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Buying State Owned Property In Bulgaria

What to consider if you are looking to buy a council owned property in Bulgaria. We shed some light on the legal aspects of real estate transactions on old or run-down properties which are available in Bulgaria yet are owned by the State or the municipalities (local/regional council).

Numerous transactions have been completed recently on properties owned by the municipalities in Bulgaria. You can just imagine falling in love with that huge and abondoned school buildings located right in the centre of a pretty village, with such promise to become an elegant and spacious home for a spectacularly low price!

But what should you know when you wish to go through the procedure of buying real estate which belongs to the municipality?

There are two classifications of municipal property. Public municipal property and private municipal property. The public municipal property is that which is determined by a specific Act of Parliament and is designated to serve the municipal authorities and administration, as well as each property that is designated for the permanent needs of the local community - such as a shool or a kindergarten. Private municipal property is any other property belonging to the municipality being excluded from any of the above types of property.

Only private municipal property can be subject to sale-purchase deals or lease by the municipality. Bear in mind that the local authority is entitled to change the purpose of a property that is public municipal property to a property which is private municipal property at any time that it considers that the relevant property is no longer necessary in satisfying the needs of the community.

Unlike what we are used to in real estate transactions in Bulgaria, that the right and title in the real estate is in the form of a notary deed. The title document for the municipal property is named an "Act of Municipal Property". The municipality is obliged to prepare and keep any Act of Municipal Property which has been issued for their property in the "Service for Entries".

This Act must contain information on the type of the property - public or private, all actions of disposal or management that the municipality has undertaken in respect of this property and all other necessary details identifying the relevant real estate.

Furthermore, there must be a separate file kept for each piece of municipal property containing all documents certifying the ownership and the relevant actions of disposal that may be undertaken by the municipality. All Acts are to be kept in the Services for Entires and on the basis of these Acts two special registers are created - one for the public and one for the private municipal properties.

Whenever the Municipal Council changes the purpose of a municipal property a new Act has to be prepared with a description of the previous Act of Municipal Property. When the municipality sells or rents, or in any way burdens the property, this is noted in the Act of Municipal Property and the relevant document certifying the action are included. Thus anyone that is interested in the status of a property can make the necessary checks at the district Agency for Entries.

Remember that the Act for Municipal Property is an official document but it does not initiate rights and obligations. It only certifies and basically summarises the information on the status of the property and its ownership on the basis of existing original documents. If such Act contains a technical mistake, it would not change the actual status of the property. So, our advice is, when you are interested in a municipal property, to check not only the Act, but also to check all the documents enclosed in its file.

We won't describe all the different types of disposal here but only the purhcase of a private municipal property, suggesting that this will be the most common case: as in the case of our Old School House.

A private municipal property may be announced for sale after the council has taken a decision for the sale of the said property. The procedure for taking such a decision, as well as the procedure for the change of any municipal property from public to private, is regulated by a local ordinance. The actual sale of a private municipal property is done following a tender organised by the local Mayor, and the procedure for conducting this tender is also based on local regulations.

The sale of the property is done at a price based on an evaluation assigned by the Mayor to an independent licensed expert. If the evaluation indicates a price lower than the real market price, then the property is to be sold at the market price.

After the buyer is established, the Mayor of the municipality issues a Resolution containing this decision. The actual sale of the property is done by means of a written contract. This written contract is in effect the Title Deeds. Afterwards the contract is duly registered in the Agency for Entries and the sale is noted in the Act of the property and its file.

Roumen Petrov and Asja Mandjukova, GPNG Law Firm Sofia