Legal Check before buying property in Bulgaria

Legal Check before buying property in Bulgaria

At the moment, real estates are one of the most valuable assets that usually increases in value over time and protects our money from crises such as high inflation. However, this is only valid in the normal course of events. Unfortunately, many problems can arise when buying a property in Bulgaria that can turn the property from an asset into a liability. In view of the high property prices at the moment, this can lead to serious problems if we pay a high amount for a property that we cannot use or sell. It gets even more complicated when the buyer is a foreigner and is not completely aware with the legal system. Therefore, it is important that you do a Legal Check before buying property in Bulgaria, so that you can conclude the transaction calmly and with confidence.

Why should I do a legal check before buying a property in Bulgaria?

When buying a property in Bulgaria, it is possible many things to go wrong, even when we buy the property with the financing of a mortgage loan from a bank. We should not forget that banks make their income through lending and for them there is a benefit grant a credit, and when they carry out their legal check, they monitor whether the interest of the bank itself is protected, not whether the interest of the buyer is protected. However, the situation even get riskier if the purchase is done with cash only.

The situation with real estate agents is similar. They are in a conflict of interest with the buyers, because their commission payment depends on the completion of the transaction. If there is no deal, then there is no commission. Even if the property has problems, they would like it to be sold so that there is a deal, resp. commission to be paid.

It is important to use legal check service before buying a property in Bulgaria, because it is possible to buy a property that is encumbered with encumbrances such as foreclosures. In this case, your sale will not be countervailable, i.e. will be relatively invalid, compared to the person who imposed the foreclosure. In practice, this means that even though you have paid the amount, the property will not be your property.

Mortgages may be established on the property, which are not cancelled upon sale, but continue to encumber the property. In this case, the mortgage loan can be satisfied from the price of the property by putting it up for public sale.

A limited property right can also be imposed on the property as a right of use. In this case, it may be that the seller’s parent, child or grandparent has a vested right of use while they are alive. In such a scenario, you will be the owner of the property, but you will not be able to use it while the user is alive.

There may also be leases in place that you need to comply with. If the property was acquired on the basis of a constitutive notarial deed, this makes it a risky asset and there is a risk of judicial removal. The chain of title should be carefully checked to confirm that the person claiming to be the owner is the real owner regardless of providing a title deed, which very often reassures buyers.

The property may be subject to legal disputes if there are registered claims. In this case, even if you buy the property, your transaction is unopposed against the person who entered the claim.

Buying a property from companies carries other risks related to the company’s tax obligations or possible bankruptcy risks. When buying a property which is not built yet, it is possible that it will never receive Act 16 (Certificate of commissioning and permission to use), so that means that the building might be never be possible to live in.

If you are buying a plot of land with the desire to build your dream home, it is very important to check whether it is possible to build on that plot and, if so, under what conditions.

These are just some of the problems and challenges that can arise if you buy a distressed property.

What is included in the legal check service?

As part of our Legal Check before buying property in Bulgaria service, we carry out the relevant inspections in the Cadastre, Property Registry, the relevant municipality and other government bodies when there is a need for this.

The service is individual and depends on the type of property and the transaction itself, but usually includes the following:

  • Checking the chain of ownership – whether the person who claims to be the owner is really such (especially problematic in the case of inherited properties or those with several co-owners, as well as those acquired with a ascertaining notarial deed);
  • Check for encumbrances – mortgages and foreclosures;
  • Check for limited property rights – right of use, right of easement, right of construction;
  • Checking for legal disputes with the subject property;
  • Owner verification if the seller is a company (legal entity);
  • Checking whether it is possible to build on the property and under what conditions, if we are talking about land.

Additionally, we may draft the preliminary contract or review and edit it if the seller or broker has provided a preliminary contract.

It is possible to assist with the supply of documents for the transaction, as well as with participation in the notarial confession of the purchase before a notary.

More information about what to look out for when buying a property can be read in our article here.

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email: office@bi-lawfirm.com