TL;DR: A preliminary contract for the sale of real estate in Croatia is a legally binding agreement that protects both parties during the period between agreement and final sale. It must contain an exact description of the property, the purchase price, deadlines, and provisions regarding the earnest money deposit. Thorough due diligence of documentation before signing is crucial for a secure and successful transaction.
Many buyers and sellers of real estate view a preliminary real estate contract as a mere formality – a piece of paper signed while waiting for a loan or sorting out documentation. This misconception can be costly. A properly drafted preliminary contract is a legally binding document that protects both parties, defines the terms of the transaction, and stipulates what happens if someone withdraws. In this guide, you will learn what a preliminary contract must contain, how the earnest money deposit works, when notary certification is required, and what red flags you need to watch out for before signing.
Content
- What is a preliminary real estate contract and how does it work?
- Essential elements of a preliminary contract you need to know
- Earnest money deposit in a preliminary contract: what it is and how it protects us?
- Preliminary contract and main sales contract: key differences and certification
- What buyers should pay attention to before signing a preliminary contract: key red flags
- Why a preliminary contract is not just a formality
- How Regent Real Estate Agency can help with concluding a preliminary contract
- Frequently Asked Questions
Key Insights
Legal significance of the preliminary contract — The preliminary contract obligates the parties to conclude the main contract and protects the interests of both parties in the real estate purchase process.
Essential elements — The content of the preliminary contract must include an exact description of the property, the price, deadlines, and provisions regarding the earnest money deposit.
Role of the earnest money deposit — The earnest money deposit serves as assurance of the seriousness of the offer and can be forfeited or returned with double the amount depending on who withdraws.
Difference from the main contract — The preliminary contract does not transfer ownership; ownership transfer requires the main sales contract with notary certification.
Preparation and verification — Before signing, verify ownership, encumbrances, and clearly define conditions and deadlines in the preliminary contract.
What is a preliminary real estate contract and how does it work?
Many buyers and sellers of real estate view a preliminary real estate contract as a mere formality – a piece of paper signed while waiting for a mortgage loan or sorting out documentation. This misconception can have serious financial consequences. A properly drafted preliminary contract is a legally binding document that protects both parties, defines the terms of the transaction, and stipulates what happens if someone withdraws. In this guide, you will learn what a preliminary contract must contain, how the earnest money deposit works, when notary certification is required, and what red flags you need to watch out for before signing.
A preliminary contract for the sale of real estate in Croatia is a binding agreement by which the parties undertake to conclude a main sales contract in the future under predetermined conditions, regulated by the provisions of the Obligations Law. It is not a document without legal weight, but a contract that creates concrete obligations.
A preliminary contract is most often used when there is a time gap between the agreement and the realization of the transaction. Typical examples include waiting for mortgage loan approval, arranging ownership documentation, resolving encumbrances on the property, or completing construction. Without a preliminary contract, neither the buyer nor the seller has protection in this interim period.
It is crucial to understand what a preliminary contract is and what it is not:
- A preliminary contract is a legally binding agreement that obligates both parties to conclude the main contract
- A preliminary contract is not a transfer of ownership; ownership is not transferred by signing the preliminary contract
- A preliminary contract is protection for a buyer who wants to secure a property while waiting for a loan
- A preliminary contract is not a substitute for the main sales contract, which is signed before a notary public
- A preliminary contract is the basis for paying the earnest money deposit as confirmation of serious intent
A preliminary contract is a bridge between agreement and final sale. Without it, the agreement remains only an oral understanding that is difficult to prove and even harder to legally protect.
Essential elements of a preliminary contract you need to know
The preliminary contract should contain the essential components of the future sales contract, specifically: details of the parties, an exact description of the property, the purchase price, the deadline for concluding the main contract, and provisions regarding the earnest money deposit or advance payment. Each of these elements has its function, and the omission of any can lead to disputes or the nullity of the contract.
Here is what every preliminary contract must contain:
1. Details of the parties — full name, personal identification number (OIB), address, and contact information for both buyer and seller. If the seller is a legal entity, details of the company and the authorized person for representation are required.
2. Exact description of the property — cadastral municipality, cadastral parcel number, area, floor, and apartment number if it is a unit in a multi-unit building. The description must match the data in the land registry, not just the address.
3. Purchase price and currency — the price must be clearly stated, and if it is in euros, this should be explicitly written. Ambiguities in the price are one of the most common causes of disputes.
