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Changed construction plans for already sold offplan property

I don’t know what the builders are thinking when they change the construction plans and don’t update all off-plan purchase agreements?

Imagine the following situation. You have bought a relatively cheap apartment in an off-plan development.The estate agent have shown you some fancy 3D graphics of how the building would look like. Nice gardening around, happy people walking on nice alleys.

The reality is slightly different. Builder didn’t have any experience, hasn’t done any legal/technical research but have started selling off-plan. He had applied for construction permission, but the chief architect required changes to be made to the initial construction plans. The builder needed to change building plans. Some real examples: cutting off whole floor, changing roof shapes by creating sloping ceiling on top floor apartments, cutting off each apartment’s area, so they can fit within the architect’s requirements.

So far so good. But what about the off-plan buyers? They are completely ignored. Of course, they still need to pay the outstanding 50%+ of the apartment price. If they knew the truth they wouldn’t continue with the purchase or would require deduction because of non compliance with the preliminary agreement clauses. Even worse – they could sue!

The builder decides to remain silent to the end. No preliminary agreements are amended, no buyer is aware of the changes…until it’s time to sign the title deed. Now the truth is obvious. How the buyer feels? Bad! How the builder feels? Happy! He has got the cash already, so why should he care?

A true story…

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Farmland: the new trap set by the government

New amendments were introduced to the Ownership and Use of Agricultural Land Act on 27 March 2012. All agricultural land owners or lessees are now obliged by 31 July each year to submit declarations to the local offices of the Agriculture Municipal Service. The declarations need to point out how the farmland they own or use will be used.

Art 37b. (1) Each owner shall submit a declaration form in the local Agricultural Municipality Service, where the land is located. The Form shall state the possession type and the type of long term usage of the land…

Normally that is not a problem, but it’s yet another administrative burden. The real problem may occur to owners who don’t use their farmland or foreigners who have bought farmland though a limited company and haven’t leased it to a local farmer.

The arguable text of Art. 37c para 3 says:

When there is no consent between the users in terms of the agreement pursuant para 1 as well as for all land that is out of the scope of the agreement, the Commission drafts a plan for distribution of usage of the land, by plots by 15 September each year, in the following way:…

Note that “all land that is out of the scope of the agreement” refers to the farm land that no declaration is submitted for. This means that if you miss to declare the type of usage of your farmland, the government considers it as abandoned and may grant its usage to a third party without your consent or approval. Legally speaking this is private property interference and creates a huge corruption base as well as a base for legal disputes.

The government idea is to make use of all farmland, which is not used right now. The amount of such land is huge since after privatisation in 1990 each farmland plot was returned to 10+ heirs. Some of them live abroad, others because of legal disputes can’t cultivate their land. There are also simply non-interested parties so the farm land is not cultivated.

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Forging distribution of common areas in apartment complexes

We have been warning apartment owners that developers use incorrect calculation of common parts, in order to gain majority in the condominium General Meetings. Thus they set their own decisions about which will be the maintenance company and how much that maintenance company will be paid. It’s out of question that they form their own maintenance companies and get the maintenance fees.

For the past year we have been fighting such developer in Bansko. He had built three apartment blocks and have used only the initial common areas calculations for selling the apartments and consequently defining how big is the voting right of each apartment owner. The problem was that the plans of the building were changed 2 times during the construction. This inevitably changes the distribution of the common areas percentage and the subsequent voting rights. However that was never written in the table of common areas. This enabled the developer to “blackmail” the rest of the owners and outvote all General Meeting decision which were not in his own favour.

Hopefully the owners were wise enough to challenge the GM decision in the court. The court expert found the incorrect data and all GM votes counting. The court ruled that the GM decisions were illegal due to incorrect voting rights calculations.

If you are owner in a complex, whether it is in Sea or Mountain resort, be sure to check whether the same scheme is not applied to your property. If you are a victim of the same rip-off, be sure to challenge the GM resolutions in the court. Remember that the challenge need to happen within 7 days, as from the moment the GM has been attended or 1 month if the GM was attended by the apartment owner.

