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Difficult Moments When Buying Property

This article is a summary of some of the difficult moments which can occur during the whole property buying process in Bulgaria. Here are guidelines which may be followed through the acquisition process or take it as a list for a pattern of what services and information to ask for from your estate agent, solicitor or developer. Let us start at the beginning:


A. Choosing a Property

The last thing you should care about is the beautiful, colourful digital property you have been presented with. It may help you choose which one of all appeals most but then you must try to provide the answers to the following critical questions.

1. Ownership of the Property - is the seller the sole and fully legitimate owner of the property? Are there any rights of third parties related to that property such as mortgages, rental contracts, limited rights, servitudes, etc., claims or other dispute's. Has the seller obtained the property on a good and sound legal ground? In order to prove his ownership rights, the seller must present:

- The last notary deed, and preferably
- An up to date Certificate for Availability / Lack of Encumbrances for the property

2. Legal and Planning Status of the Land - if you are buying land, is it urban or agricultural status (agricultural land may not be built on with residential buildings without the lands designated use being altered to urbanised). If it has been agricultural land which has been changed to urbanised land (in Bulgaria this is called 'regulated' land and is then included in the Detailed Development Plan of the area), has this procedure been duly conducted by obtaining any and all necessary permissions? Are there any restrictions on the land that affect its use? In order to be able to provide yourself with some answers on these questions you must have:

- An up to date land registry plan (in Bulgaria called a 'skitsa' or sketch)
- All decrees, statements and decisions, issued in the process of the transformation of the designated use of the land

3. Phase of Construction (for off plan purchases) - has a Construction Permit been granted yet? This one simple question is the most important; if you do not have a Construction Permit (building permission) you simply do not have a project at all! Generally, the Construction Permit approves the investment project, allows construction to start and determines some of the major parameters of the construction. It is the ultimate guarantee that the project exists and will commence. If a Construction Permit has not been granted yet, it is of no use to look at the architectural plans, drawings of your chosen apartment, etc., as they are not yet approved. You must ask to be provided with:

A Construction Permit

4. Legal Status of the Vendor (or the Developer in the case of off plan) - is the seller/developer a Bulgarian natural or juridical person, does it/he have an address in Bulgaria? If possible endeavour to find out what is its/his reputation in business (sometimes even searching in Google gives some pretty good results). If the seller/developer is a company ask for:
- Certificate of Incorporation and / or Certificate of Good Standing (for the actual status of the company)

TIP: It is not ethical to pay reservation deposits to Bulgarian or British estate agencies before you have already obtained sufficient and satisfactory information and documents providing answers to all of the above questions. These deposits are either substantial or non-refundable and paid at this early stage; they basically represent a charge for providing you with information which they should provide anyway. There are other ways for agents to secure payment for their services and it should not be done under the guise of clients' deposits.

B. Signing a Preliminary Contract

When you come to the point of signing the Preliminary Contract it is preferable that you get assistance by a professional that of course must act for you only (and not also for the vendor). The Preliminary Contract is as important at this stage as is the deeds at completion. It protects your interests and makes available all legal opportunities that you may use in the future, even if you would like to cancel the contract and seek compensation. Always make sure that your contract contains the following substantial elements:

1. Full details of the vendor / developer - name, address, Bulstat (identifying company number) as per the certificate in Item 4 above if they are a company

2. Full and precise description of the property - including quotation of the current title deed, description of the premises and especially the real living area and the total area (including the common parts of the building if it is say, an apartment)

3. Full price of the property - including VAT where due, as well as any other additional expenses which the buyer will bear

4. Manner of payment - always leave at least 10 to 20% of the price to be paid upon signing the deeds at completion. If you are buying off plan, bind the separate instalments not with exact dates but with relevant levels of completion

5. Off plan - exact terms of completion described with certain dates. It is not that important for you when Act 14 or Act 15 will be obtained. You will be able to use your property upon issuance of Act 16 and subsequently obtaining the Occupational Permit of the building, so when you are given a completion date, make sure that it means obtaining the Occupational Permit!