Propery deals for over EUR 5000 will go through bank wire only!

Another "kick" on the free trade has been adopted by the Bulgarian government. As from July 1st 2011 an amendment in the Notatrial Act regulates that property deals worth more than 5000 Euros has to be paid through the notary trust account or dedicated bank account. The full text of the ridiculous Art. 25 is here:

(9) (New - SG. 41 of 2011, in force since 01.07.2011) Upon performing transactions, which set up, transfer, amend or terminate real estate rights, participants in the notary proceedings declare that the amount stated therein is effectively agreed.

(10) (New - SG. 41 of 2011, in force from 01.07.2011) The payments under para 9 in total over 10 000 BGN are made through a special bank account of the notary or bank account chosen by the parties in the bank.

So how come this is bad, someone will ask. Well, the state basically limits the payment options. What if I want to pay cash or what happens if you want to make a property swap? This examples complicates the proceedings and are grounds for  different law interpretations by the different notaries. The result is destructive - no clear regulation and confusion on the property trade market. Lawyers will have to argue with notaries and since we are the 'weak' party in the process, the lawyer are forced to accept the notary interpretation. Which is often against common sense...

General Meetings of the Condominium at Black Sea resorts (Varna, Bourgas etc.)

It appears that the builder's lobby in the Condominium Management Act has prevailed. The Act was adopted during the property bubble, when all builders had plenty of work and clients. They were trying to predict who they can benefit their further business and how to squeeze more out of the foreign buyers. They were trying to find loopholes and adjust the legislation in a way so their business can be run smoothly. In my opinion one of the loopholes is the ban for convening General Meetings during the summer season.

Art.13  para 8  of Condominium Management Act explicitly states:

(8) Except in urgent cases, a General Assembly shall not be convened during:

1. the period between 15th July and 15th September;

  1. days declared as official holidays;

  2. days declared as holidays by the Council of Ministers;

As you can see the ban matches the summer season i.e. when all holiday property buyers are going on vacation and stay in they apartments. Oddly and surely very convenient when all condominium members are in the building a General Meeting cannot be convened. In my opinion there should be distinction between summer and winter resorts properties. Unfortunately the law doesn't make that distinction.

Furthermore, because the owners can't attend the GMs, they need to authorize solicitors or other third parties. Builders count on the fact that power of attorneys involve costs (depending on the way you choose to notarize the document) and apartment owners don't bother making PoAs at all. This way the management of the condominium (usually the builder via a local limited company) creates obstacles and ensures themselves a majority on the GM and consequently adopting resolutions in builder's favour i.e. supporting their post development business.

Cargo truck drivers have problems with Bulgarian Transport Police

The main cargo road between Western Europe and Turkey goes through Bulgaria. The increased trade consequently leads to increasing land cargo transportation, mainly by trucks. Because Turkish transport companies are not very much familiar with the Bulgarian transport laws, they usually have problems with the Traffic police.

The usual problem are speeding, not having the right cargo and truck documents, lack of tachograph (or not working properly) etc. If the driver is stopped by the Traffic police/Transport authority and defaults in the truck/cargo/documents are found, the driver and the transport company will be fined and issued a penalty document ("akt").

In that case the transport company will need a lawyer to take care of the legal formalities and appeal the fine/penalty. A fine to the transport company or to the driver are clearly putting a bad mark on the trade and business of the company. Therefore a lawyer could be of big help. Usually the penalty forms have formal mistakes and when challenged in court the penalties are canceled.

The lawyer will find the formal mistakes in the penalty document and will ask the court to cancel it. This will result returning of any money paid for the penalty.

Online gambling license regime in Bulgaria

When we talked about Internet gambling license will soon be available in Bulgaria, we thought the Parliament will pass the bill really quickly because of the big interest, the real gambling companies have in Bulgaria. Now, as some of the comments pointed right, companies holding non-EU gambling license don't care about getting an EU one, because they can operate on-line virtually anywhere.