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Buying regulated land in Bulgaria 2012

  • 14.03.2012
    • , by 
  • by Milen Hristov
  •   1 Comments

Because of the speculations, I decided to write this small post. I will try to clear out whether an EU citizen can buy regulated land directly in Bulgaria as from January 2012.

A common misunderstanding is that foreigners cannot buy regulated land directly if they own primary home in their native country. This was valid until 2012, but not any more. The legal grounds are Art. 29a of the Ownership Act:

Entities in Art. 29 para 2, who do not reside permanently in Republic of Bulgaria, can acquire land for secondary home property after expiration of the term, set forth by the conditions of the Treaty for Accession of Bulgaria to the European Union

The above articles was introduced in 2007, the year when Bulgaria joined EU. As I have written last year the prohibition term was 5 years since Bulgaria’s accession. As from January 2012, the prohibition term has expired, so pursuant Art. 29a Ownership Act, foreigners can buy regulated land directly, no matter if it is primary or secondary home property.

The speculation still exists, but I think this is supported by property agents who lose business. Just imagine how many companies will be liquidated and how many annual accounts and tax declaration will not have to be submitted. Property agents need to move on and stop spreading disinformation.

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Full text of the Condominium Management Act

Many people wanted to see the full text of the Condominium Management Act 2011 in English. This is particularly useful for all foreigners who have bought holiday apartments in Bansko, Pamporovo, Borovetz and the Black Sea resorts. The Act can be downloaded from here [PDF 178kb].

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Liquidation of Bulgarian limited company

The biggest issue with the compulsory liquidation of the Bulgarian limited companies is the communication with the state appointed liquidator. Since the Registry Agency appoints liquidators from their liquidators lists, no one considers whether the company owner is foreigner or does he speaks Bulgarian. Some liquidators are not diligent enough when they see that the company owner is not Bulgarian. Sometimes they will not make efforts to contact the latter. One a separate note, this is difficult because the company owner address is spelled in Cyrillic letters and it is very difficult to restore the right English spelling.

Normally the the newly appointed liquidator will try to contact the capital owner(s) and request all company documentation i.e. contracts, bank account balance, court papers (if any), past years accounting reports etc. These will be needed to find out if the company has any outstanding debts and to repay them. Only then the rest of the company assets will be cashed and distributed among the company capital owners. Upon request of the capital owners and if available, any property left can be transferred to the company owner(s) without being cashed.

The latter is an exemption rather than a normal procedure. Therefore the company owners need explicitly and formally to request this transfer from the liquidator. If this request is not made in a formal way, the liquidator will sell the property on public tender/auction. As solicitors, we ensure that the formal request is submitted to the liquidator on time and no foreigner loses their property just because a formal request hasn’t been made to the liquidator.

Having said the above, I strongly encourage all Britons and Irish who still haven’t re-registered their companies – you still can keep your properties! The only effort you need to make is contact us with details of your Bulgarian limited company. We will take care of the rest.

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Bulgarian courts should accepts/send papers online

This week we have achieved a small victory. We are representatives of a client on a case, heard in Stara Zagora District Court. We have asked the judge to send by email copies of the latest hearing minutes. The judge refused, grounding her decision with “the court doesn’t have that practice”. We’ll that was not quite true. Art. 42 para 4 of the Civil Proceedings Code allows the court to send notices and subpoenas by email. We claimed that the court can use that to send copies of court documents too.

We have lodged an application to the Chairperson of Stara Zagora District Court, requesting the Chairman to “create such practice”. The court Chairperson accepted our arguments and ordered the judge to apply directly the aforesaid article. Yesterday we have received the requested documents by email.

I’m writing about this since that a major breakthrough in how the Bulgarian court operates. As I’ve said before, one of the major reasons of why lawsuits  take so long to be tried is the notice/subpoena problem. Electronic means solve this problem, but the the judges are reluctant to use them. There’s no explanation why.

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