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Tricky Moments When Buying - Penalties, Completion

8. Further representation and warranties - include all facilities for common use in the building (development complex)? At the moment, frequently, the developers advertise that they will construct a lot of modern and useful facilities but after they commence construction, they start having second thoughts about these facilities. Often they change the investment project and these facilities never come to be or are changed to apartments and studios.

9. Penalties - very, very important! Make sure you agree reasonable penalties (at least 0.1% per day) for all tyhpes of breaches - delay, bad quality, incorrect representations and warranties (see points 6 and 8 above) or full compliance. Provide a clause that entitles you to terminate the contract and get full reimbursement plus penalties after a reasonable term of delay. Do not allow a penalty in favour of the vendor/developer amounting to the whole first instalment, not to mention the whole sums paid so far!

10. Force majeur - beware of the way the provisions, which exclude the vendor's responsibility for breaches or delay are drafted - they should not be too wide and vague.

TIP : Very often, usually far away from the clause providing the term of completion of an off plan project, a certain grace period of delay of the completion date without penalties or termination, is inserted. This can often be from one to six months. Always look for such a clause and try to cut it short as much as possible - if you cannot get it shortened, then forget all about the original completion date and just think in your mind of the completion date being with this 'grace' period added on.

C. Signing the Notary Deed

Don't conclude that reaching this stage means that all obligations of the vendor/developer under the Preliminary Contract have been duly fulfilled, that you have inspected your property and are fully satisfied... right? No, there are four more things to check out:

1. You have the right to have the full price of the property on the notary deeds. Despite what any agent may tell you, nobody but you can make this decision - not your proxy, your agent, your lawyer nor the vendor

2. You should make one final check in the Service for the Entries for any encumbrances on the property - preferably on the day of completion. Sometimes the vendor will agree to do it for you, or the notary will excplicity require it

3. It is better if you include in the notary deed the same representations and warrenties of the vendor (see item 6 above) and some penalty provisions

4. If someone else will be signing at completion on your behalf, be careful what Power of Attorney you give them. It has to be as precise as possible, not allowing too many free actions, but also as full as possible so not causing difficulties for your proxy to fulfil his/her duties

 

Roumen Petrov and Asja Mandjukova, GPNG Law Firm Sofia