Please, refer to answers to questions 21 and 27 to see the regulations regarding lawyer’s fees. In case you decide to buy the property via credit released by a Bulgarian bank, you would definitely need the advice and assistance of a lawyer. When signing the title deed there are the following taxes: Notary tax-around 1% of the purchase price Land Registry tax- 0,1% of the purchase price Stamp duty- varies according to the place, where the property is located- usually 2%-2,5% of the purchase price. Those could be split between the seller and the buyer, but are usually only paid by the buyer. You would also have to be registered and acquire a Bulstat number – this is a reference number. Before paying the price, it is essential that your lawyer verifies that the property was not encumbered by the seller in favor of banks, third parties or tax authorities.
FAQs - Main questions
Citizens of EU Member States or of Member States under the European Economic Space Agreement may acquire the right of ownership in premises and limited real rights in a real estate in Bulgaria at the same terms and conditions like Bulgarians.
Citizens of EU Member States or of Member States under the European Economic Space Agreement may acquire the right of ownership in land in accordance with the requirements laid down in law in compliance with the Treaty concerning the Accession of the Republic of Bulgaria to the European Union. Until the end of 2011 foreign individuals were restricted from owning land as a second home. As of 01.01.2012 this restriction is no more applicable and foreign investors may acquire the land, where their property in Bulgaria had been constructed. However, the restriction is still valid regarding the ownership over agricultural land and would fall off in 01.01.2014.
3. Which are the main stages regarding the legal procedure (i.e: contracts, title deeds, etc) before the registry/public notary?
In case the property you want to buy is not fully constructed yet, or you do not have the readiness to become an owner (for example you cannot pay the purchase price at once, but would like to establish a payment plan), you could first sign a preliminary contract. The preliminary contract is a promise by the seller to construct/sell the property and by the buyer to buy it. Apart from this essential content, it is recommendable to include clauses safeguarding your interests- final terms for construction and transfer of the title; state of completion when the title could be transferred; completion of the complex, where the property is located; handling the last payment at the notary conveyance, only once the property is fully constructed and has all licenses; obligation of the seller/developer to transfer the title free of encumbrances(mortgages, pledges, charges, third parties rights); inserting penalties for late completion and transfer of the title and in case of encumbrances; securing the right to rescind the contract in case of failure to fulfill obligations. Once both parties are ready and the property is completed, it is necessary to sign the title deed before the notary. This is the document transferring the title and proving the buyer as owner of the property. At the same day he is listed as owner at the Land Register and is fully entitled to dispose with it- mortgage, rent, sale, ect.
4. How much are the legal costs and taxes (authorities taxes, lawyers services, banks, etc) involved with the purchase procedure?
5. Which are the most suitable legal measures I can take against the developer if he doesn’t comply with the preliminary agreement?
Generally, the law requires serving the developer with an invitation to fulfill the obligations within a reasonable term with a warning that in case of further delay/non-fulfillment you would rescind the contract and claim back the funds invested including penalties. In case the developer fails in his obligations specified in the invitation, your contract is rescinded and you can raise a claim in the court to sue him accordingly for refund, penalties, interest and expenses.
This depends on the case and the competent Bulgarian court entitled to hear it. There is a 3 instances court system in Bulgaria- first instance court, appeal court and Supreme Court of Cassation. Cases are appealed before the Supreme Court on very limited grounds, so most of them are decided finally by the appeal court.
7. What are my chances of winning a case in Bulgaria being a foreign national? Do I need to be present in person at the hearings?
As far as one of the parties to the contract is a Bulgarian legal entity or an individual, you could raise a claim in the Bulgarian court, unless it is specifically provided in the contract that the parties had chosen another jurisdiction different from the one provided by the general rules. There are many court cases in Bulgarian courts raised by foreign investors and their success depends not on the nationality of the claimant but on the characteristics of the case and on the well-founded preparation and the appropriate qualification of the attorney-at-law. Up to date many foreign investors managed to sue Bulgarian developers and received judgments in their favour. However, there are also cases where the judgment of the court was in favour of the seller/developer and the investors were obliged to cover the court tax and other party’s lawyer’s fees. It is very important to trust your case in the hands of a highly qualified lawyer with international reputation and references. Usually, it is not necessary to take part in the hearings personally. It is enough to be dully represented by your lawyer/attorney-at-law through power of attorney.
8. I have discovered that the developer took a mortgage out on my property and is now claiming bankruptcy. The bank is going to sell the property but I have paid for it in full. How can I stop the bank selling it?
The solution is different if you have already signed the final act- the title deed that ensures you have acquired the title over the property, i.e. you have been transferred the right of ownership over the property. In this case and provided that your lawyer had insured that you were transferred the right of ownership free of any encumbrances (including mortgages and rights of third parties), your property is safe and possible insolvency proceedings do not jeopardise your ownership over it. However, if your purchase is still at a preliminary contract stage and you have not been transferred the title, legally you do not own the property. The owner is still the seller/developer, who has only undertaken the contractual obligation to transfer you the title. In case of insolvency proceedings, you would be transformed as a creditor of the seller and entitled to claim your taking (the funds paid so far, penalties, ect.) in the insolvency process itself. The aim of the insolvency is to gather and then dispatch between the creditors (according to their rank and privileges) all assets the seller’s company owns. Note that the terms to bring the claim for your taking in the insolvency proceedings are limited. In addition, the insolvency proceedings are complicated and long-lasting and require full and dedicated legal assistance. The terms set forth by law regulating the insolvency proceedings are binding and it is important to comply with them. Therefore, it is highly recommendable to engage an attorney-at-law that would represent you and protect your interests in those proceedings.
9. My lawyer is telling me that I cannot get the title deeds from my apartment because there is a problem with the developer’s tax return and the NRA (National Revenues Agency) has a hold on the properties in my complex. What does this mean? What should I do?
In case you have secured your purchase with a preliminary contract and inserted a clause that the developer should transfer you the title free of any encumbrances (including charges from the tax authorities, mortgages of the banks, ect), you can pursue the developer/seller to release the particular apartment/property from the charge by covering the respective part of the debt. In case of delay, you could rescind the contract, raise a claim in the court and sue the developer for refund. Another option is to enter into negotiations with the seller to change the apartment with another one, which is not charged/ mortgaged.
10. The developer has not finished the complex where my apartment is and has disappeared? What should I do? What things should I watch out for while I try to resolve the problem?
Again, it is necessary to look into the clauses of the preliminary contract signed with the developer and establish what are the particular obligations undertaken by him. It is very important that you secure his obligation to construct not only the apartment but the whole complex. Thus in case of failure to fully construct the complex, you would have a case against the developer. Note it is highly recommendable to seek legal advice and review by a lawyer before signing a preliminary contract and entering into the purchase, not after, when the problems had occurred. All mechanisms for your protection should be secured in the preliminary contract.