high?

Teo Ranić: The property tax for foreign buyers in Croatia is not generally high and is calculated on a fixed percentage of the property price. The property tax for foreign buyers is 3% of the property's sale price. Once the agreement has been legally signed in front of a notary, the notary will forward the contract to the tax office. Subsequently, the tax office sends the applicable bill of tax payment directly to the buyer for payment.

WOLEP: When purchasing real estate in Croatia, what are some of the common scams or fraudulent activities that foreign buyers should be vigilant of?

Teo Ranić: Due diligence is an essential aspect of purchasing real estate in Croatia as it provides insight into the property's legal status and ownership history. When obtaining an excerpt from the Land Court, foreign buyers may encounter active notes on the property. However, not all notes are serious, and an experienced lawyer can assist with resolving any legal disputes surrounding the property.

Before entering into a contractual agreement with the seller, it's crucial to include specific clauses that provide a higher degree of protection for the buyer and prevent scams and fraudulent activities from occurring. Engaging a competent professional to assist with the contract review is also highly recommended.

It's worth noting that once the contract is legally signed, any omissions or errors cannot be corrected easily, which may lead to legal disputes and financial losses. Foreign buyers, therefore, need to exercise caution and undertake appropriate due diligence to prevent scams or fraudulent activities during the real estate purchase process.

WOLEP: What is the usual approach of foreign clients when seeking legal assistance, and what are their commonly asked questions?

Teo Ranić: Referrals and word-of-mouth recommendations are the most common ways that foreign clients approach me for legal assistance when purchasing real estate in Croatia. As for the most frequent queries, clients often ask about the property's legal status to ensure it is free and clear of any claims or disputes.

Another common query clients have when buying building land is whether it's classified as a building plot or whether it may only be developed in some sections. Clients seek legal assistance to ensure that the buying process is seamless, and they are willing to invest in a comprehensive legal service like mine that guides them through the buying process.

I communicate with clients to ensure they stay updated on the procedure and the legal requirements to avoid any surprises along the way. This step-by-step approach provided by my services helps clients have peace of mind and know what to expect at any moment of the buying process.

To conclude, I provide full legal assistance to my clients from the initial steps of investigating the property's history to ensure it's free from any legal disputes, to drafting and composing a clear and concise contract. I guide my clients through the payment process and the necessary steps required to enroll the owner in the Land Court. Along with these, I also assist clients with all other legal procedures and requirements essential when acquiring property in Croatia.

WOLEP: In the last decade, has there been an increase in foreign nationals buying real estate in Croatia?

Teo Ranić: Yes, there has been a rise in foreign buyers over the past ten years. Particularly in the last two to three years, there has been a surge in foreign investment in Croatia as people continue to discover the country's real estate potential and its beauty. In fact, in the last year, most of the contracts I have executed were for foreign clients.

WOLEP: Are there any specific regions in Croatia that you would recommend to investors interested in real estate?

Teo Ranić: My recommendation is always around Rijeka! (laughs) Istria, of course, is the most beautiful part of Croatia, I think - they have sea, they have agricultural land, they have good food, good hosts, good wines. Basically, everything that a foreigner can ask for!

Then if you want to go to the sea, you can buy real estate on islands like Krk. Krk is connected to Rijeka by bridge, it takes circa 20 minutes to get there. You also have other islands - Mali Lošinj, for example, is quite renowned.

WOLEP: Tell us some more about the attractions of Rijeka.

Teo Ranić: As an avid football fan, I would highly recommend visiting the famous Kantrida Stadium, which is located close to the sea amidst enchanting rocky terrain. However, it is not currently in use, and we have a temporary stadium in place due to renovations required for Kantrida Stadium. It's my hope that within the next few years, after revamping, Kantrida Stadium will be an even greater attraction, and football enthusiasts from all over the world will be eager to come and witness it for themselves.

WOLEP: I'm looking forward to watching a game there alongside our colleagues from the WOLEP Sports Practice.

Teo Ranić: That would be great! As a real estate lawyer, it's my pleasure to recommend some of the must-visit attractions in Rijeka. Trsatska Gradina, or the Trsat castle, provides an awe-inspiring panoramic view of the entire city. The Old Town is another fantastic place to visit, with beautiful churches and monuments that embody the essence of the city.

Moving beyond Rijeka, Opatija is one of the most famous tourist destinations in the region and definitely worth visiting. There are also breathtaking castles and a quaint, picturesque town situated on the surrounding mountains, adding another layer of charm to the region. The mountains in the Gorski Kotar area are fantastic for trekking and running, providing breathtaking scenic routes and a chance to immerse yourself in nature. Additionally, you can even ski on the slopes while enjoying breathtaking views of the sea - a unique and truly special experience.

These are the most important attractions that must be visited in Rijeka. I highly recommend spending a few days in the city to soak in the ambiance and experience the heartbeat of the place.

To be continued

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