Advice for people buying property in Bulgaria, including information on legal advice, fraud, residence requirements and more.
Introduction
This guide sets out essential information for men considering buying property in Bulgaria, including obtaining legal advice, how to submit any complaints and more.
Since 1 January 2012 all EU and EEA (European Economic Area) citizens are allowed to buy land in Bulgaria. This applies to houses with gardens, all plots that are within the zoning of the settlements, apartments coming with shares of the land, offices and other commercial properties.
Legal Advice
It is strongly recommended that you choose an independent lawyer who is specialised in Bulgarian property law. ‘Independent’ in this regards means that they will work on your behalf only and are not also looking after the interests of the agent or developer.
If your lawyer is based in Bulgaria, check that he/she is registered and practicing with the Bulgarian Bar Association by asking for their registration number and verifying this through the Bulgarian Bar Registers.
You should exercise extreme caution if an estate agent, promoter or lawyer urges you to cut corners to save money or time.
A Bulgarian notary public will be involved in preparing the contract of sale and issuing the public deeds. As the purchaser, you have the right to choose which notary you use. The notary is a public servant who has a duty to provide you with free and impartial legal advice on all aspects of the contract before you sign. It is a good idea to seek advice from the notary early on. A full list of registered notaries public in Bulgaria can be found here.
Translators
If you do not have a good understanding of Bulgarian, make sure that you get all contracts and relevant documentation translated by an independent translator. Make sure that any translations are true and legal. You can find a list of accredited translators and interpreters in Bulgaria on the Bulgarian Ministry for Foreign Affairs website. Please note that only the Bulgarian version of the contract is valid in a Bulgarian court.
Mortgages
Do your homework: you should analyse and compare a range of different products and services offered by different banks. If you have any doubts about the terms and conditions, ask the lender to clarify.
Look for the mortgage which is most appropriate for your capabilities and needs. There are a range of mortgages on offer and you should pay special attention to the interest rate and repayment period, fees for setting up the mortgage as well as early repayment and cancellation fees.
If you cannot keep up the mortgage repayments, the Bulgarian bank could repossess your property in Bulgaria. If the value of the property is less than the total debt outstanding (you are in negative equity), the bank may pursue your other assets to recover the mortgage shortfall using a European Enforcement Order.
Make sure you fully understand the mortgage agreement you sign. If you have any doubts, check with the bank and with your lawyer. If for any reason you cannot keep up the mortgage repayments, you should speak to your bank immediately (before defaulting on repayments) to discuss the options available.
Taxation
The Bulgarian tax authority is the National Revenue Agency. It provides some information on its website in English.
Fraud
Bulgarian authorities
Should you feel you are the victim or at risk of fraud, you should report this by registering a complaint with the Bulgarian police or Regional Prosecutor’s Office.
In Bulgaria cases involving property fraud usually fall under civil law and therefore are settled as private disputes held by a mediator or in court. If serious fiscal frauds have occurred (such as payments taken without receipts), the controversy is likely to fall under penal law. The Bulgarian police should deal with all fraud allegations once they are brought to their attention.
Complaints against the legal system
If you believe your lawyer has been negligent and has not met their obligations, you should complain to the regional bar association with which they are registered or to the Supreme Bar Council. Complaints should be in writing and in Bulgarian. A full list of the bar associations around Bulgaria can be found on the website of the Bulgarian Bar Registers.
If you have a complaint about the way a court has handled your case, you can present a complaint to the Supreme Administrative Court in Bulgaria or to the Supreme Judicial Council.
If you have a complaint against a notary public, this should be directed to the Notary Chamber of Bulgaria.
Visa/residence requirements
If you intend to stay for longer than 3 months, you will need to apply for a long-term residence permit from the Migration Directorate of the Bulgarian Ministry of Interior.
British nationals who have resided legally in Bulgaria for a period of five years on the basis of holding a consecutive long-term residence permit are entitled to a permanent residence permit.
For further information and feedback, please contact your local Migration office or call +359 (2) 982 4808, email: migration@mvr.bg.
