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Buying off-plan in Bulgaria: Act 14, 15 and 16!

When buying second home in Bulgaria, be extremely careful when signing any preliminary agreements.  Be sure to check when the property ownership will be transferred, at what moment exactly. The builders usually prefer that they get rid of the apartment/house at the moment of obtaining Act 15.

Act 14  This protocol (minutes) is to be drafted by the builder when the construction works of the building reach the so called “rough construction” or shell construction.

Act 15 is actually a protocol (minutes) signed by the investor, the builder, the architect and the private audit construction company. This protocol is to certify that the building is finished (not suitable for living though) and all the construction works are actually conformed to the approved architectural plan. However Act 15  doesn’t allow you to legally inhabit the premises. Act 15 is an act of formal delivery of the building by the builder to the investor. Developers usually try to sell premises at the stage of Act 15. You shouldn’t agree on that. But if you do, prepare to have trouble obtaining Act 16 (Habitation certificate” or “certificate for living suitability”) i.e. collecting all the necessary documents.

Act 16 or”habitation certificate” is the formal certificate issued by the municipality audit commission. The latter checks if all the documents conform to the Bulgarian construction legislation as well as if the building is properly connected to the electricity, sewerage and water suppler. It checks if the premises are secure and suitable for living. You have to mind Act 16 when buying property in Bulgaria.

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Bulgarian lawsuit procedure: what to expect

If you happen to be a party in a lawsuit in Bulgaria, you should be aware of the following:

  1. Don’t be impatient. Bulgarian Civil Proceedings Code regulates certain terms that have to be taken into consideration
  2. The weakest part in a lawsuit is the delivery of subpoenas. All the papers which have to be delivered to the parties, are carried by employees of the court called “призовкари” (subpoena carriers) . The delivery employees are not limited to delivery terms, as the law assumes that there may be troubles finding the parties. That’s why a typical subpoena delivery may take about a month.
  3. When a lawsuit is filed, there is one month period, which has to pass, before the judge sets a date for the first hearing. This is a period in which the defendant has to submit an answer to the claim. Please note that this period starts, as from the day the claim was delivered to the defendant.(See point 2 above)
  4. The judge may “stretch” the lawsuit in several hearings, depending on how complicated is the case. Usually lawsuits have two or three hearings. The time between the hearings depends on the caseload of the particular judge. Usually its one or two months.
  5. When the lawsuit is announced for resolving by the judge, there is a one month term during which the judge has to issue the court resolution.
  6. If the resolution is not appealed, it enters into force and you may engage a law enforcement agent.

Of course the above is just a brief explanation of the lawsuit procedure in Bulgaria, but basically you don’t have to push your lawyer,because not everything depends on him/her.

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Builders in Bansko are still vulnerable

Be sure to check whether your off-plan builder in Bansko is not in breach of your preliminary agreement. There is a general ban for issuing planning permissions in Bansko, issued by the mayor of Bansko. The ban is set for several areas of the town, so you should check whether your apartment is not in a to-be-building, located in the mentioned areas.

If your investment is still in the planning stage, it’s likely the builder doesn’t have planning permission. This situation will probably affect the deadlines in your contract. If so, it is your chance to get rid of your bad investment, by terminating your agreement unilaterally on the ground that the builder will not fulfill their obligation in the terms set in the preliminary agreement. Be sure to consult an independent lawyer, in order to get a clearer picture of the situation and independent evaluation your your case.

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Purchase property: never fully trust a developer

It seams that the so-called “construction boom” in Bulgaria begins to take its victims. Personally I have three clients that have similar cases. They all wanted to buy a property, either for investment or for a second home. The common between all the cases is that the developers have breached the agreement with the buyers: the built property is not what it was agreed on. In short, they got not what they expected. Probably there are other people out there who just accept the problems, but it shouldn’t be like that. The developers in Bulgaria are illegally earning money from cases like this.

The core of the problem is the unjustified trust of the buyer in the developers’ solicitor. Always remember that if you sign an agreement that has two or more parties, you should never use the solicitor that the other party offers, to consult you on the purchase deal. Always trust your own lawyer! In Bulgaria we have a saying: “The cheaper one is the more expensive one”. Paraphrased, it means that initially you will give to your own solicitor a retainer, but if you spare it, you’ll probably soon face a problem at a much greater cost.

Some of the things that your own solicitor will do prior to the date of signing the purchase agreement:

  • check the status of the land, where your house/apartment will be build
  • check the ownership of the land/building
  • check for land encumbrances (mortgages, ownership claims)
  • check the credibility of the developer etc.

The above are some of the necessary checks that have to be performed. Furthermore the solicitor have to check the content of the agreement: is it legal, is it drafted in your favour or there is some catche, the way of payment, realistic deadlines, penalty amount etc. This is a necessary assistance that will save you troubles in the future.

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The promissory note: securing your money

The promissory note is a common legal security tool in Bulgaria. Usually it is used by the banks, when providing loans to companies and persons. This way they increase the money payback, because both the loan agreement and the promissory note are used as securities of the debt.

The advantages of the promissory note are:

1. You can obtain a court order for execution within 20 days. This way you will skip the long and cumbersome civil litigation process.

2. No need to summon the defaulting party to court. It has the surprise element, and the debtor won’t be able to dispose of its property.

3. No notary certification needed. A simple signature by the debtor is enough.

Of course the promissory note is a formal deed. There are certain rules that should be followed when drafting one. Contact a solicitor to draft a promissory note for you.

Application of the promissory note:

  • Preliminary agreement when purchasing property
  • Construction works (both reconstruction and finishing works)
  • Loan agreements etc.

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Choose an independent solicitor

Usually when buying a property you have to trust the Agent’s own solicitor. A notorious practice in Bulgaria is just one solicitor to represent both parties when a purchase deal takes place. Almost 50% (unofficial data) of the property agents take advantage of the foreign buyer by increasing the legal services fees up to five times!! If you are a buyer, you can save yourself further troubles by hiring an independent  English-speaking solicitor.

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Notary fees in Bulgaria

Dear friends, I suppose each of you  had been to a Bulgarian notary’s office: a property purchase took place, a certification of a power of attorney etc. You should be aware that as from the 2007 notary services are charged additionally with VAT (20%). This have increased the expenses, especially when buying property (the notary fees are calculated on the grounds of the property value).

Although there are regulations for the application of notary fees (the Tariff of notary fees in Bulgaria and an Ordinance of Ministry of Justice, which interprets the notary fees application), not all notaries treat the same cases in the same way.

Before you pay the requested notary fee (especially when it’s high), consult an independent solicitor. This may save you possible future troubles. If you think that the notary is cheating you, go to another one.

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