Buying Process for Properties in Bulgaria

Below is the standard purchase process for properties in Bulgaria and issues that may affect that purchase. The procedure follows basically the following steps:

1. Reservation (normally includes a reservation fee, which is afterwards deducted from the price);

2. preliminary contract – it is normally drawn up by the developer and checked by the purchaser’s solicitor in respects of property rights, seller`s credibility, construction permits, debts on title, and terms of contract etc at which stage the purchaser will be expected to pay a deposit in various amounts, if he hasn`t done so previously.

3a) certification of Power of attorney and other notary paperwork, authorising the solicitor to conclude the final contract in form of Notary deed on the purchaser`s behalf

Or

3b) travel preparations and additional agreements, if the buyer chooses to be present in front of the Notary public himself;

4) Notary meeting - The final form of the purchase of immovable properties in Bulgaria/ land, real estate/ is Title Deed, which is signed by either the purchaser himself or the lawyer, acting with a Power of attorney, which must be certified by the Bulgarian council in London or by a Notary Public. In case they are legalized by a Notary Public at the back of the document an APOSTILLE is placed that allows then to be legally used in Bulgaria. The APOSTILLE is issued by the Foreign and Commonwealth Office in London or Dublin. If he has not done the purchaser must pay the balance of the purchase price as well as the relevant fees, amounting to around 4 % of the purchase price. Costs of a standard propertes in Bulgaria include the following:

• A municipality tax is calculated on the purchase price on the Title Deed and is similar to a stamp duty. This is determined by each City council and may vary between 2% and 3,5% of the price in the Title deed
• The notary fee is calculated using the price in the Title Deed. The following can be used as a guide:
  From €25,700 to €51,300 it is €180 + 0.2% of the amount over €25,700
  Over €51,300 it is €230 + 0.1% of the amount over €51,300 but no more than €1550.
  These are added to the purchaser`s cost. Notary publics in Bulgaria are tax registered and therefore calculate 20 % VAT over the above listed amounts.
• Land registry costs 0.1% of the value.
• After becoming the owner of an estate in Bulgaria, you also have to be BULSTAT registered. This is normally done by your solicitor as well/ and a special Declaration for obtaining real estate in Bulgaria has to be filled in and filed with the Tax authorities. This registration results in the issue of a BULSTAT card containing each buyer`s tax identity number.

A few additional issues that might affect your purchase are as follows:

A non-Bulgarian national may own real estate in Bulgaria (flats, houses, etc.), but not land. When a purchaser buys an apartment he owns the property right on it and also the building tenancy on the land, which the development is built on. Therefore it is not absolutely necessary for him to register a company in Bulgaria.

If a non-Bulgarian national wishes to purchase land or shares of land, he is currently not permitted to do so, it is still necessary for the purchaser to form a Bulgarian limited company that can own land. The clauses of the contracts, that Bulgaria has signed in relation to its admission in the European union, stipulate that this regime will be lightened in a few years for citizen of countries – members of the EU.

EXCEPTION: When a non-Bulgarian national has permanent permission to live in Bulgaria he is allowed to obtain the ownership on the land for a secondary home. The solicitor can also perform the procedure of issuing the Certificate for Permanent Stay in Bulgaria.

Land tax and garbage fee are owed by each buyer after he has obtained the ownership over the real estate and the Habitation Certificate of the building has been issued. These are owed annually.

Clients may choose to subscribe to the solicitor`s service of informing them of the tax, owed for each year, and paying the latter on their behalf.

Buying Land

As a foreigner you are obliged to have a company registered in the country, in order to gain ownership over land in Bulgaria. You have to choose a company`s name, which has to be unique for the whole state. You also have to choose a seat and registered address for the company on the territory of Bulgaria.

Afterwards, this is the procedure you have to follow:

1) you send your solicitor in Bulgaria your passport details and two- three optional names for a company.
2) The solicitor fills in all required documents and sends them over to you to sign and legalise some of them.
You have to legalise these documents to the Bulgarian consul in London.
You have to legalise the documents in Bulgarian. However, copies in English may be sent to you to compare the content of the documents, to let you know what exactly the registration forms mean (the handwriting is your personal data and one of the names for the company you have chosen which was not taken in the Registry Agency).

The documents you have to legalise are:
a). Declaration- for not participating in other companies;
b). Specimen of your signature;
c). A4- form for filing circumstances relating to limited liability companies;
d). D1-form for reservation of a company name;
e). Power of Attorney – with which you authorize us to act for your name in connection with registration of your company.

It’s really important for you to know that by the requirements of the Registry Agency you have to sign and write your full names on all documents with a blue pen (the Bulgarian consul should know these details of the procedure).

The documents, which need to be signed but not legalised, are different depending on the chosen form of organisation – Ltd, Jsc, etc. (for example company contract, protocol for choosing a manager of the company etc.)

3) You return the signed and legalised paperwork to your attorney and send 5 000 levs (approx. 2550 euro) for capital of the company. These funds are refundable after the company has been established.

4) The solicitor takes all the required steps in your name in front of the Registry Agency and finally

5) The Agency registers the company and you receive a Certificate of Incorporation.

The state taxes for the procedure amount to 250 levs (about 130 euro) and include the issue of the Certificate of Incorporation and the company`s stamp. Your solicitor will inform you additionally of his fee for the service.

Information on Inheritance

According to the rules of the International private law, when there is a property on the territory of Bulgaria included in the inheritance, the rules of inheriting this particular property are set by the provisions of Bulgarian law. According to these, there are two types of heirs - by law and by will.

Heirs by law are in the following order:
1. children of the legator;
2. parents of the legator;
3. brothers and sisters, grandparents of the legator;
4. other relatives to a certain level.

The spouse ALWAYS inherits together with the first three groups and excludes the 4th group from inheritance and if there are no heirs of the above the spouse gets the whole inheritance.

When the inheritance transmitts by will, the legator may not breach into the so called “reserved portion” of his heirs by law. This is an amount of the legacy that descendants, parents or spouse should get. The reserved portion of the descendants (including the adopted), when the legator has not left a spouse, shall be:

- in case of one child and descendants from him – 1/2 of the whole inheritance
and
- in case of two and more children or descendants from them – 2/3 of the possession of the legator.

The reserved portion of the parents or only the outlived of them is 1/3.

The reserved portion of the spouse is 1/2, when he inherits alone and 1/3 when the legator has left also parents. When the legator has left descendants and spouse, the reserved part of the spouse is equal to the reserved part of each child. In this case the disposable part in case of one child is equal to 1/3 and in case of two children is equal to 1/4, and in case of three and more children is equal to 1/6 of the inheritance. If this part is breached, the heir may want restoration in court.
The legator, may also choose the rules of inheritance of the country he lives in to be applicable for the possessions of properties in Bulgaria. This may happen with a will, made by the rules of his native law. However, this still might not breach the reserved portion of the heirs as per Bulgarian law.
The will may also be executed here, in which case the Bulgarian procedure is followed. The legator may either make a handwritten will, or make one infront of a Notary public

If you have no will, the provisions of the inheritance by law come into force as described in detail above.

The Bulgarian state or the Municipality on whose territory the real estate is may inherit the property ONLY IF there are no heirs of the above.