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 Buying a House or Property in Bulgaria

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PostSubject: Buying a House or Property in Bulgaria   Tue Sep 15, 2009 12:48 pm

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Buying a House or Property in Bulgaria;


Foreigners Owning Property in Bulgaria - The Law!

Foreign parties can buy property but not the land it is built on. The system used most frequently by foreigners to buy property with land is setting up a Bulgarian company. Being a Bulgarian entity, the company would legally own the land and the buildings.

The law is set to change eventually with the entry of Bulgaria into the European Union in January 2007. This is one of the reasons why Bulgarian property is so relatively cheap compared to Western and Central Europe. As it stands the ruling in place right now dictates that EU citizens will have the right to buy land in 2014, but in the meantime a company is still needs to be in place for land ownership.

The overview is:

‘If purchases include land a Bulgarian Limited Liability Company (EOOD or OOD) will need to be formed’.

This of course is not a difficult process but requires the services of a solicitor or a good agent to complete.
How To Set up a Limited Liability Company

Firstly. the company owners will be liable for all the company's business, transactions and ongoing conduct.

This is in conjunction with the value of their shares in the company's registered capital. All articles of Incorporation are prepared read or understood then signed by all shareholders.

A company bank account has to be opened to collect all the capital, (shares). The minimum amount of share capital that is required is currently 2 leva. These funds can be withdrawn once the company is registered.

From the moment it is added to the Commercial Register the company is a active. The entry of the company is made upon the instruction of a district court decision for the incorporation.

The Documents required for the registration of a company with the court are:

* Articles of Association
* Proof of registration of a unique name
* A memorandum for appointment of Directors
* Proof that the registered capital has been paid
* Declarations from each shareholder
* Application for recording the incorporation in the court
* Specimen signatures of the managers

All Bulgarian legislation and company formations are published in ‘The Bulgarian State Gazette’ which is the official state media.

However, this is not the end of the process. Your new company has to be registered with Bulstat ( Part of the National Recording Agency) that will issue the company with a registration number.

It can take anywhere between a few days to a few weeks to process the formation of your Company.

You need to allow between €500 - €700 in charges made in conjunction with the formation and registration of your new company.
Summary of Charges Levied When Purchasing Property
Real Estate Tax

Corporate tax aside, no other taxes are levied on the transfer of real estate property. However, the transfer is subject to notary and municipal fees.

The amount of notary fees you have to pay is calculated using a sliding scale on either the buying price or the tax valuation of the property whichever is the higher.

Payment of purchase tax has to be made to the municipality in which the property is situated upon completion. This is based upon 2% of the buying price of the property. Look at it like Stamp Duty in the UK.
Local Taxes and Rates

Property tax is a liability the owner of a building or a plot is obliged to pay. The value of the plot will also be included in the tax base where a building is built on a State or municipal land.

The tax is basically 0.15% of the book value of the real estate but arable land is exempt from this.

Owners also have to pay for waste-collection fees in addition. All these fees are assessed at the time of registration with the municipality. You should be aware that fines are imposed where this registration is not completed within 60 days of purchase.
Value Added Tax (DDS)

Purchasing land and leases of properties for residential purposes are totally void of liability to VAT. The exception to this is if you purchase a new build from a developer.

Other real estate transactions have a statutory VAT amount to pay at the standard rate of 20%. This is of course assuming that the seller is registered for VAT.

The buyer is entitled to a VAT refund, provided that it is registered for VAT purposes.
In Conclusion

This is merely a summary which is meant to give you an overview of what purchasing a property involves.

Finding a real estate agent that has your interests at heart and who you can come to trust is the best advice that can be given. There are some about!

Finding one is invaluable in all respects in helping you through all of the procedures, and not least to help you find the property of your dreams.

Doing your research before you travel to Bulgaria and familiarising yourself with the procedures may save you much time and money at the end of the day.

