Question on buying property "permission to use hou

[ianl]

Hi folks. We're hoping to sign for a detached house in Istria next week but our lawyer has come up with some information I'm not sure I understand or am keen on. I'm trying to find out from him exactly what it means but would be grateful for any advice from knowledgeable people here.

The property is 4 years old and the original buyer who is named on the land registry apparently still owed money to the developer so the developer did not apply for 'permission for use of the house'. We are buying from another person who had the property after the original buyers. My lawyer says this lack of 'permission to use the house' is not a legal problem and I can apply for it when we have signed for the house. But, does anyone know what this permission involves? what are the implications if you don't have it and is it costly/difficult to get?

We are buying as private individuals not as a company because we can't face the hassle of a company. I think we have a good idea of the implications of this for renting etc but don't know if it has any bearing on the question above.

Thanks

[seka]

I have not heard of this before, but be careful. Consult a second lawer, if you can.

[Ribaric]

It's difficult to decide if...

(A) This is a non-problem and the lawyer is merely looking for a meaningless technicality in order to swell his/her charges. Or....

(B) That "use" of the house has not been established. If not, so what? Who will cause a problem?

AHhhh! Buying abroad eh.... Who'd do it?

[mambo]

What he is talking about is the so called 'using permission' that you need for a house. Without this using permission you (officially) cannot get water, electricity, in fact, you are not allowed to live in it, so renting it will be out of the question, because you will have to apply for a permission to let and what do they want to see ...............indeed, the using permission, which you don't have.

This is of course on paper, because in reality you will have all these services, but you can end up in a hell of a lot of problems if you meet the wrong inspector.

You can of course apply for this permission yourself, but I think I would like to know why they never applied for it in the first place ? I.o.w. why did he owe that money to the developer ? Did the developer not deliver what he should have delivered or was the buyer wrong in this case ?
So perhaps you should get a spet inside the house and let him decide if the house meets the specifications which it should have. If it meets the specifications then the using permission will not be a problem. But............if it doesn't meet the specifications it can become a costly affair. You will have to make (and pay for) the changes so that the house can pass the inspection.

I think my suggestion would be to check all other permissions and, if they are OK, put some money on a third party account (e.g. notary) in case problems arise with the permission.
Lots of people in Croatia try to hide deficiencies, make you believe everything is fine and once you paid you will never see them again. First they are your best friends (or so it seems) and once the deal is done they will never talk to you again.
There is a nice saying that goes a bit like this: 'A Croatian businessman will be your friend for as long as he needs you'.

Be careful

[ianl]

Thanks everyone, esp Mambo's full reply. That's helpful advice, I'll tread carefully and report what happens.

[nikh]

Hi! Mambo si completely correct, you also wont get insurance on the building or be able to sell in the future. You should not purchase without a usage permit is the bottom line. Demand they get it. The new laws states from Jan this year that you must have a usage permit and they intend to crack down on this, you could find yourself in an awful position of living in an illegal build and finding a bulldozer outside your house one day. 55 houses in the little town of Milna on Brac knocked down already this summer. No usage permt dont pay and your lawyer should be shot for his advise.pm me for the translation of the new laws governing usage permits if you want

[ianl]

Another question, sorry. The deed is done, I've been through it in great detail with the lawyer and been assured that the primary building permits and permissions are in place and everything is legally sound with no problems in gaining the permission to use. They say that the 'permission to use' is only a double check on the main documents. If anyone would like to know more, please pm me!

My next question is that the estate agent is now demanding her fee but is asking not only for 3% of the price but 22% tax (of the 3%) on top of that.

3% I expected and budgeted for, an extra tax of 22% of the 3% I did not. Does anyone know if that's correct or is a fast one being pulled here?

Thanks

[vanetta]

I think you will find that this is correct. If you go through a Croatian estate agent then yes you do pay the extra 22% on the 3% as I believe this is the VAT. Hope this helps.

[irac]

Ian, a lot of agents in and out of the country round this up to 4%, or say 3% plus vat (usually 3.75%). You could have case for recourse if it wasn't mentioned in the original arrangement, normally commission prices are quoted stright up (and tax is always mentioned). Eg. my colleagues charge 3%, which is 2% plus tax.

[ianl]

No, its not mentioned in the original agreement and even on the estate agent's website in the FAQs where it explains the charges it says to add only 3% for the agent's charges in working out the total sum. Do I have a legal leg to stand on if I pay only the 3% and not the extra PDV added?

Thanks

[irac]

Ian, ultimately you will be the person who decides what to do or what process to follow. Personally, if it's not in the agreement, hasn't been mentioned, or hasn't been put on the webstie, then you have more than a legal leg to stand on. I know from this past summer where a client was given (inadvertantly) an out of date brochure and on it the price of the property hadn't been adjusted for more than 12 months or a new patio and attic conversion taken into account. My colleague Veljko spoke with the vendor, explained the mistake and came to an agreement with them and the buyer, and in the end the property guys got 1% instead of 4% (tax and fees accounted for).

If you want you can pm me and I can ask my colleague who does our legal stuff. He's local and has just gone onto the bench, so he'll know best.

