Bulgarian real estate market still remains unexplored to certain extend that makes it very profitable and attractive. The legal system is in the process of been aligned with that of the EU. Therefore, there are some peculiarities with regards to ownership of property.
Law restriction for NON- BULGARIANS
As stated in the Constitution of Bulgaria and according to the Property Act NON- BULGARIANS cannot own and acquire land in Bulgaria.
Any foreign citizen though, can acquire the right of ownership over a building (apartment, house, villa) separately from the underlying land, without any conditions attached to it. According to the law in Bulgaria, a person can obtain right of ownership over a dwelling separately from the land on which it is build.
The restriction on land ownership on None-Bulgarians is under review and it is bound to be modified or lifted within the spirit of the EU directives, since Bulgaria has become a member of European Union as from the beginning of 2007.
Any foreigner though, can own 100% of the shares of a Bulgarian registered company (legal entity). Because the Bulgarian Company, is a legal entity, existing in accordance with the provisions of the law, it has all the rights, any other Bulgarian citizen has, such as to own land or ground. You can therefore, indirectly and through your company, acquire the land or ground.
In order to register a Company on your name, you need to be in Bulgaria for at least couple of days and the only document you need is your passport. Our legal assistant can register a company for you and the cost will be 600 euro. You will additionally need 2560 euro, which is the company capital. You will have to deposit the capital at a suspense bank account and you will then be able to withdraw it in full once the company is registered.
It is a common practice when purchasing a property preliminary contract to be prepared between the buyer and the seller and upon its signing the buyer pays to the owner of the property or the agency a down payment of 10% of the total purchase price. This contract is bounding for both parties and is needed in order for the owners and real estate agents to prepare themselves with all the necessary documents and in the meantime the process of setting up a company is complete (in cases of buying property with/or land from foreigners).
Changes in the Preliminary Contract
The preliminary contract can be modified only if both parties with mutual consent sign an additional agreement. If the buyer withdraws from the deal he will loose his down payment paid upon signing of the contract and if the seller withdraws, he is obliged to pay back twice the amount of the down payment.
Within certain period of time (usually 30 days from signing of Preliminary Contract) the deal has to be completed and the buyer is obliged to pay the outstanding amount of the sales price and obtain Title Deeds for ownership of the land or property.
In Bulgaria all real estate deals must be done before notary public.
Notary public (public notary or just notary) is a person authorized by the state or local government to witness officially the signatures on documents, administer oaths, and collect sworn statements. He uses an embossing tool, verifying his presence at the time of signing of the documents.
According to the Bulgarian law all documents signed by foreigners before the notary should be translated beforehand by legally authorized translator.
You will require independent legal representation and a legally authorised translator with you to ensure that transfer of ownership takes place.
If required and in case you are not able to be present when signing before the notary (on the completion of the sale or when signing the preliminary contract with the seller), a Power of Attorney should be granted to another person (your estate agent or solicitor) to attend and sign on your behalf.
Legally the ownership of a property is transferred in the form of Title Deed (equivalent to the Notary Deed or Notary Act). This is a contract of sale, which content and form are prescribed by law and is written on the basis of the preliminary contract and contains all attributes of the property (address, boundaries, size, etc.), the personal data of the previous and new owners and also includes all required documents issued prior to signing of the Title Deed such as tax evaluation of the property, certificates for paid tax, sketches and everything else needed to recognize the ownership.
The Notary is obliged to check the identity and capacity of the parties, the authority of the representatives and the contract/ Title Deed been in full accordance with provisions of the law. Upon checking all the relevant documents the Notary Public gives his or her consent the Title Deed to be registered in the General Registry. Finally, been endorsed by the Notary the Title Deed is registered at the regional court of justice.
In the case where the contract signed refers to off-plan developments, buyers should be very careful and to seek reliable legal advice, because the final Title Deeds is not signet until completion of the building.
Things to be considered:
In many cases the seller of the property would prefer not to declare the real price of the real estate on the Title Deed. The reason is that by doing so, he will avoid paying capital gains tax (which is approx. 30% of the purchase price). You might end up in a situation where the seller proposes that either you agree on transferring the property on a lower declared price in the Title Deed or paying additionally for the property to cover his expenses on paying taxes. In such cases we would recommend to have this explicitly agreed before signing of any document, but if you come to a such dead-end situation, you should be aware that having a Title Deed with lower price doesn’t invalidate the sale. However, a situation like this has its financial consequences – you will also pay less taxes on acquiring a property but on the other hand you will pay higher taxes if you decide to resell the property at a later stage on its real value.