We can see some "non-gambling" websites which offer free poker games, but they also offer paid membership where you can actually gamble. It appears the Gambling Commission is unable to sanction them, or at least nobody urged them to.

The fact is that the bill is still pending for discussion in the Financial Parliament Commission since 2009. Apparently it will be there for another couple of years.

EU transport lincese - cargo and passenger licenses

Note to our Greek partners: Εάν θέλετε να αποκτήσετε της ΕΕ επιτρέπουν των οδικών μεταφορών από τη Βουλγαρία, μπορείτε να χρησιμοποιήσετε το ελληνικό πιστοποιητικό σας για την επαγγελματική επάρκεια. Περισσότερες πληροφορίες μπορείτε να βρείτε εδώ
Bulgarian law is offers one of the most liberal procedures for obtaining cargo and passenger transport license. The authority that issues the licenses is Executive Agency "Automobile Administration". The benefits of getting a Bulgarian cargo or passenger transport license is that it is issued relatively quick (within 20 days) and almost no initial checks are done. This means that you can register a new company and get the license. Of course there are mandatory requirements which you need to meet, such as:
  • your company need to be in good financial condition. Luckily the law sets what is good condition:  your company has to show in its balance sheets possession of at least 9000 Euros if you apply for one vehicle license and +5000 Euros for every other vehicle you apply for. To be absolutely clear here is one example:
You apply for license for 3 trucks. This will be: 9000(first truck) + 2 x 5000(the rest two trucks) = 19000 euros. This is the amount that your company accounts should show that you possess. This amount can also be available through bank guarantee or borrowed from third party.
  • Your company should hire a person who has passes the state exams for qualification for transport company management. This is a special license issued upon successful passing of the state exams for transport company management. Anybody can get this qualification certificate as long as he/she is fluent in Bulgarian and learns the exam prep papers. IF a foreigners applies for such transport management qualification certificate, the high school diploma needs to be legalized in the Bulgarian Ministry of Education.
  • The full package of application documents can be prepared by our Varna lawyers. We can apply and get your cargo and passenger transport license by using a power of attorney. This enables us to act with minimum efforts put by you in this process.

Currently many Romanians and Greek transport companies has benefited from our transport license services.

Land lease - not so common in Bulgaria

When foreigners buy apartments or studios in Bulgaria they are explained that they can buy that property without forming a limited company. This is true, because they are buying only the individual premises in the building and not the land beneath the building. Usually the builders keep the land for themselves by "extracting" the right for building from the land ownership. This enables them ti build (or even sell the right for building to third party) on the land while keeping the land ownership for themselves. Consequently they can sell the building (or individual premises in it) without affecting the land ownership.

Now what happens when new apartment owners come and use their apartments? Owners from UK often compare the property relations with the UK law. The common mistake is that the land beneath the building is regulated by the so called "land lease" rules. According to Wikipedia:

A land lease or ground lease is a lease in which the tenant rents and uses the land, but owns the temporary or permanent buildings and other objects placed upon it.
Unfortunately the legal regulation is completely different. The land is owned by the owner and it is not leased. All rights and obligation for land management are for the owner and not for apartment owners. The only right they have upon the land is the "right for passage" i.e. they are allowed to pass through the land in order to get to their apartments/building.  The owner is obliged to maintain all facilities that are not permanently attached to the land and not owned by third parties. The individual apartment owners are not obliged to maintain the land because it's neither leased to them nor owned by them.

Because of this difference a lot of problems arise. Builders often try to gain profit over the apartment owners by obliging them to pay land maintenance fees. Unless there is such contract and apartment owners has explicitly agree to pay such fees, everything that builders asks for land maintenance is illegal.

Condominium problems - common areas calculation often forged

[styled_box color="grey"]Important Update: We are pleased to inform all owners that we have made a precedent in Razlong District Court, concerning three apartment complexes in Bansko. We have successfully proven in six court cases the discrepancies between the common parts calculation used on General Meetings by the builder and the actual common parts area that is built. You can read more here.


