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Don't Leave your Brain on the Plane


A buying guide for Bulgarian property. Many buyers seeking Bulgarian property understandably get caught out by the sun and blue skies; and thoughts of mundane things such as contracts fly out of the window. Consequently, the purchase, which should be quite straightforward, can become tangled. Prevention is better than cure and most of the buying process for Bulgarian property is common sense but sometimes purchaser are so taken with sunny Bulgaria and the excitement of their new home, it's as if they leave their brain on the plane.

The majority of property transactions in Bulgaria go well, with over 86% of those surveyed saying that their purchase had gone without a hitch. This basic guide in simple note form, is intended for those who are seeking to buy property in Bulgaria, and, whilst not exhaustive, will help avoid potential problems and ensure a positive buying process.

Buying process

It is in essense similar to any other country: View, make an offer, (set up company if buying property with land / garden), sign a preliminary contract and pay a deposit, at completion sign the final deeds and pay the balance.

However, there are things to note and potential pitfalls to be avoided. Follow our tips and hints to a successful property buying process

Research and viewing

Don't get fixated on one property, it may not be available when you get there but others will have come on the market
Take photos and notes as you go
Look all round the village, town, neighbouring properties, drive in one way and out another
Tell the agent if you will have children with you, so they can plan more 'pit stops' and the size of vehicle needed
View a maximum of six properties in a day: be prepared it will be a long tiring day
Don't lose sight of what you really want to buy - just because property is so very cheap does not mean you have to buy it
Anticipate it may take a long time to drive between houses
Always inform the agent if you are delayed or cannot make the appointment
Check and check again: septic tank, cess pit, boundaries, internet availability, water pressure, whether water and electric go off unexpectedly, if there is a well at the property is it registered, cost of renovations or works, nearest shops and facilities
Tell the agent what you do and do not like about the properties, be honest and straight with them
Prices are usually in euros. The euro to leva exchange rate is fixed. However, be aware of currency fluctuations between the pound and leva as any change can affect the end price you will pay
Understand inheritance laws in Bulgaria and make a will. Remember there are reserved shares for children and family, you cannot will your property to whomsoever you wish. Be aware if you are buying via a company as to what occurs if a shareholder dies

Making an offer

Check the boundaries, this is easier with the new online cadastre
On the skitsa will be marked the plot and everything on the plot, you'll be able to see if your building did indeed have planning permission
Don't be surprised if the owner refuses an offer even in these hard economic times, Bulgarians frequently hold out for the full price
Get your own independent lawyer, do not rely on the one recommended by the agent or developer
All property transactions must be done through a notary in bulgaria. Be aware that a notary acts as a functionary, collecting any taxes due on the sale, verifying the parties are who they say they are...  A notary is not a lawyer acting on your behalf and in your interests
Do not give PoA to anyone you do not completely trust; make the PoA restrictive yet sufficiently broad so that they can perform their duties (but not clear out your complete bank account or misuse funds)
A PoA has its own life: if you want to rescind a PoA, then you need to contact the notary or lawyer who originally did this for you and get another document drawn up saying it has been rescinded: get all copies of the PoA back from any parties which have one
Establish a Bulgarian company if the purchase involves land/garden, this can be done in two days although normally takes about ten working days: note that one person needs to be asigned as 'manager' of the company: this person carries signatory powers for and on behalf of the company, so if the company needs to sign anything (such as tax returns) that person will be needed to do so (you can set up a PoA between shareholders so that another can sign on their behalf, which can be useful)
Think about what address to put down as the registered 'seat' of the company as this is the address where any mail from the authorities will be sent to: mail may need to be attended to quickly and dealt with properly so be sure of the address you want it to go to
Open a company bank account if you are buying through a company:
Open a personal bank account as well: you can open an account in pounds, euros or leva; it is advantageous to have a leva account so that household bills may be paid easily
Be careful which branch of a bank you open your account at: many banks do not allow a company to do any banking on their company account, except at the branch at which the account was opened
Check the bank has internet banking if you need this: if you use Apple Mac, you are unlikely to get internet banking, although the banks say it works on a Mac, it does not unless you create a virtual pc partition (can be very flakey) in which you run the banking software
Joint accounts do not exist in bulgaria
The deposit on resales is usually 10% of the price, for off-plan often 30%
Check with currency brokers for rates and whether a forward rate should be used to avoid currency fluctuations and thereby the property costing you more than you anticipated
For offplan ensure the builder has permission to build - if not, there isn't even a project at all. Also verify the financial status of the developer and discuss with your lawyer how to protect yourself if the builder becomes bankrupt or fails to complete the project


Deposit and preliminary contract

If there are problems later on, this is the document which will be referred to, so you must get this right. most problems occur because the buyer has not understood (or even not bothered to read) this contract. Pay attention to the written word.
Don't pay cash, pay by bank transfer and mark on the document what the payment is for, that way you have a trace
Don't pay into anyone's personal account
Your lawyer can hold money for you in a lawyers client account
It is highly recommended that on resales the deposit is not paid over to the vendor at this point but is held by a safe third party (your lawyer) until the final deeds are signed: if there are problems between preliminary contract and deeds and you are entitled to have your deposit returned to you, it will be virtually impossible to get this money back if it has already been handed to the vendor
Agents often ask for their fees on signing of prelim contract, check this before you make any offers, their fees should be paid when the final deeds are signed
Do not sign a preliminary contract without a certified translation in your own language, it will be the Bulgarian version which will be legal and you must understand everything that is written in it.
The preliminary contract is the basis for the final deeds: include in this the price net to the vendor and agents fees, plus other clauses which protect you
For off-plans ensure all facilities on the development are included in this prelim, don't rely on the sales puff or the brochure you saw: also deeds should be signed when Act 16 is granted and not earlier
Tie staged payments to stages of completion and not to dates. Also, pay these staged payments bank to bank direct to the developer and mark on the bank slip what you are paying for
Again for off plan, check out the maintenance agreement thoroughly before signing the prelim
If you need a mortgage to purchase, include in the contract that the purchase is dependent upon you obtaining this finance
Do not believe anyone who says it is normal to under-declare, it is not: it can also land you with a big tax bill if you come to resell
On resales, it is possible to go straight from offer to final deed without a preliminary contract if both parties agree
To draw up the preliminary contract, your company will need to be set up, you will also need your passport and company stamp
It usually takes four weeks from prelim to deeds: however, this is one of the few country's in the world where it can be done in a day!
Ensure the prelim says that at final deeds you are taking vacant possession - it has been known for owners to believe they can stay on for a month or more
Get insurance quotes for buildings and contents
If you are buying through a company, make the deposit and final funds part of a

The notary act

The final notary deeds will be signed in the municipality in which the property is located
You may attend the signing of the deeds or your PoA may do it for you.
You will need your passport and company stamp if you attend yourself and you should organise to have a certified translator present
Balance of funds must be transferred for the total price
Get the final deeds translated by a certified translator before signature and check all the details of the property and price to the vendor and agents fees
Before signing do a final check on the day for any liens on the property
On the day, get receipts from the vendor that electricity, water, cable tv, internet, council tax, etc are paid up to the date of signature
Get a receipt from the agent for their fees
Get a copy of the notary deeds and keep this with you. The original will be available to you a few days later when the transaction is registered
Better not to leave your deeds or company stamp with anyone else for obvious reasons
Visit the property on the day prior to signature to verify that all is correct and the vendor has not removed anything which is included in the contract or for that matter left a load of rubbish which you will struggle to get rid of
Make buildings and contents insurance active on this day