4. Deadline for concluding the main contract — a specific date or condition that must be met. For example, "within 60 days of loan approval" or "no later than October 1, 2026."
5. Provisions regarding the earnest money deposit — the amount of the earnest money deposit, the payment date, and clearly defined legal consequences in case of withdrawal by either party.
You should perform a check of important documents for purchasing real estate before signing the preliminary contract, not after. Any missing or irregular document can become an obstacle to concluding the main contract.
Professional Advice: Always insist that the description of the property in the preliminary contract be identical to the description in the land registers. A difference of just one square meter or an incorrect parcel number can create legal complications during ownership registration. 
Earnest money deposit in a preliminary contract: what it is and how it protects us?
The earnest money deposit is a sum of money that the buyer pays to the seller at the time of signing the preliminary contract as confirmation of their serious intention to purchase. It is not the same as an advance payment or down payment, although many confuse them. This difference has concrete consequences.
If the preliminary contract is concluded with an earnest money deposit as a penalty for withdrawal, the typical rule is: if the buyer withdraws, they lose the earnest money deposit; if the seller withdraws, they must return double the earnest money deposit. This is a legal mechanism that encourages both parties to fulfill the contract. The specific consequences of withdrawal always depend on how the clauses are defined in the preliminary contract itself – which is another reason for careful drafting of the document.
Differences between earnest money deposit and advance payment:
- Earnest money deposit has the function of a penalty for withdrawal – forfeiture or return of double the amount is a legal consequence of withdrawal
- Advance payment is a down payment on the purchase price that is always returned or accounted for, without penalty effects
- The earnest money deposit is accounted for in the purchase price if the transaction proceeds smoothly
- An advance payment does not have a protective function in case of withdrawal
The earnest money deposit is not a penalty, but a balance. It protects the buyer from the seller selling the property to someone else, and the seller from the buyer simply withdrawing without any consequences.
Practical example: The buyer signs a preliminary contract and pays an earnest money deposit of 10,000 euros. In the meantime, the seller receives a better offer and wants to break the agreement. The law obliges them to return 20,000 euros to the buyer – double the amount of the earnest money deposit. This provision makes the seller's withdrawal expensive and thus protects the buyer who has already invested time and money in the process.
Professional Advice: The earnest money deposit must be clearly agreed upon in writing. An oral agreement on an earnest money deposit is practically impossible to prove. Always request proof of payment and a written clause on the earnest money deposit in the preliminary contract.
Preliminary contract and main sales contract: key differences and certification
The preliminary contract and the main sales contract are two different legal documents with different effects. Understanding this difference is crucial for anyone buying or selling real estate in Croatia.
The certification of signatures on the preliminary contract is not obligatory for the preliminary contract to be legally valid – certification is linked to the main sales contract, which serves for the transfer of ownership and registration in the land registry. However, notary certification of the preliminary contract is recommended for high-value transactions as it increases the evidentiary weight of the document.
Characteristic / Preliminary Contract / Main Sales Contract
Legal obligation — Obligation to conclude the main contract — Transfer of ownership
Transfer of ownership — Does not transfer ownership — Basis for registration in the land registry
Certification — Not legally required — Legal requirement for ownership registration
Earnest money deposit — Typically paid with the preliminary contract — Remainder of the purchase price
Consequences of withdrawal — Forfeiture or return of double the earnest money deposit — Lawsuit for performance or damages
Form — Written form is sufficient — Notarial deed or solemnization
The role of the notary public becomes crucial when signing the main contract. Without notary certification or solemnization, it is not possible to register the change of ownership in the land registry. The entire real estate purchase process in Croatia goes through this step.
What buyers should pay attention to before signing a preliminary contract: key red flags
Signing a preliminary contract without thorough due diligence is one of the most common causes of legal disputes in real estate transactions. Before signing a preliminary contract, it is necessary to verify ownership and any encumbrances on the property, ensure that the description of the property matches the land registry data, and clearly define the deadlines and conditions for withdrawal.
