Buying Property in Croatia – A Warning

Property in Croatia has been a good investment in recent years, with prices rising 20 percent per annum. An ever increasing number of Brits are buying in Croatia, keen to share in the boom.

Channel Four’s Selling Houses Abroad featured a warning last night, however, about the Croatian property market where corruption, the programme claimed, is widespread.

In 2003 Graham Thurston bought a 2,000 square metre (half an acre) plot of land by the sea just outside Dubrovnik for £85,000, hoping to build an apartment block to fund his pension. As a result of government red tape, however, he spent two-and-a-half years obtaining planning permission to build the apartments. While he was doing this Graham discovered he was not the legal owner of the land.

The man who sold the land to Graham did not have full legal title to it. Graham had used the legal services of the seller’s estate agent to check the land’s title. This was unwise. He should have used an independent solicitor to work on his behalf.

Kieran Kellaher, an Irishman who has worked as a property agent in Croatia for 14 years, recommended that in Eastern European countries you should employ the services of a high powered solicitor from the capital city when buying property. This avoids you having to deal with a local solicitor in towns and villages where everyone knows everyone else and the system may be worked to the disadvantage of outsiders.

A particular problem in Croatia (and potentially other eastern European countries) is that more people than just the seller may own title to a property. There may be children, brothers, sisters, aunts, uncles and a variety of other people who could enjoy part ownership of a property. No single person has the right to sell it. Kieran Kellaher believes that about one third of property coming to the market in Croatia could have unresolved issues lurking in the background, with the potential to catch out unwary buyers.

Fortunately, the intervention of Selling Houses Abroad seems to have brought about a satisfactory resolution for Graham Thurston. Graham was advised to register a dispute with the local planning office about the land’s ownership. This would enable him to block the land from being developed or sold and give him a strong negotiating position to recover some of his money. The Croatian owners then offered Graham 50 percent of the proceeds from selling the land.

Local agents say the land could now have a value of £320,000 so, fortunately for Graham, he still seems likely to make a profit from his adventure in Croatia – although much less profit than he should have made.