Legal Guidance

Bulgaria is a politically stable country, and the introduction of a currency board in 1997 stabilized the country's economy. However, as is the case elsewhere in Central and Eastern Europe, legislation, including that governing real estate, is volatile and subject to frequent change.

Foreign investors are guaranteed full repatriation of profits resulting from an investment in Bulgaria. The transfer abroad can be made only after the bank effecting the transfer is presented a certificate proving payment of all Bulgarian taxes due.

Bulgaria has one of the most liberal foreign investment laws in the region. Foreign investment typically assumes one of the following forms: establishing a joint venture with existing companies, state-owned or private; acquiring a company through privatization; setting up a new (green field) venture; or making a portfolio investment. Portfolio investment has been minimal given the relative lack of development and inefficiencies of the capital markets.

The law does not limit the extent or amount of foreign participation in companies. Foreign companies have the right to open deposit accounts in hard currency and Bulgarian Leva.

Foreign Ownership

Under the Bulgarian act on Foreign Ownership, foreigners are allowed to buy buildings but not land. Foreigners can however own land by setting up a Bulgarian company. This restriction is simply avoided by setting up a Bulgarian company that owns the land. The situation is summarised below:

• No land ownership for foreigners in Bulgaria.

• Foreigners can own buildings.

• Foreigners wishing to own land can do so through incorporating a company.

• Bulgarian company incorporation costs 550 Euro.

• Bulgaria's ownership policy will be harmonised with the EU in the future.

All our off-plan developments do not require company incorporations and when you buy an apartment, you buy a section of the building. This section of the building is freehold and there is no lease, the apartment is yours forever, or until you sell.

The Contract

Buying ‘off plan' in Bulgaria is essentially the same as buying 'off plan' anywhere else. A preliminary contract signed by all parties (similar to ‘Sold Subject to Contract' ') is drawn up to cover the purchase of the property. It is known as the” preliminary contract” because both parties effectively promise to enter into a final contract to buy and sell the property.

After verbal agreement and all the necessary details provided, the contract will be drawn up by the developers solicitors and will set out timescales, payment terms, prices and the terms and conditions agreed. At this stage, the agreed deposit – normally between 10%-25% of the purchase price – is paid to the seller and such contracts will also detail scheduled payments thereafter, up to and including the completion date in front of the Notary.

There will be penalty clauses contained in this document in the event of either party withdrawing from the sale or purchase after this contract is signed. We advise you to obtain your own legal advice before committing to any significant financial transaction.

Deposit

A deposit is usually required upon signature of the contract. There is no limit for this but experience shows that usually buyers are not prepared to put up front a substantial deposit. It may vary but be prepared to pay a minimum of 10% of the total value of the property. It is advisable that this amount should never exceed 50%.

Completion/Notary Act

Final legal transfer of the property is different to that of the UK.

The client is required to sign the Notary Act (Contract of Purchase) in attendance of a Bulgarian Notary – a legal entity who is duty bound to check every detail and document.

The Notary Deed is equivalent to our “Title Deed” and is the important document transferring ownership of the property.

You will require independent legal representation and a legally authorized translator with you to ensure that transfer of ownership takes place.

If required, a ‘Power of Attorney' can be granted enabling another person (usually your solicitor) to attend and sign on your behalf.

Please note, in the case of off-plan developments, the final Notary Act is not signed until the building is completed.

The client is responsible for these extra costs which will typically account for 3% of the purchase price:

• Notary fees, document translation and legal costs

• Country Tax (the equivalent of the Stamp Duty in the United Kingdom). This is a maximum of 2% of purchase price.