During the socialist era, and prior to 1992 land registration was largely neglected and it was almost impossible to find a property with a 'clean title'. Records are often out-of-date and inconsistent with poor linkages between the property registers (located in the local courts) and the cadastral (land registry). Often one or the other is out of date due to the fact that a record would be updated in one of the registers but not the other and it was left to the owners of the property to register the property at both the court and land registry. Other factors as to why the records are out of date are:
- Properties have been handed down to offspring without proper recording due to excessive inheritance taxes during the communist regime in the former Yugoslavia
- There has been little or no government funding to update the system from its inception, however the system is now being updated thanks to funding from the World Bank in 2004 but this process will not be completed until at least 2015.
- A lot of Croatians immigrated after both World Wars so a lot of people listed on the deeds, if they are alive, could well be living in another country.
This means that an eventual purchaser may have to hire a lawyer to clean the title. Depending on the circumstances this process may take between 3 months and a few years. Often, if witnesses in the village agree that no-one is alive on the title or their whereabouts are unknown then the process is quite quick.
What is a clean title?
A clean title is one whose ownership history is properly and legally recorded. Properties which are not clean should not be bought by foreigners without first having the title cleaned. One must also be careful if buying an apartment that all historical building disputes have been resolved. Often these building disputes are the reason why a lot of buildings are in a state of neglect whereas an individual apartment in the building may be in good condition.
Sometimes clean title is misunderstood by clients to mean that legally everything is fine...however foreign purchases should be aware that a title may be clean but the house/apartment/building may not be legal.
Is a building or apartment legal?
A house/apartment/building may not be legal if it was built after 1968 and does not have a building permit or if additions have been made to the property without getting a building permit for the addition.
A foreigner may purchase a property that does not have a building permit as the permission application to purchase a property requires only that a property is in a building zone.
A foreigner may purchase a property that does not have a building permit however it is recommended that the buyer first engages an architect to ensure that the building has been built in accordance with building codes and regulations and a building estimate made to bring the building up to standard so that a building permit may be applied for and granted.
Does the property have a lein recorded against it?
The buyer should also ensure that a title does not have a lein recorded against it that has not been settled.