The most recent rip-off scheme used by the Bulgarian (Varna, Bansko, Bourgas etc.) developers is "blackmailing" the foreign investors through property management fees. So how does it work?

The Common Parts issue

Most of the foreign investors have bough their properties off-plan. The developers has sold whatever they can, but there is certain amount of apartments which are still owned by the developer. Since the property bubble has popped, the only money source for the developers is the annual property management fees. The new Condominium Management Act stipulates that the management of the common areas can be assigned to external company with a contract between the condominium and that management  company. Now where's the catch?

The catch is that the management company shall be chosen by the majority on the General Meeting (GM). The majority is counted on the basis of the common parts, which each premises in the building possess. It's counted in percentage. Now the problem occurs because the percentage table of contents of common parts is created by the developers themselves.

In our lawyer practice in Varna and in Bulgaria as a whole, we face numerous cases e.g. there are different tables with common areas in the local municipality office, with the notaries who certified the property sales, with the regional office of the National Construction Audit Directorate. This often is made deliberately bu the developers, so the can manipulate the voting on the General Meetings. This gives them advantage to vote for their own management companies and subsequently rip-off the foreign investors. This also provides illegal opportunity to pronounce themselves as Condominium Managers and dispose owners money at their own discretion (often not connected to the management).

So how this common areas problem can be solved? The most straightforward way is to have proper measurement of the building done by court expert. Owners from the building should hire a lawyer/solicitor who will file a claim for establishing the real common areas percentage. After the measurement is done, the court expert can do the proper common areas calculations and will assign the proper percentage to each premises in the building. The court will establish this calculations as legal by issuing a court resolution on that matter.

As from the moment, the court resolution enters into force, the General Meeting of the condominium will have to take the new common areas calculation into consideration.

Electricity and Water Supply Issue

Often the new so called "closed apart complexes" have no properly installed individual meters (both for  electricity and water).There is only one general meter for the whole building which has been registered with contract with the supplier (CEZ, EON, EVN). Foreign investors are told  that they cannot have individual contracts because of various reasuons such as the suppliers don't want to have individual contracts, the power grid of the building was not planned for higher capacity appliances etc.

The fact is that the developer is ripping off the other property owners by overbilling the utility bills. Since the utility invoice is just one for the whole building one can easily be confused in the calculation of the individual electricity and water consumption.

Some developers are claiming that they are not overbilling, which is correct, but they do something different - they invoice the utility bills to the owners, but take back the VAT from the state over that invoice. This makes the VAT pure profit for them.

Both of the above cases are examples of illegal practice because everyone who charges for electricity and water has to has a license issued by the State Energy and Water Regulatory Commission. Each company which doesn't possess such license is subject to big fines.

Commercial Register failed!

For the past couple of days, the Commercial Register of Bulgaria is not working. According to an official government announcement, the computer cluster, serving the register system failed to take the huge load of connections from users/government employees. Today the Registry Agency in Varna was not working due to the system failure. This is also a huge embarrassment for the Ministry of Justice, part of which is the Registry Agency.

Court Resolution Enforcement Explained

The current articles is following up  the first stage a typical civil lawsuit goes through. Assuming the plaintiff has won the case and the court has awarded him with full refund (+ penalty and legal expenses recovery), the plaintiff is waiting the lost party to pay. It is common in Bulgaria that debtors don't pay willingly. Therefore the creditor need to enforce the court resolution.

Law Enforcement Agent

The law enforcement agents are the only state authorized persons who can enforce court resolution in Bulgaria. Generally the enforcement agents are private ones and state ones. Private enforcement agents have their Private Enforcement Agents Chambers, which is also their regulatory body. Private agents are more capable due to the monetary stimulation of debt recovery - they charge both flat fees for initiating the enforcement case and percentage based fees upon collection of funds.