This is only a guide please ensure you check all facts with a qualified and registered Solicitor/Notary

Updated 10 May 2011

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PostSubject: Re: Buying a House or Property in Bulgaria   Thu Oct 17, 2013 1:45 pm

Our story is a little different to everyone else who has posted so far. We hadn't really made any retirement plans as such . Then one day I accidentally stumbled upon Bulgarian properties for sell on eBay. As the amount involved was insignificant really we decided to bid on a property and we won. It was just a whim I suppose at the time. Anyway the time came to tie up all the legal loose ends and so we came over for the very first time and returned home with the deeds and skitsa.
But while we were here we fell in love with the country and its people. The property that we bought needed some renovation but was in a lovely location in a small village. It was then we decided to up sticks , sell our UK house and relocate. Our village has only one store , a bakery , a post office ,cafe , community centre and mayor's office. But at the end of the day it's people that make a village , town or city . Here in Borislav we have some wonderful friends , neighbours and acquaintances and all made in 11 weeks. These people are so resourceful we want for nothing. We have fibre optic internet , satellite TV etc , pay all our bills through the kmet's office and are friends with an honest builder and his mechanic pal.
At the end of the day we took a gamble and probably more by luck than judgement it has turned out good for us. There is no moral to our story . . just thought it might be of interest. David and Brenda
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PostSubject: Re: Buying a House or Property in Bulgaria   Thu Oct 17, 2013 2:15 pm

Well done Bgbound its lovely to hear from people who take a gamble and win! So many posts are negative. I made my decision very quickly too and knowing nothing about the country or culture but it was affordable. In spite of lack of bars and shops the one we have has a great choice. You are right about people making it pleasant. Ours is a lovely community and a very good Mayor and a working peoples club with internet, a pensioners club, childrens club, PO and Community Hall where events are held. They are all small because there are only about 200 now in the village but this swells in summer when people arrive from the towns and the children come back after schooling away. Yes, I certainly agree with your points. It is the support from our villagers that have got us through our difficulties with a few of the other permanent Brits. I don't think this would effect anyone else moving in. Good for you posting your experience. g s
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PostSubject: Re: Buying a House or Property in Bulgaria   Thu Oct 17, 2013 6:28 pm

Thanks Oldun for your kind comments . Who dares wins eh ? T
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PostSubject: Re: Buying a House or Property in Bulgaria   Fri Oct 18, 2013 8:56 am

I think you will find that most of us love the people in our villages,Tthey are so very welcoming and will do anything to help where they can. They are simple people with a simple lifestyle. Our lifestle is always so busy and active it is a pleasure to come here and see how the other half lives. But if you do not have the right amenities life here will be struggle - The Bulgarians are used to this way of life. They will walk 4 miles a day just to buy one loaf of bread it is no problem to them. Whereas we would jump in the car to the conrer shop. There are no street lights in our village so use flashlights all the time as it is pitch black and sometime you cannot see your hand in front of you - quite scary. Needless to say we don't get out after dark unless we go in the car but that is a hassle too - opening and closing gates etc. Life is so different here but we love it too.

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PostSubject: Re: Buying a House or Property in Bulgaria   Fri Oct 18, 2013 9:04 am

I just want you all to know that I am reading all these posts and appreciate your input.

Must admit, I did have to laugh about the streetlights thing though: I am from a rural area anyway and so that's not a problem for me, but I remember a friend who moved from London to a Scottish Island. The first time she opened the door at night her response was "
Where the b....y hell has the world gone!"

It really scared her.
I couldn't stop laughing.

Simple is fine by me. People say I'm simple.......?????;
-)
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PostSubject: Re: Buying a House or Property in Bulgaria   Fri Oct 18, 2013 10:32 am

[You must be registered and logged in to see this link.] wrote:
I think you will find that most of us love the people in our villages,Tthey are so very welcoming and will do anything to help where they can. They are simple people with a simple lifestyle. Our lifestle is always so busy and active it is a pleasure to come here and see how the other half lives. But if you do not have the right amenities life here will be struggle - The Bulgarians are used to this way of life. They will walk 4 miles a day just to buy one loaf of bread it is no problem to them. Whereas we would jump in the car to the conrer shop. There are no street lights in our village so use flashlights all the time as it is pitch black and sometime you cannot see your hand in front of you - quite scary. Needless to say we don't get out after dark unless we go in the car but that is a hassle too - opening and closing gates etc. Life is so different here but we love it too.