[z00ey]

@ ianl

the "permission to use the house" aka "uporabna dozvola" is a permit that is given to a building, actually saying that the building is:
a) safe to be used (built according to the specifications and plans)
b) it defines the way it is used (ie a kindergarten, or a hotel, or a private house etc)

you should get the building permit papers together with the plans, and take them to a local architect. Then he can go out on the building and see if the building was built according to the building code that is stated in the building permit (of course, you'd pay him his fee). lawyers don't know dick about this (they can't read plans at all)

if the building is not built according to the code (especially if it is quite bigger than it was supposed to be) it is in danger of being torn down, or at least of not getting the permit. in that case you'd never be allowed to rent legally.

[nikh]

Hi! Ianl sent you a pm of the english version of the new law on usage permit. I hope you can understand it as it relates to a report on properties i have pruchased,. zooey is right about the lawyes as we discovered after we purchased 3 props, the lawyer told us that the agent had checked the paperwork and that he had not been instructed to do so , it is up to you to purchase as if you would at home. and look at the paperwork, get copies and then go to a n architect and enginerer to check its correct. You need a usage permit no matter what your lawyer says. It is not as he says, it is necessary , but I would be more interested in why it wasnt applied for before, it sounds fishy to me. you should not pay your agent until they sort tthis out for you, tell them to get stuffed if they didint tell you abot the pdv , they are probably picking up a commission from the vendor as well so they should take this one on the chin. did you sign a contract with your agent

[ianl]

Thanks nikh. Unfortunately I don't seem to have got the pm. I have received other pms so not sure why yours did not come through.

Sorry if I gave the impression that the lawyer said that the permission to use was not necessary. It is but they said it was of secondary importance to all the correct permission to build and approved building plans etc. and all those are in place so I can apply for the permission to use which 'should' be no problem. They reckoned that it only really impacted if I wanted to apply for a licence to rent, which I don't at this time and hopefully will have if in the future we decide to rent. (Decided we wanted the house purely for ourselves to enjoy Croatia at times we want).

I've been checking all the papers we signed, especially the original one which we signed to see the houses with the agent in which we agreed that if we bought one of the houses we saw with them, we would go through them and pay 3%. No mention at all of PDV. So, as far as I am concerned that's the agreement I have with the agent.
You're right about the agent should take it on the chin. They are making 3% from both buyer and seller - is this a licence to print money?

[mambo]

Ian,

What Zooey is trying to tell you is that having a 'building permission' does not mean it is automatically the RIGHT 'building permission'.

In order to get the 'using permission' you will have to show all your permissions and they may (they don't do it always) compare the drawings in the 'building permission' with the actual situation.
Some people once built a house, then later decide to add a room, a terrace or a swimming pool and they don't even bother to ask for a 'building permission'. They simply think 'I have a building permission, why do I need to apply for another one ?'

In case your house does not comply with these drawings two things might happen. The first one is the worst one and that is that the state will tear the whole house down.

The second one is that they will let you file for a 'building permission', but it sounds easier than it is. In order to do that you will need to go to an architect, he has to draw the whole thing (but he needs to check the foundation, thickness of the walls, measure the whole thing, cost a lot of money), then you need calculations and then you need a hell of a lot of signatures from almost everyone.
The worst part is................you need them from your neighbors and if they had problems with the former owner you can simply forget about ever getting a permission. As long as they don't sign you will not get your 'location or even building permisson'.
Many real estate agents conveniently leave this out of the information they give to prospect buyers, because they know that potential buyers will either lower the price drastically (rightfully so) or they will not even buy it anymore.

Some people say it is not that bad...........I am sorry to say that it is that bad. In Pazin there is a case of two neighbors having a nice argument about electricity and then comes the time that one needs a................'building permission'..............he never received one, since the neighbor simply refused to sign and is still refusing up until today.

If you were reading the news papers you probably have read the story about PEVEC Pula. One of the neighbors apparently is not happy with the amount of money he received from PEVEC and he made the city withdraw the 'location and the building permission'. PEVEC now officially has to close, this is how rediculous it is here in Croatia.

Anyway, I hope and assume it is not that bad with your house, but you definitely want to check the drawings against the actual building prior to doing anything. Never ever trust a lawyer or real estate agent on his word.............the value of both of them is zero !

Yes you can go to court..............good luck, it will take you at least 5 to 10 years to get some sort of an answer and usually you loose (unless you have an extremely good lawyer and they cost a lot of money again), since you are a foreigner. Courts can still be bought in this country, so be careful.

You don't need an architect to check the drawings, you can do that yourself. Get a measuring device, get the approved drawings from the 'building permission' and start measuring the house.

If they don't match up.............you have problems, simple as that. And in that case I would not buy that house. They can tear the house down if they want.
The whole procedure of applying for the right documents may take you over a year and cost a fortune and a lot of headache, not worth the hassle.

In other words, be careful.

Let them arrange that 'using permission' if it is so easy. They know how to do it.......so why didn't they do it themselves ? Apparently it is not that easy and now they want you to have the fun with it.