Enforcement process

The law enforcement process begins by filing the original of the execution order issued in the lawsuit the plaintiff have won. The execution order (or writ) is submitted to the office of an law enforcement agent along with application and any other written proofs of  assets, the debtor might have. The application need to contain also enforcement method. If the creditor is not aware of debtor's assets, the enforcement agent can make a detailed research of debtor. This includes - properties, vehicles, bank accounts etc.

Debt recovery methods

The major debt recovery methods are:

  1. Seizure of bank accounts
  2. Seizure of property and putting it on a public tender
  3. Seizure of vehicles and putting them on public tender
Each of the above involve paying to the enforcement agent a fee. The most expensive one is the first method. There the creditor need to pay percentage of the property value in order to get it put on public tender. In the end all expenses are recovered from the assets of the debtor anyway.

Generally the law enforcement agent leads the creditor through the proceedings, but it is preferable the creditor to engage a lawyer(solicitor) who will push the proceedings. The successful enforcement agents are buried with cases and they often neglect single creditors. The agents give preference to banks and insurance companies which bring thousands of Euros in fees into agent's accounts. Therefore it is good to have a lawyer who will push the agent to go through the proceedings on time and not to delay.

Timeline of enforcement proceedings

The time line of the debt recovery process depends on whether the debtor has assets and how easy they can be discovered. The discovery process lasts about 2 months (especially information about bank accounts) due to the fact that the process is conducted through written correspondence (regular mail). There are 42 banks and foreign banks branches, so if the agent sends letters to each bank, the responding and processing of the correspondence will take time.

Distressed properties in Bulgaria

As a separate service, the properties that are put on public tender by the private enforcement agents are listed in centralized database of the Chambers of Private  Law Enforcement Agents. All properties that are put on public tender can be browsed and sorted by different criteria such as location, initial bid price etc. This is an excellent service for property agents and investors.

Bulgarian Civil Court Process Explained

We receive many complaints about the slow civil court proceedings. Since it is a complex issue, rooted deeply in the judicial system, I'll try to outline the main causes of the delay. Below I'm explaining in details how a typical court process does and the concerns of a typical plaintiff's lawyer.

1. After the claim application is filed, the court's Chairman distributes the case on random principle among the judges (time frame 3-4 days as from the claim filing)

2. The judge whom the case has been distributed reviews the case documents and all attached written evidence (up to one month)

3. If there are misexplanations or unclear facts in the claim application, or simply the copies are not in good quality (or other pure formal things), the judge orders to the court employees to send a notice to the plaintiff. This lasts up to one month, depending on how quick the court employees will organize the sending. Also the court delivery persons (subpoena persons) don't usually go on the next day they were ordered to. They collect the notices for certain city area and take all notices at once. This can postpone this court phase up to two months. However this point is not mandatory, since the claim application can be clear and the judge might not have any questions.

4. Next step is the judge to order to the court employees to send a copy of the claim along with copies of the enclosed evidence to the defendant(s). In order the court employee to apply this order into action usually it takes a week or two, because of the many cases that get such orders.

5. The claim copy is to be delivered to the defendant. Now we face the first obstacle here. Usually if the defendant is a company, they don't trade on their registered address. Also there is almost no way to find their actual trading address. It gets even worse if the company is not trading - no trading address and nobody on the registered address. In that case the defendant is practically undiscoverable. In such cases an article in the Civil proceedings Code allows the court delivery person to stick a note to the company's registered address and the summon will be valid. Unfortunately we face extreme fear by the judges and the delivery persons to apply this article. It's a fear of ruining the proceedings if the company proves that there was a person to receive the notice at that date. Therefore only few judges order this articles to be applied. No delivery person applies it on their own discretion - they wait explicit order by the judge. We as lawyers need to insist and file requests several times before a judge agrees to apply this article. If the defendant is a person we either summon him on the permanent address registration or if we don't know it, we requests a court certificate (on paper), which the lawyer takes from court and uses it with the Police. the police replies within one month. All correspondence between the court and the Police(and any other authority) are exchanged via regular post (no priority). This can slow down the process with one or two months.