Purchaser’s checklist
Before you complete your property purchase you should make sure that:
you have seen the Land Registry extract (кадастрална скица), available from the local Town Hall and checked the following details:
the property and land for sale match the details registered and the sellers are the registered owner(s)
there are no debts or charges, such as a mortgage, on the property and/or there are no legal proceedings initiated against the property for contravention of land planning law
For properties which are not included in the Land Register (not available for all areas) a Municipality Sketch (регулационна скица) is issued.
you have checked that planning permissions (виза за проектиране) are in order and the property is a legal build. This is particularly important and relevant when buying off-plan or direct from a developer. The Town Hall can inform you whether the building has all licences and permissions and provide details of the type of land. If the property is built on rural land or land that is not classified for construction, additional confirmation should be sought from the regional government offices as to whether they have authorised the construction
you have checked the latest town plan to see whether or not the plot you wish to buy has any building restrictions, is in a green zone or includes a public pathway or similar. This can be viewed at the town planning department of the local Town Hall
you have carried out a property survey. Whilst this is not obligatory, it is wise to get a chartered surveyor (независим оценител) to check the property
You know the cadastral value of the property and how much purchase tax will be due. Cadastre is the official public register showing details of ownership of the real property in a district, including boundaries and tax assessments. Be aware that tax is charged on the council’s evaluation of the property as opposed to the amount of the sale.
Make sure you have seen the following documents:
a paid-up receipt for the previous owner’s annual property tax . It is also wise to get a certificate from the town hall proving that there are no unpaid taxes from previous years
the Cadastral certificate giving the exact boundaries and square metres of your land. The Cadastral record will be linked to the Land Register record by a cadastral reference which will be included in both. You should ensure that the property and land description contained in both records matches the Use Permit (Act 16) which is issued by the Town Hall for new buildings or restructured ones and certifies that the property is habitable. You will need this document to connect to electricity and water companies receipt to prove all utility bills have been paid by the previous owner.
It is wise to require the seller of the property to provide evidence for absence of any liabilities concerning the property (taxes and other statutory costs and fees) or its use (consumable expenses) Ask the property agent for information regarding any costs the owner has not paid. It is strongly advisable to ensure that you have a copy of an affirmation stating that the previous owner has no debts the title deed – it is important to check that there is an accurate description of the property in the deeds if you are buying an off-plan property, confirm that there is an architectural plan for the property approved by the local municipality. Ensure that the developer/constructor has the necessary insurance to cover any build defects.
On completion, the public deed should reflect an accurate description of the property. It is advisable that you register the property in your name with the Land Registry as soon as possible to ensure full protection of your rights. The notary can even send advance notification to the Land Registry once the public deed is signed.
Buying property off-plan
Buying off-plan property inevitably involves higher risk than buying re-sale property. If you are considering buying off-plan in Bulgaria there are a number of points to consider.
There are statutory stages of construction of an off-plan development which are certified by certain documents specified in the law. The most important documents are:
planning permission/Visa for design (виза за проектиране) – it entitles the developer to prepare architectural design and construction plans for the development in accordance with certain statutory parameters for height of the building, density of the construction, layout of the building, etc
construction permit (разрешение за строеж) – it entitles the developer to start construction process as per the approved architectural, construction and other technical plans for the property
opening of construction site and determining of construction line and level (Protocol for commencing of construction)
certificate for completion and approval of rough construction (Act 14)
certificate acknowledging the compliance of the construction with the statutory rules (Act 15)
use permit (Act 16)
It is not advisable to buy off-plan development for which no construction permit is granted.
In practice, a usual transaction for buying off plan development has two stages: the signing of preliminary contract; and the signing of public deed before a Bulgarian Notary (Notary deed). The transfer of the property is made under the notary deed.
It is advisable for the payment for the purchase of off plan property to be made in instalments each of which is made after the completion of the relevant construction stage and obtaining of a statutory certification document.
Before signing the preliminary contract you should:
Check with the Land Registry to make sure the land which is going to be built on is registered to the developer you are doing business with.
Confirm that there is an architectural plan for the property approved by the local municipality. Ensure that the developer/constructor has the necessary insurance to cover build defects.
Make sure you obtain a copy of the Cadastral certificate giving the exact boundaries and square metres of your land. (Cadastre - an official public register showing details of ownership of the real property in a district, including boundaries and tax assessments)
It is also advisable to obtain a certificate regarding the planning situation of the plot you wish to buy from the Town Planning department of the Town Hall. This will include other information such as whether the plot has any building restrictions, is in a green zone, includes a public footpath or if there are any current plans to build a motorway or other infrastructure builds etc.
