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Legal information when buying and renting properties in Bulgaria

2012-01-23   |  BULGARIAN PROPERTIES

In this article BULGARIAN PROPERTIES answer some of the most frequently asked questions related to the legal aspect of buying and renting properties in Bulgaria.

1. Can I buy a property in Bulgaria and are there any restrictions for foreigners?
Generally speaking, foreigners as persons can acquire only buildings but not land. Only Bulgarian citizens and legal persons (including such with a foreign owner) can obtain ownership of Bulgarian land.

Exceptions to this rule are now applicable to EU physical and legal persons. They are allowed to buy houses with gardens and regulated plots of land in Bulgaria on their own names as physical persons. The Treaty of Accession of Bulgaria to the EU allowed Bulgaria to keep the prohibition for EU physical and legal persons to buy land in Bulgaria for up to 5 years for land and up to 7 years for forests and agricultural land after its accession to the EU. The 5-year term has now finished and since 1.01.2012 all EU persons are allowed to buy plots in Bulgaria (all plots that are withing the zoning of the settlements, houses with gardens and ideal parts of the land coming with apartments) without any restrictions. For agricultural land and forests EU persons still need to register companies in Bulgaria in order to buy these types of properties and these limitations will be valid till 1.01.2014.

For all other foreign persons, not citizens to EU countries, the overall restriction to buy land in Bulgaria is still valid, which means that they need to register a Bulgarian company.

2. How do we check the encumbrances on the property, as well as the due taxes and other aspects?
Information about the encumbrances on the property (mortgages, third parties’ rights, legal claims, etc.) can be checked by the relevant Registry Office (Property Register) at the Registry Agency as per the location of the property.

The due taxes can be checked in the respective Local Taxes and Fees Office with the respective municipality as per the location of the property. One must get a Certificate for Tax Evaluation of the property or a Certificate of Municipal Liabilities (for liabilities of the seller for local taxes and fees to the respective municipality and for other properties).

In the respective territorial branch of the National Revenue Agency one can check the seller’s liabilities to the state budget (taxes, obligatory social security contributions, etc.) by requiring a Certificate of Tax Liabilities.

Apart from the preliminary checks of the property and the lack or presence of encumbrances and liabilities it would be best if one gets an Encumbrance Certificate as of the day when the deals is certified in front of a notary public, as it will show all records and entries that might lead to an eviction of the buyer.

3. How can I check the validity of the seller’s notary deed?
If there is any doubt about the validity of the notary deed of a property it can be checked at the respective Registry Office (Property Register) with the Registry Agency

A check can also be made with the notary public whose name is on the notary deed and who certified the deal but the most reliable check is at the Registry Office (Property Register).

4. What does “ideal parts” mean?
According to Art.38 of the Ownership Act - in buildings in which floors or parts of floors are owned by different owners, common for all owners are the land on which the building is constructed, the courtyard, the foundations, the external walls, the internal dividing walls between separate parts, the internal supporting walls, columns, cross beams, floor slabs, trimmer joists, staircases, landings, roofs, walls between attic and basement premises of the individual owners, chimneys, external entrance doors to the building, and the doors to the common parts of the attic and basement, the main lines for all manner of installations and their central outfits, elevators, drain-pipes, the janitor's apartment and everything else which by its nature or purpose serves for common use.

It may be agreed upon that the parts of the building which serve only some of the individually owned floors or parts of floors are common only to the persons whose premises they serve. Common parts may not be partitioned.

The shares of the individual co-owners in the common parts are calculated depending on the value of the individual premises. Shares are defined as per the rules set in Art.40 of the Ownership Act. They are proportional to the ratio between the value of the individual premises, calculated at the time of establishing the condominium ownership. The sum of all common parts shall be 100 percent, if shown in percents or shall be one if shown in fractions.

5. How and when do I pay for a property in cash and via a bank transfer?
There are no legal requirements about when one should pay for the property – the price can be paid in advance, before the deal is certified before a notary public, on the day of the transfer of ownership or in installments.

NOTE: as from 1.07.2011 the cash payments for properties are limited to 10,000 BGN. This means that if the price of a property exceeds 10,000 BGN the payment can be made only via a bank transfer. This is also valid for partial payments of the property price. For example a deposit of less than 10,000 BGN must also be paid via bank transfer and these payments are certified before a notary public on the day of the conclusion of the deal with bank statements for the paid sums under the deal.

6. What happens when I buy a property that has a mortgage?
If at the moment of the signing of the preliminary agreement the property has a mortgage then the seller must be obliged to expunge the mortgage at the moment of the final transfer of the property ownership and the new owner to receive a property without encumbrances.

7. Is it important to know in which year the property was built?
In case the building was constructed without a building permit and it doesn’t have building documentation, knowing the year it was built in is important so that it can be established whether it is tolerable or not.

This happens with the issuing of Certificate of Tolerance. It is issued for properties built before 1987. For deals with such properties only such a certificate is needed as it can be issued by the respective municipality as per the location of the property.

Rent

1. When the apartment needs repair works who must pay for them – the landlord or the tenant?
Repair works which must repair damages from the everyday use of the property must be paid for by the tenant, while more major repairs must be paid for by the landlord unless the tenant caused the damage intentionally which then means the tenant must pay for the repairs.

2. Does the landlord have the right to visit their property without notice?
The law states that the landlord doesn’t have the right to visit the property they are renting out without notice as they are obliged to ensure the undisturbed use of the property by the tenant. Still, the owner has the right to visit the property with due notice which can also be included in the rental agreement.

3. When must the tenant pay the rental income tax instead of the landlord?
When an enterprise or a self-employed person is the one paying the rental income (the tenant) the amount of the tax is withheld and remitted by the payer of the rental income (the tenant) at the time of its payment to the landlord.

If you have any questions please contact us

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