6. After the claim copy has been delivered, the defendants have one month as from the moment they were delivered the claim copy (this could be as long as 4-5 months after the judge ordered the claim copy delivery). Usually the defendant files the answer to the claim on the last day of the deadline in order to save time and drag the proceedings as long as possible.

7. After the court receives the answer to the claim, the same procedure as in point 4 and 5 above. This time the plaintiff receives the answer on time, since the plaintiff doesn't want to slow down the process. Moreover, when our law firm is acting on behalf of the plaintiff, we go to court on weekly basis and check for the judges order. Generally we want to skip point 5 above by getting the documents directly from the court building. This saves us about 1-2 weeks proceedings time.

8. Depending on the defendant's answer the plaintiff might or might not want to send additional claim application. If there are new facts regarding the case or disputes about case facts, the plaintiff should send additional explanations and argumentation of the case fact. This is important because judges usually don't pay attention to what's happening in court and they generally read the written statements of the parties. Therefore it is important to write such additional (explanatory) application. If the plaintiff do sends such application, we can expect the points 4 and 5 above (including the delays) to happen again.

9. Not in all cases but it does happen - the defendant is filing counter claim against the plaintiff. In that case all steps (3-8) will apply but with reverse parties, plaintiff becomes defendant on this counter claim and defendant becomes plaintiff for this counter claim. As you can imagine this puts another 4-5 months to the proceedings.

10. Assuming all steps above are completed and all correspondence exchange has already taken place, the judge sets a hearing date. Now depending on the court's workload, the date might be between 20 days and 6 months as from the moment of judges resolution for setting a date. Here is the biggest problem - usually Sofia courts set the furthest dates. Varna court has relatively small workload so possible term is 1-1.5 months.

11. On the first court hearing the two parties are requesting and/or disputing other party's evidence/evidence requests. Also the parties can request from the judge additional evidence -such as witness testimony, requests for documents in possession of third parties (such as government or municipality agencies and bodies). Also in this hearing expertises (accounting, engineering, computer, medical etc.) can be requested by the parties and will be appointed by the judge. After the evidence requests are over, the judge closes the hearing and sets another hearing date. Again the workload of the judge is taken into consideration.

12.On the second hearing date the expertises are heard, the requested documents/statement from third parties are accepted (or not accepted), witness testimony are recorded. If there are further evidence requests and the judge considers them as appropriate another hearing can be appointed for collection of those evidence. But generally the evidence part of the proceedings is closed on the second hearing.

13. In the same second hearing the main pleading part of the process starts. It doesn't last long normally and it finishes in the same second hearing. Also some judges doesn't like talking in their courtroom and they require from parties' lawyer so submit written defence application within one week as from the last hearing. The judges also state that they will issue the court resolution on time. Now the key phrase "on time" is arguable. The Civil Proceedings Code give a month of instructive deadline (read as not obligatory deadline and without consequences if passed). The judges usually try to fit within one month, but sometimes they resolve the case in 2-3 months after the last hearing.

14. After the court resolution is issued, the court needs to notify the two parties of it and to deliver a copy of it to them. Now if the defendant has lost the case, they will do their best to postpone the enforcement of the resolution. This is done again by delaying the delivery of the court resolution. In the practice of MHLegal we've seen situations such as bribing the delivery person and even stealing documents from the court file and thus making the court to reissue documents (notices, subpoenas) in order to keep the proceedings lawful. Desperate lost defendant would do anything to delay the resolution enforcement.

Now, as you see lawyer's work is made harder. The lawyer not only need to follow the process by also need to push the judges and all court employees to actually DO THEIR JOB. That makes lawyer's work exceed the normal proceedings role.