Once construction has finished, and before you sign the title deed, ask for all documents from the seller to show that the construction has been finished in accordance with the plans.
Make sure you have the Use permit (Act 16) which is issued by the town hall for new buildings and certifies that the property is habitable. You will need this document to connect to electricity and water companies.
Consider asking a chartered surveyor to check the property. This is not obligatory but it is wise to obtain a professional opinion on the property before you complete. The Chartered Surveyors Chamber has contacts for all registered chartered surveyors.
Should the developer not build your property within the timeframe stated in the contract, or services and utilities are not completed and connected to standard, or the habitation certificate cannot be issued, you are legally entitled to either:
rescind the contract and have the deposits returned plus interest
or extend the deadline, allowing the developer to complete the property
If you want to rescind the contract, it is advisable to seek independent legal advice. Once you have consulted a lawyer, the first step is to write to the developer to explain that due to non-compliance with the contract, you want to rescind the contract and request that the deposits paid so far are returned, as well as the accrued interest. You should include any relevant documentation (e.g. a copy of the contract, copies of payments made, copy of the bank guarantee) and state a timeframe by which you want the amount to be reimbursed.
If you believe you have been a victim of fraud and you have neither a bank guarantee nor an insurance policy from the developer, you should seek independent legal advice regarding taking criminal legal action through the courts and register a statement with the police.
Condominium Management Contracts
If buying an apartment in a block of flats or a closed residential complex, investors are usually required to sign a secondary contract relating to the management of the condominium, e.g. paying costs associated with the communal management of the apartment block and maintaining the property.
Sometimes developers require signature of the management contract at the time of buying the property and will not sell it otherwise. You should pay extra care and ask your legal adviser to check the property management contract carefully as sometimes there may be exorbitant costs attached to it. You should also make sure that your contract has the same terms and conditions as for all other owners. It is not an uncommon practice for foreign owners to be offered a different management contract compared to Bulgarian nationals.
Under the Bulgarian Condominium Act all expenses for the management and maintenance of the common parts under the condominium ownership arrangement should be equally shared by owners, users and residents.
Repair, renovation and reconstruction of common parts or replacement of common facilities and equipment should be carried out after an agreement is reached at the General Meeting of owners. The General Meeting of the owners or the Owners Association establishes and maintains a Repairs and Renovations Fund.
Expenses for repairs, renovation, reconstruction and rehabilitation of the common areas, referred to in the respective decision of the General Meeting of owners are distributed among the owners of the individual units proportionately to the shares of the common parts of the building held by each individual owner.
Renting out your property
Short-term lets
If you want to let your property to tourists on a short-term basis, you must ensure that you are doing so in accordance with Bulgarian law. The regulations on letting tourist apartments and holiday homes to tourists will vary depending on the region where the property is located.
If you are planning on making a return by renting out your property on a short-term basis, it is best to seek independent legal advice and check what the rules are at the local town hall or the tourist department of the regional government before you buy.
If you are planning to buy an apartment which is part of a residential block, you should also check whether there are any rules set by the committee of owners that prohibit or restrict short-term letting. You may want to consider hiring a Bulgarian letting agent to assist with finding tenants, drawing up rental contracts and managing the property on your behalf.
Long-term lets
Owners who let their properties on a long-term basis are free to do so within the terms set out by the national rental law. However, it is worth seeking professional advice to make sure that you are complying with Bulgarian legislation and that you are using the correct rental contract.
Letting taxes
You must ensure that you declare your rental income to the Bulgarian tax authorities whether you are resident in Bulgaria or not. Taxation is a complex issue, and it is advisable to seek the advice of an accountant or professional tax adviser with comprehensive and up to date knowledge of both the UK and Bulgarian tax regulations.
Other sources of advice
In November 2012 the Bulgarian government launched the Property in Bulgaria website, containing useful first-hand information on buying and selling property in Bulgaria and on property maintenance and the different fees and taxes involved. The website also offers a contact facility for answering inquiries from the public.
Expat forums and talking to local residents including other nationals who have already made the move can really give you a feel for an area and give you the inside track on any local problems.
The Bulgarian Ombudsman is responsible for defending the fundamental rights and civil liberties of citizens by monitoring the activity of public authorities. If you have a complaint about any public authority, you can submit a complaint to either the regional or national ombudsman.
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