HARMONY ESTATES

Legal Advices

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LEGAL ADVICES

Purchasing a Property in Bulgaria
Dear Customer, the Bulgarian property market offers various and favourable possibilities for purchase of a real estate property. A few points should be considered before you go for a property deal in Bulgaria.
At present, it is possible for foreign people to acquire ownership on houses, villas or apartments. Although the restriction with reference to sale and purchase of land by foreign people, the law however allows that you acquire land.
Right now, in order to do this, a company should be incorporated – a limited liability company which will buy the land. Company registration procedures are relatively straightforward and normally do not affect the deal. Two or three weeks are needed and around 500 EUR. The share capital (5,000 BGN or 2500 EUR) should is deposited in a Company’s bank account and may be drawn out in full in 3-4 weeks.
This soon will be changed following Bulgaria’s EU membership in order to allow foreign people to freely acquire land.
Please note that in order to put you at ease and save you time, we are able to organize all stages related to sale and purchase of a real estate property for you.

The main steps when buying a property:
1. After choosing a property, you are expected to check if it is available for sale
2. The next step is to secure the chosen property against payment of a reservation fee (it varies with the different investors), allowing withdrawal of the property from the market for some time.
3. Receiving and signing a Preliminary Agreement for Sale and Purchase stipulating the main rights and obligations, price of the property and the means of payment, until the notary finalizing of the deal.
4. At this stage (or earlier) you my take a trip to Bulgaria in order to view the property
5. Signing of a Final Agreement for Sale and Purchase and Notary Deed in front of a Bulgarian Notary Public in Bulgaria. This takes place after payment of the final installment (or the full price) and signing of Act Form 15.

What do you need to know upon executing an Agreement for purchasing a property
Executing of a Preliminary Agreement for Sale and Purchase is the final and closing stage of the negotiations intended to clarify the main terms and conditions related to the sale and purchase of a real estate property. This is an Agreement under which each Party shall be obliged in the presence of certain preconditions or after expiry of a certain period of time to execute the Final Agreement. Legally, this issue has been settled in Art. 19 of the Contracts and Obligations Act. A valid agreement shall contain the main agreements referring the major terms and conditions of the Final Agreement – the Notary Deed, namely: a specified property, final price, terms and means for its payment, deadline/date for notary finalizing of the deal, Notary Public, deadline for accession to the property, penalty payments upon delay or non-implementation.
In order to become effective, the Preliminary Agreement should be executed in writing, but notary certification is not needed. The written form is a requirement for its validity.
Upon executing of a Preliminary Agreement for a sale and purchase, an explicit statement – declaration of ownership onto the property and lack of burdens are to be included.
Upon non-implementation of the Preliminary Agreement, in accordance with Art. 19, par. 3 of the Obligations and Contracts Act, each Party shall have the right to initiate a claim for executing the Final Agreement if the other Party is not willing to do this voluntarily. Subject of the procedure for executing the final agreement is the right stipulated in the preliminary contract for demanding execution of a final agreement.
Amendments and supplements in the Preliminary Agreement may be made after its signing, this taking place with the explicit agreement between the parties expressed in writing – an Annex to the Agreement.

Notary Transaction
The final legal transfer of the ownership of the property chosen by you takes place in front of a local Notary Public on a date specified in advance. You need a sworn translator to accompany you to this meeting guaranteeing that transfer of ownership was done. In case you are not able to come to Bulgaria and be present personally, you need to have chosen a third Party in advance as a Power of Attorney Holder to sign the Notary Deed on your behalf. The Notary Public examines thoroughly the accurateness of the property documentation before entering the deal, following this he/she certifies that the deal was executed and arranges for the property transfer. The New Notary Deed for ownership is entered into the state registers and you will be able to receive it within 7 - 14 days as from the date of the notary transaction. The Notary Deed stands for a “document to certify right of ownership”.
After purchasing the property, it needs to be registered at the statistical organization BULSTAT (for the foreign people) within 7 days as from receiving the Notary Deed from the Registry Agency as well as the Tax Inspection as per location of the property within 2 months.

Taxes and Charges related to sale and purchase of real estate property
Upon sale and purchase of a real estate property and upon notary certifying the deal, the Parties owe fees, their amounts fixed in the Tariff of Notary Fees, Chapter “Proportional Fees”. It is formed as it follows:
1. Registration fee – 0,1% of the certified financial interest
2. Local fee - 2% of the agreed selling price or the tax valuation if it is higher than the selling price
3. Notary fee – in accordance with the Tariff of Notary Fees observing the Notary Act

Local taxes
In accordance with the Local Taxes and Fees Act, the tax subject to payment upon sale and purchase of a real estate property is 2% local tax. It is formed on the grounds of:
- The price of the apartment as stated in the Notary Deed, and
- The tax valuation of the apartment