Buying property in Croatia

21-09-2015

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Initial agreement between the seller and the buyer - Before Contract

What form can this agreement take? Preliminary contract?

A real estate purchase agreement may be concluded in the form of a private deed with a certification of signature, an authenticated private deed, or an authentic instrument (notarial act).

All above mentioned forms are written forms.

Rules set out by the Croatian Obligation Law Act (Zakon o obveznim odnosima) – Art 268.  provide for an equal form of a preliminary contract.

With whom must the parties (buyer/seller) formalise the initial agreement? Is a legal form imposed?

All of the mentioned forms require notarial services. In the case of a private deed with a certified signature, parties may assemble the agreement themselves, or be assisted by a  professional, and the notarial service consists of certifying the signature of the seller.

The same is true in the case of an authenticated private deed, with the distinction that the agreement has to be assembled according to a more formal set of rules regarding form. Authentication itself makes the notary liable for the content. The mentioned liability is a safety valve because the notary will deny service of authentication unless an adequate intervention into the content is permitted, assuring a proper level of legal certainty regarding form and content.

An authenticated private deed produces same legal effects as an authentic instrument (notarial act).

An authentic instrument (notarial act) is assembled directly by the notary making him/her liable for the content. 

Further to different legal heritage and tradition within the same legal frame, certain modalities are more accepted in some regions of Croatia than others (notarial acts being especially accepted in the north-western coastal region of Croatia - Istria.)

What are the legal effects of this preliminary contract? Is a preliminary contract necessary?

The preliminary contract produces an obligation for both parties to stipulate the objective agreement. It is binding provided it includes basic elements of the objective agreement and the circumstances haven’t changed to an extent that neither the preliminary agreement would have been concluded under such circumstances.

The preliminary agreement is not necessary, but may prove useful and is not uncommon in practice.

Are there amounts to be paid, and to whom? Can these amounts be repaid?

Advance payment isn’t prescribed by the law, but may be provided for the clauses of the purchase agreement.

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