New rules for real estate transactions: Stricter penalties and more transparency

The introduction of stricter penalties and increased transparency in real estate transactions marks a significant shift in Croatia's regulatory landscape. The new Law on Mediation in Real Estate Trade came into effect two days ago, reflecting the evolving nature of the property market, which has become more dynamic and fast-paced since its last major revision in 2007. This change was discussed during the TV program U mreži Prvog, where Boro Vujović, president of the Association of Real Estate Business at HGK, and Maja Radišić Žuvanić, head of the Sector for Trade and Market of the Ministry of Economy, outlined the implications of these reforms.

The law introduces several key changes aimed at protecting consumers and ensuring fair practices among mediators and agents. One of the most notable updates concerns the regulation of mediation fees, commonly referred to as agency commissions. These provisions were part of a long public consultation process, with input from both economic stakeholders and citizens. According to Radišić Žuvanić, some complaints had been raised regarding certain mediators who engaged in practices such as conditioning property viewings on payment, a practice that has now been addressed. She emphasized that while not all mediators engage in such behavior, the law aims to create a more transparent environment for buyers.

Under the new rules, buyers can inspect properties multiple times without being required to sign an agreement for mediation. Instead, they simply need to complete a record sheet confirming their visit. This change is intended to prevent potential exploitation by mediators, who might have previously used the signing of agreements as a means to secure payments. Vujović pointed out that this reform helps clarify the responsibilities of mediators, who are now expected to act as professionals rather than exploiting consumer rights.

Another critical aspect of the new law involves stricter penalties for violations. Previously, fines were considered insufficient to deter misconduct, but the updated regulations introduce higher financial consequences. For individuals, the minimum fine ranges from around €1,000 to €30,000, depending on the severity of the violation. This increase is seen as a necessary step to ensure compliance and uphold the integrity of the real estate sector.

Vujović also highlighted the presence of illegal mediation activities on the market, noting that the new law addresses this issue by making it harder for unlicensed operators to operate. He mentioned that in some regions, there were numerous advertisements from agencies that did not have proper contracts, creating confusion and misleading information for potential buyers. With the new law, such practices will be prohibited, helping to restore order and clarity to the marketplace.

The law also includes measures to enhance transparency, particularly in how property listings are managed. It prohibits the use of unregulated advertising without prior mediation agreements, aiming to reduce the number of misleading offers that could mislead consumers. This approach aligns with broader efforts to improve consumer protection and promote ethical business practices within the real estate industry.

As the new law takes effect, experts anticipate that it will lead to a more regulated and trustworthy environment for both buyers and sellers. While challenges remain, especially in adapting to the new requirements, the overall goal is to foster a more stable and equitable real estate market. The response from industry representatives suggests that although the transition may require time, the benefits of greater transparency and stronger legal protections are likely to outweigh the initial difficulties.