You are right Berni - we love it here too and our street lights are on, but only one in every four are working, it's called "
Bulgarian Economee"
by Bernard!! Torches are a must if you are walking after dark. We buy three loaves of bread and put two in the freezer, it's our way of Economee on our feet and our diesel!!
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PostSubject: Re: Buying a House or Property in Bulgaria   Fri Oct 18, 2013 2:11 pm

It's true I suppose what you say about amenities Oddie but we have found that our fitness levels have greatly improved since arriving here. We walk more now than we ever did and generally get far more exercise. So combined with the healthier diet we feel so much better than we have for years. We're getting a bicycle each next spring so that we can ride the 5km to the next village and other surrounding places. It's pretty flat around here so will be fairly gentle exercise.
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PostSubject: Re: Buying a House or Property in Bulgaria   Fri Oct 18, 2013 2:40 pm

Well, you are all not putting me off yet.

From what I'm picking up, and if I can compare it to rural France, it seems more organised and not less.

This is probably because it is a poorer country and everyone is not presumed to have a car - so they need more local shops and better (or more frequent) public transport.
I would also presume that the majority of the houses in villages are permanent residences and not a large proportion being weekend or holiday homes, which also tends to happen in France. So what happens is that although villages might have got quite a few houses many of them are not in use for a large proportion of the time/

I'm liking this Bulgaria thing. I'm not looking for paradise...
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PostSubject: Re: Buying a House or Property in Bulgaria   Fri Oct 18, 2013 3:36 pm

[You must be registered and logged in to see this link.] wrote:
Well, you are all not putting me off yet.

From what I'm picking up, and if I can compare it to rural France, it seems more organised and not less.

This is probably because it is a poorer country and everyone is not presumed to have a car - so they need more local shops and better (or more frequent) public transport.
I would also presume that the majority of the houses in villages are permanent residences and not a large proportion being weekend or holiday homes, which also tends to happen in France. So what happens is that although villages might have got quite a few houses many of them are not in use for a large proportion of the time/

I'm liking this Bulgaria thing. I'm not looking for paradise...

Ah weasle we would not dream of putting you off just pointing out the pros and cons as we have found. We have found our paradise here, we love it Dougie has been here since April and still he wants to stay until Dec. we will need to go home than as we could not survive a winter in our villa unless we are well parepared . Things will get better and better each year. Something new has developed in our town and last year the nearest village got internet so maybe next year our village will have it too..... There is tallk of repairing the roads too, so exciting times ahead g

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PostSubject: Re: Buying a House or Property in Bulgaria   Fri Oct 18, 2013 4:32 pm

Needless to say we don't get out after dark unless we go in the car but that is a hassle too - opening and closing gates etc. Life is so different here but we love it too.

Mmm, please don't take this the wrong way, but if the village/s are so nice and friendly etc, why bother closing the gates, bedtime or when you know you will not be going out again fair enough, but just to go shopping?

Or is it just to take away any temptation?

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PostSubject: Re: Buying a House or Property in Bulgaria   Fri Oct 18, 2013 4:39 pm

Very interesting subject, which I've followed from the start. Things don't seem to happen all that quickly here, but when they do happen, it's usually for the best. When I first moved into our village, over six years ago, the roads and village streets were strictly horse and cart, or bicycle..18 months ago everything was upgraded and now you could drive your Rolls at 100mph with no problems! Internet was non-existant and mobile coverage was a very hit and miss affair..now we have the fastest internet connection I've ever experienced anywhere in the world and the phone reception is very good. All of our streetlights work and the local bus service is regular and reliable..all this in a small village on the road to everywhere else and a permanent population of just over 300 souls with an average age of about 72.


I just love it!!!
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PostSubject: Re: Buying a House or Property in Bulgaria   Fri Oct 18, 2013 7:25 pm

[You must be registered and logged in to see this link.] wrote:
Well, you are all not putting me off yet.

From what I'm picking up, and if I can compare it to rural France, it seems more organised and not less.

I would also presume that the majority of the houses in villages are permanent residences and not a large proportion being weekend or holiday homes, which also tends to happen in France. So what happens is that although villages might have got quite a few houses many of them are not in use for a large proportion of the time/

I'm liking this Bulgaria thing. I'm not looking for paradise...

