Buying Bulgarian Property – Law and Procedures

When buying property in Bulgaria, the first law you will encounter as a foreigner is that you cannot. That is scheduled to change in 2013 after EU accession, but investors looking to get a piece of the lucrative land boom in that country, popular as it is with tourists from Britain and elsewhere, need to go in with their eyes open to the growing pains of the Balkan legal system that surrounds land or property purchases.The law stipulates that foreigners may not purchase land or any property that comes with land. The popular way around this is for foreign nationals to register a company in Bulgaria when purchasing the equivalent to an ‘English freehold.’ A foreigner may own a company in Bulgaria and that company owns the property. This is a straightforward procedure, but shop around for a reliable lawyer to knit it all together. I have heard reports of people paying as high as EUR5000 for such a service. At least Dick Turpin wore a mask.For those seeking a cleaner transaction, buying an apartment, especially new construction in the capital city of Sofia, is not only less complicated, but more likely a sounder investment. The law against foreign ownership is irrelevant when buying an apartment with no land belonging to it outright. In addition to this it is usually correct to use property values in the capital city as the fair marker of where the market really stands. Whilst many sun seekers may be transfixed by the idea of a coastal apartment on the Black Sea Coast or a rural cottage, prudent investors tend to invest in the capital, looking for a steadier and long term market growth. As you can lunchtime ski from Sofia, this is not so stupid.Another issue buyers must keep their eye on is the difficulty of establishing title. The previous rule of the communists has left many question marks hanging over ownership. Property has been reclaimed after 45 years, families have changed since the communist government interrupted ownership and rights of succession remain unclear, especially when the long lost love child appears on the horizon.Recently I was winding up research on a property for a client in the Rodopi Mountains, was about to buy, only to discover the land on which it was built was actually still state owned. Such information is not on a national database and must be researched the old fashioned way. This is not a cause for abstinence, assuming you have the right agent and legal help acting prudently on your behalf.When purchasing a property, standard procedure is to make a preliminary contract with the seller. This should include a number of factors including an initial down payment and a final payment date. There must be a clause stating that, to the knowledge of the seller, there are no debts on the property and should any be found after the transfer of the property these should remain the duty of the seller to deal with. Any penalties for failure to realize the preliminary contract should be reasonable, fair and equal to both parties. For this reason I always recommend having your own lawyer, experienced in Bulgarian property law and fluent in both Bulgarian and English. Without this safeguard a contract can be so one-sided as to verge on being criminal.There are hurdles to jump but they should not be a serious impediment to purchasers. Buyers need to be aware that the bountiful opportunities for bargains that exist in Bulgaria come with a parallel lack of maturity in the market. There are opportunities to pick up cheap properties as the estate business is so underdeveloped with no information sharing, obtaining the right assistance will be the key to success. Jump in, but with both eyes open and with the right help by your side.

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