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Avoiding Third Party Liens

Inevitably, there are cases in real estate transactions, when things go horribly wrong. The classical situation is when you find out that a third person has initiated litigation against you claiming to have ownership rights on the property or land that you had just purchased. Whilst this is a rare occurrence in Bulgaria, there are many reasons as to why this can happen and each case must be looked at individually. In this article we look at how you can check that you have good title on your purchase before you part with any hard earned cash.

The following represents a brief explanation on how to make an investigation on a property at the Land Registry.


We realise that it may be difficult for a foreigner to take these steps alone, but many have expressed an interest in knowing what the procedure is and what should be expected of solicitors acting on your behalf.


Land Registry (Office of Entries)

The most important and adequate way of investigating the legal status of a real estate asset is to examine the information available at the local Office of the Entries (Land Registry). Each time a sale is made before a Notary, the Notary registers the new Notary Deed with the Land Registry before delivering it to the seller and the buyer. In order to affect this registration the administrative authority requires the payment by the parties of a state charge amounting to 0.1% from the purchase price. If this registration is not carried out, the sale or purchase is not valid. Notaries are legally bound to register the notary deeds as part of their duties. The proof that your deed has been registered lies on the top right corner of the deed, where there is a small rectangle containing some handwritten numbers. This is the reference number of your deed in the Land Registry. It would be highly unlikely that your notary would not register your land, but in the event of this happening, you can take legal action against him.

The Office of the Entries is required to keep records not only of all sales and purchases, but also on the initiated litigations in respect of immovable property, voluntary or court partitions of real estate assets, successions, etc. Generally, this means keeping records on all activities regarding the disposal of real estate including all details evidencing the presence of dispute.

If a claim or another act has not been registered at the Office of the Entries, it does not have any legal force. Even if, for example an unscrupulous seller sells his property twice on a single day and you are a second purchaser, if your purchase is registered earlier than the first one, you will be the lawful proprietor and not the first purchaser.

Every person can freely examine any real estate asset at the Office of the Entries. The records are public. If you do not have sufficient time to file an application in writing and wait for a response within seven days, you can conduct a computer check, which is a short extract, pointing to the record of the seller – sales, purchases, claims, restraints, mortgages, etc. Otherwise, you can obtain a certificate from the Office, which states that up to a certain date the property, subject of the check is free of encumbrances.


Make a full check

If you want to make a full check on the previous documents related to a particular property (which is always advisable), you have to do the following:

1. Conduct a computer check on the seller’s record (you need the full name of the seller and his/her Personal Identification Number) and you will find in it the details of the title document of the property in question – it can be a Notary Deed, a Contract with the State or the Municipality (if the property was obtained from the State or the Municipality), a court decision (in case the property was obtained through litigation), a will etc. Let us presume the title deed is a Notary Deed – the most common case;
2. Using the details of the Notary Deed from the computer check, you can file an application to obtain a copy of it. It contains useful information such as who is the owner, preceding your seller, the date of the preceding deal, which can help ascertaining, whether instruction terms have expired as well as any other specific information which may be important;
3. At the end of your seller’s Notary Deed there is a description of all documents that have been presented to the Notary, including the preceding title document. You can use these details in order to obtain a copy of it in the same way.

Thus, starting from the last Title Deed, you can follow the entire history of the property in question, thus finding out all the important facts. For example, the preceding title deeds are evidence of the legal grounds for the acquisitions of all preceding owners, which help deciding what additional checks may be necessary.


Inherited land or property

Pay particular attention to land or property deeds which have been passed on through inheritance laws. If you find out that the seller is selling you land or a property that they have inherited, make sure your lawyer obtains the original copy of the Inheritor’s Certificate – it will name all legal heirs of the deceased person and will help verifying that the so-called “reserved shares” of the spouse, the children and the parents, if any (we have discussed this matter in our previous articles) have been observed at the distribution of the patrimony between all heirs. This is important because there is an exclusion from the above rule, which works on the principle of “What is not registered does not exist”. The exclusion is provided in Art. 37 of the Inheritance Act, which states that if an inheritor disposes of a property, which is part of a legacy and this disposal harms the reserved shares of the named and legal group of heirs, then the heirs who dispute this sale can challenge the deal providing it only took place within one year from the opening of the will. This challenge can be made regardless of whether a third party purchaser is involved.


If things go wrong...

If things do go wrong, you can take the accused parties to court to get your money back and also ask for compensation. The time and costs are individual to each case, but in addition to legal costs, a court tax of 4% from the price of the claim is payable. The civil court does not impose penalties on the seller and will only award a compensation, if you have
claimed for one. If a crime has been committed in relation to the fraudulent sale, the Prosecutor's office may initiate criminal proceedings.

Roumen V. Petrov
Asya Mandjukova

GPNG Law Firm, Sofia, Bulgaria.