Specific red flags to pay attention to:
- Inconsistency of ownership in the land registry — if the seller is not registered as the owner or there is co-ownership that is not stated, the transaction may be legally questionable
- Encumbrances and mortgages on the property — a mortgage in favor of a bank, an attachment, or a right of way must be resolved or clearly agreed upon before signing
- Unclear deadlines for concluding the main contract — phrases like "within a reasonable time" are not precise and can lead to disputes about whether the deadline has passed
- Lack of building or occupancy permit — for properties built without a permit or with unfinished legalization, there is a risk that ownership cannot be properly registered
- Unclear clauses regarding the earnest money deposit — if the preliminary contract does not clearly define what constitutes withdrawal and what the consequences are, the earnest money deposit can become the subject of a lengthy legal dispute
- A seller who is in a hurry to sign — pressure to sign quickly without time to review documents is always a reason for caution
Professional Advice: Request an extract from the land registry and a land registry certificate immediately before signing the preliminary contract, not weeks in advance. The situation in the land registry can change, and you need the most up-to-date information. Find advice on complete document verification before purchase and price and terms negotiation in our guides.
Why a preliminary contract is not just a formality
There is one mistake that is repeated over and over: parties sign a preliminary contract quickly, without checking, because "we'll sort everything out in the main contract anyway." This logic can have serious financial consequences.
Based on experience in real estate brokerage, a properly drafted preliminary contract can crucially protect the interests of both the buyer and the seller, precisely because it regulates the obligation to conclude the main contract and the consequences of withdrawal. Disputes almost always arise for the same reasons: unclear clauses about the earnest money deposit lead to questions about whether the earnest money deposit is forfeited or must be returned; undefined deadlines open the question of whether the contract has expired or is still valid; imprecise descriptions of the property create problems during registration. Each of these problems can be prevented by carefully drafting the preliminary contract.
Buyers who conclude a preliminary contract without thorough due diligence often do not understand what they have signed until a problem arises. By then, it is too late to negotiate, and the only option is court.
Sellers, on the other hand, sometimes underestimate the obligation to return double the earnest money deposit. They think they can simply "change their mind" if they receive a better offer. The law does not protect them in this regard, and court proceedings can last for years and cost more than the price difference itself.
Thorough documentation review and careful drafting of the preliminary contract regularly pay off – any oversight in this step can be more expensive than the entire process.
How Regent Real Estate Agency can help with concluding a preliminary contract?
Buying or selling real estate is one of the biggest financial steps in life, and the preliminary contract is the first binding step in that process. Whether you are buying an apartment in Zagreb, a house on the coast, or property in Istria, a preliminary contract functions according to the same legal rules throughout Croatia – but local knowledge of the market and documentation can be decisive. With professional support, this step does not have to be a source of stress.
Regent Real Estate Agency provides legal services that include review and advice on drafting preliminary contracts, checking land registry data, advice on earnest money deposits and deadlines, and support throughout the entire purchase process. Our team helps both the buyer and the seller understand what they are signing and what their obligations are.
If you are looking for a property to buy, browse our offer of properties and find a suitable option with expert support at every step of the transaction. For any questions, feel free to contact us.
Frequently Asked Questions (FAQ)
Is a preliminary sales contract for real estate binding without notary certification?
Yes, a preliminary contract is valid even without certification – a written form is sufficient. Notary certification of signatures is not a legal requirement for the validity of a preliminary contract, but it is recommended for high-value transactions as it increases the evidentiary weight of the document.
What is the usual amount of earnest money deposit when buying real estate in Croatia?
The usual amount of the earnest money deposit ranges between 5% and 10% of the purchase price. For more expensive properties, a fixed amount can also be agreed upon – the specific amount is always freely agreed upon between the buyer and seller and must be clearly stated in the preliminary contract.
What happens to the earnest money deposit if the buyer withdraws from the purchase?
If the buyer withdraws without a valid reason, they lose the right to the earnest money deposit, which remains with the seller as compensation for the missed transaction. The specific circumstances are always assessed according to what is agreed upon in the preliminary contract.
When is it necessary to conclude the main sales contract after the preliminary contract?
The deadline for concluding the main contract is freely agreed upon in the preliminary contract and is not legally prescribed. In practice, it usually ranges between 30 and 90 days, but it can be longer – especially for the purchase of a new building or when waiting for mortgage loan approval.
What is the difference between an earnest money deposit and an advance payment?
An earnest money deposit has specific effects in case of withdrawal – forfeiture or return of double the amount – while an advance payment is a down payment that is always accounted for in the price or returned, without penalty effects. The earnest money deposit is a stronger protective mechanism because it financially obligates both parties to fulfill the contract.
Recommended
- When to Buy Real Estate: A Market Analysis Guide
- Guide for Foreign Citizens Buying Real Estate in Croatia
- Documents You Must Check When Buying Real Estate
- Buying a Home with a Loan: A Guide to Costs, Interest, and Taxes
