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EU Citizens and Buying Land

Can EU citizens purchase land in Bulgaria? The answer is not straightforward. The long overdue amendment in the Bulgarian Properties Act has already been enacted, but this did not make things any clearer as we all expected and hoped for.

This is why we have undertaken an attempt to analyse the complex regulation of this matter, which refers back and forth from the Properties Act to the Treaty for Bulgaria’s Accession to the European Union and vice versa.

According to Article 29, Paragraph 2 of the Properties Act, the citizens of the member states of the European Union and the states which are parties to the European Economic Area Agreement (the 27 EU member states and Iceland, Norway and Liechtenstein), can acquire ownership rights on land in observance of the requirements set by law and in compliance with the terms of the Treaty for the Accession of the Republic of Bulgaria to the European Union.

Thus, Article 29, Paragraph 2 sets two pre-conditions for purchase of land by foreigners :

1. Compliance with the Treaty between Bulgaria and the EU (hereinafter called the “Treaty”) and

2. Compliance with the internal legal requirements of Bulgarian law.

 

Compliance requirements

Let us take a closer look at these compliance requirements.
1. The Treaty stipulates that regardless of the obligations of Bulgaria relating to the future adoption of a European Constitution (and of course, not derogating from the three major freedoms guaranteed within the EU, one of which is the free movement of capital), Bulgaria shall be entitled to retain all limitations existing at the date of signing of the Treaty, which are related to the acquisition of land, designated for second residence, by EU citizens that are not residing in Bulgaria, for a transitional term of five years after Bulgaria’s EU accession.

The second provision of the same article confirms explicitly that such limitations will not apply for such EU citizens who reside in Bulgaria legally and specifically blocks the application of any other norms or procedures, which differ from the ones applied to Bulgarian citizens, and which put the EU citizens residing in Bulgaria in a less favoured position than the Bulgarian nationals.

2. The Treaty allows Bulgaria to retain those limitations in terms of acquiring land by EU citizens, which exist in its legislation up to the date of the signing of the Treaty. It is submitted that before Bulgaria’s EU accession there existed no limitation in respect of EU citizens that did not reside in Bulgaria for the simple reason that all EU citizens were not allowed to purchase land, and not only those who did not have a
residence permit in Bulgaria. Yet, Bulgaria has made use of the provision of the Treaty and has kept, or more precisely, has adopted a new limitation in Paragraph 2 of Article 29 of the Properties Act. It states that EU citizens that do not have permanent residence in the Republic of Bulgaria will be entitled to purchase land only after the expiry of the transitional period determined in the Treaty – 5 years.

The result is that the Properties Act first refers to the Treaty on the terms for acquiring land by EU citizens. Then the Contract refers to the Bulgarian law in terms of the relevant limitations, which may remain in force for another five years. Then the Bulgarian law, i.e. the Properties Act, explicitly sets up such limitation by referring to the Treaty, which determines the term – 5 years. It very much reminds us of the situation when one attempts to obtain a public service from a Bulgarian civil servant – call this number, go there, do that and then come back again and may be and only may be you will get the service.

 

Residency

At the end of the day, it turns out that finally EU citizens are entitled to purchase land, but only after they obtain residence in the Republic of Bulgaria. What is residence?

Here comes another confusion: everyone who has passed through this procedure knows that there are two types of residence – long-term residence (up to five years) and permanent residence. According to the Treaty no limitations can be applied towards EU citizens who “reside legally” in Bulgaria. However, both the long-term and the permanent residence provide legal residence in Bulgaria!

According to the quoted provision of Article 29, Paragraph 2 and after taking into account the provision of the provision of Article 29a per argumentum a contrario, only such EU citizens who have permanent residence, will be allowed to purchase land before the expiry of the 5 years term. If we interpret the law, then following the scale of seniority of legal acts the Treaty should have precedence over the Properties Act and the limitation set by Article 29, Paragraph 2 must not apply (this is what the second provision in the Treaty, quoted above, states – no further limitations are allowed). But as we all know from experience – what the law says and what the reality is are two different things in Bulgaria…

 

One more important note has to be made here – as you can see, the above regulation refers to land, which is designated for a “second residence”. Considering this definition and the provision quoted below, it turns out that if you want to purchase agricultural land with the intent to transform its designation and regulate it later (you know that this land is cheaper and many prefer it for investment), you will have to observe another provision of the Treaty between Bulgaria and the EU, under which Bulgaria will be entitled to retain for a term
of seven years from the date of signing the Treaty any limitations, existing in its legislation in terms of acquiring agricultural land, forests and forest land by EU citizens. Again, using the same mechanism as the one by the Properties Act, the Ownership and Use of Agricultural Land Act stipulates in Article 2, Paragraph 5 that EU citizens will be able to acquire agricultural land only after the expiry of the term set in the Treaty. No residence is relevant here. Both the Treaty and the Act state that this limitation will not apply for EU
citizens that are self-employed agricultural producers.

 

To summarise...

We do not wish to confuse you too much, so here is the summary:

Yes, EU citizens can purchase land at the moment, but only if it is not agricultural and is designated for residential construction and only if the EU citizen has a permanent residence in Bulgaria.

Knowing that many EU citizens purchase their properties without ever stepping on Bulgarian soil and knowing that most of them use these properties to meet one of the requirements for residence – the so-called ‘appropriate accommodation’ - we can easily predict that the current regime will not have a wide-spread application.


Roumen V. Petrov and Asya Mandjukova, GPNG Law Firm, Sofia