Buying a property is a major decision that needs to be well thought out, both financially and legally. A lawyer can play a crucial role in ensuring that the purchase process goes smoothly and without unexpected problems. This is all the more true when it comes to people who are not native to Bulgaria and do not know the legislation and practice in the country well.
Therefore, this article explains the individual steps of the property purchase process so that you have a basic idea of how the purchase of a property in Bulgaria works in general.
1. Brokerage Contract
In most cases, especially for people who do not have many acquaintances in the respective city, the property search actually begins with working with a real estate agent. Even if you search for flats yourself on specialised sites, a very large number of properties are offered exclusively through estate agents. In this sense, the first legal relationship you enter into when buying a property is with an estate agent.
Normally, when you first meet a new estate agent, you will be asked to sign a contract that regulates your relationship with the agent or company in question. With this contract, you instruct them to search for properties according to certain characteristics defined by you. Also on the basis of this contract and the subsequent property viewing reports, the estate agent expects you to pay a certain commission when they have found the property for you. In general, it is 3.6% including VAT, but it is important to read and familiarise yourself with all the clauses of the respective contract.
2. Deposit Contract
If you have a strong interest in a particular property and are actually thinking about buying it, it is common practice to sign a deposit agreement. This involves you entering into negotiations about the purchase of the property through your estate agent. This usually involves negotiating a lower price than originally advertised, discussing the specifics of the property in more detail, obtaining more detailed information about the property ownership, etc. For this to happen, you will need to pay a certain deposit. Depending on the price of the property, the amount of the deposit may vary, but in general it should be around 5,000 Euros.
At this stage comes the second important document that may play a role later on, namely in the event that no agreement is reached on the purchase. Therefore, it is very important to pay attention to certain things when signing the deposit contract, especially the exact conditions under which you would be entitled to a refund of the deposit.
3. Due Diligence Report: Check of property rights and encumbrances in rem
Before you finalise the purchase of a property, it is crucial to ensure that the seller is the legal owner and that there are no hidden encumbrances on the property. It is recommended that this verification of ownership rights and encumbrances in rem is undertaken by a lawyer. By inspecting the land register and carefully checking the relevant documents, they will ensure that no mortgages, liens or other encumbrances affect the value or usability of your future property.
4. Legal Structuring and Tax Optimmization
There are special cases involving complicated transactions or the purchase of a property by non-EU citizens, which can present additional challenges. Here it may be necessary to obtain further advice on the specific case. For example, taking into account local regulations that apply specifically to foreign /non-EU/ buyers.
It may also be necessary out of business /financial/ or personal /family or inheritance/ reasons to seek tax and legal advice to determine the best structure for the purchase (e.g. incorporation of a company to buy the property).
5. Preliminary Sale Contract
The preliminary contract is a central part of the property purchase process and can be much more complex than the contracts mentioned so far, as it is actually the contract that sets out all the basic and most important clauses of the purchase. Although in practice the estate agent will provide you with the contract, your attorney will check these contracts thoroughly to ensure that all the terms are clear and fair to you. It is therefore very important that all included texts and appendices are carefully scrutinised so that they cannot be interpreted to your disadvantage.
It is also very important to emphasise that under Bulgarian law the preliminary contract has the legal force of a final contract. In the event of culpable non-fulfilment by one of the contracting parties, the entitled party has the right to declare the preliminary contract final by filing a lawsuit. In this case, the court decision replaces the notary deed as the title deed in accordance with the provisions of the preliminary agreement.
6. Issuing the Required Documents
Within the period specified in the preliminary agreement, the seller is obliged (usually with the help of the estate agent) to provide the buyer with all the necessary documents. As a rule, you will need a large number of documents for a smooth purchase process and these may vary depending on the type of property.
If necessary, your lawyer can also assist in issuing them.
7. Preparation of the Notary Deed Draft
When the whole package of relevant documents has been collected, the moment comes when your attorney-at-law starts drafting the notary deed. In this step, the lawyer draws up the notary deed strictly in accordance with the agreements in the specific case and the legal regulations. Here, they mainly take care of your personal interests and that everything that has already been agreed with the other party is also ultimately included in the content of the notary deed. So that there are no further surprises.
8. Notary Deed
The final purchase agreement must be notarised in the form of a notary deed. In this procedure, the notary ensures that the contract is legally compliant and that both parties are fully informed of their rights and obligations. He advises neither the buyer nor the seller on their personal rights and remains impartial in this sense.
When arranging the appointment with the notary, all relevant documents must be presented and, if necessary, specific legal aspects of the transaction discussed. Your lawyer's job is to fulfil this obligation and minimise the need for your involvement in the preparations.
On the day of the appointment, the notary confirms the identity of the parties and ensures that all legal requirements are met. For non-Bulgarian speaking parties, the presence of an interpreter is of course also required. After the notary reads out the contract and it is translated for you by the interpreter, both parties sign the notarial deed. The purchase price is transferred according to the terms of the contract together with the payment of all fees and applicable taxes. Finally, the notary sends the documents to the Property Register.
9. Entry in the Property Register
The notary ensures that the change of ownership is entered in the Property Register. This is the final formal step that makes the buyer the legal owner.
10. Follow-up Obligations
After the entry in the Property Register, you will receive the notary deed, usually the next day. It is also advisable to keep all other relevant documents and receipts.
Next, after purchasing the property, there are still a few formalities to complete:
If you do not have Bulgarian citizenship, you still need to be entered in the special register as the owner of a property.
And, of course, the transfer of the electricity and water accounts, payment of the annual property tax for the coming years or other issues that arise over time.
As mentioned above, the purchase of a property is a complex process that requires careful examination and preparation. Legal due diligence, checking contracts, obtaining the necessary documents, drawing up and reviewing preliminary contracts and notary deeds as well as the special structuring of purchases for non-EU citizens are essential steps for minimising legal and financial risks and successfully completing the purchase process.
Contact us today to get comprehensive support at all stages of the purchase to ensure you can buy your new property well-informed and worry-free.
