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Unfinished Developments in Bulgaria

There are two important facts that should be remembered regarding unfinished developments and two terms with which the buyer of an apartment or a studio should remember.

According to the Spatial Development Act of Bulgaria:

Should the contracting authority fail to request the grant of a building permit within one year after approval of the development-project designs, the design shall lose its legal effect.

A building permit shall lose legal effect unless construction has commenced within three years after the said permit has become effective, or unless the rough construction work, including the roof of the building, has been completed within five years after the said permit has become effective. Any such failure shall be ascertained in writing by the authority issuing the building permit.

Construction works in respect of which the building permit has lost its legal effect may be implemented after re-certification of the building permit. Unless the building permit is re-certified within one year, the approved design shall lose legal effect.

According to the part Supplementary Provisions of the Spatial Development Act of Bulgaria:

"Rough construction work" shall be a building or a structure whereof the surrounding walls and the roof have been executed, and the finishing works have not been executed at all or have been partly executed.

So everything mentioned above means that it is important that the buyer not only has to be sure that the developer had received the building permit, but also to check whether the development process had started within 3 years after receiving of such permit AND whether walls and the roof of the building were completed within 5 years after the date of the issuing of the permit.

If that term had expired and the developer had not renewed the permit it means that the permit had lost its legal effect.

Regarding the preliminary contract for the purchase of apartments and studios in unfinished buildings:

In our practice we have met a lot of foreigners who had chosen an apartment in a lovely complex which was not ready/finished, yet foreigners have signed a preliminary contract and have paid a large part of the cost or the whole cost of the apartment as they were promised that the Certificate of usage/Act 16 will be in place soon after.
After realising that the act was not received, many buyers opt for taking legal action in an attempt to prosecute for a refund on their investment believing this to be their given rights.

The disappointing truth is that under the Obligations and Contracts Act of Bulgaria all claims for which are outside of the 5 year period will be extinguished, and Claims arising from damages and liquidated damages from non performed contracts shall be extinguished upon the expiration of a three year limitation period.

It means that the buyer's right to receive the amount shall be extinguished after expiration of 5 years after the date when the obligation for receiving of the Certificate of usage should have been fulfilled (which means that after expiration of the limitation period, the buyer will lose the right to receive the amount in a judicial proceeding) and after expiration of 3 years the right for receiving of the penalty shall expire.

It is therefore essential before signing a preliminary or final contract which includes a promise to return money to the buyer in the event of a default by the developer, to remember the time limit in which you do actually have a protected legal right to make a demand for your money back.