Paradise it is for many of us and I am sure it will be for you, it's a case of looking at things from all angles. There are many empty houses in villages here, some are for sale and some are being kept by families for future use. But beware there are 250 odd ghost villages here and all that is missing from them is tumbleweed blowing down the streets and Ckint Eastwood standing at the end smoking one of his reefers!! Please ask as many questions as you like, we are all here to help you.

c c c
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PostSubject: Re: Buying a House or Property in Bulgaria   Fri Oct 18, 2013 10:26 pm

[You must be registered and logged in to see this link.] wrote:
Needless to say we don't get out after dark unless we go in the car but that is a hassle too - opening and closing gates etc. Life is so different here but we love it too.

Mmm, please don't take this the wrong way, but if the village/s are so nice and friendly etc, why bother closing the gates, bedtime or when you know you will not be going out again fair enough, but just to go shopping?

Or is it just to take away any temptation?

Good question Phil - all the neighbours gates are closed here apart from ours - but if any of the neigbours pass down our way and the vehicle is not there they will close the gates and I get told off for leaving them open. They are terrified of getting things stolen by gypsies hence lock everything down. We have no gypsies in this village but when something happens they automatically blame the gypsie. As far as I know there has been very little crime here, a few chickens the odd goat some grapes etc, than we arrived and our house is always targated. We have had three attempted breakins costing us a small fortune with replacement of new doors, windows and shutters and this year the roof. Earlier this year we had bars fitted on all the windows, put video camera's up and cut all the trees back so our place is visable in the all the time now. We have alarm system, a policeman patrols daily and neighbours pass our way, yet the neighbours are stll worried about bandits. We cannot do any more to protect the place, but they still worry. This is not what we wanted at all causing them concern. They will make me a nervous wreck if I let them. :: Now I ust tell them to leave the gates alone, it's hard for them as they have locked things up all their life and cannot understand why we don't do this. You can gtd if we went to town and left the gates open they would be closed by the time we got home. A sigh of good neighbours and yes prevention is the best cause.

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PostSubject: Re: Buying a House or Property in Bulgaria   Sat Oct 19, 2013 12:24 am

As you say, leaving gates open is something new to the neighbours ant they are just trying to prevent things from happening to start with (prevention being better than the cure 'or so they say') but I think It's nice of them to think that way instead of just thinking 'silly foreigner'

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PostSubject: Re: Buying a House or Property in Bulgaria   Sat Oct 19, 2013 10:47 am

How to buy property legally in Bulgaria and what you should do if you things go wrong.

Overview

In November 2012 the Bulgarian government launched the Property in Bulgaria website, [You must be registered and logged in to see this link.] containing useful first-hand information on buying and selling property in Bulgaria and on property maintenance and the different fees and taxes involved. The website also offers a contact facility for answering inquiries from the public.

This guide is intended as practical advice which you should consider when purchasing property in Bulgaria.
Research property in Bulgaria

It is important to research thoroughly the area you are considering purchasing in, as well as companies you might use (developers, estate agents and lawyers). You should look at a range of properties with different agents to compare prices and ensure that you do not end up paying too much.

Exercise extreme caution if an estate agent, promoter or lawyer urges you to cut corners to save money or time. The Bulgarian property conveyance system is different to the one in the UK and you should ensure that those involved in the transaction are qualified professionals with expert knowledge of how the system works.

If you choose to work with a British estate agent, promoter or lawyer, check that they are qualified, reliable and have experience operating in Bulgaria It is also worth looking at online forums dedicated to Bulgarian property to learn from others’ experience and ask questions.

Seek independent legal advice

Numerous property owners are now experiencing problems with their property because they did not seek independent legal advice and instead used lawyers and translators which were recommended by the estate agent or developer and in some cases were acting for both parties. Appoint a lawyer who is experienced in property conveyance and fully independent of anyone else involved in the transaction, eg the estate agent, vendor or developer.

If your lawyer is based in Bulgaria, check that he/she is registered and practicing with the Bulgarian Bar Association by asking for their registration number and verifying this through the Bar Association’s website [You must be registered and logged in to see this link.] or the Bulgarian Bar Registers [You must be registered and logged in to see this link.]

If you appoint a UK firm, check that they are registered with the Law Society in the UK and specialised in International Transactions.

Check that your UK lawyer has professional indemnity insurance. In Bulgaria there is no indemnity insurance.

Do not sign any papers or hand over any money until you have taken independent legal advice.

Although the British Embassy cannot recommend a lawyer, we do have lists of local English-speaking lawyers and qualified translators [You must be registered and logged in to see this link.] ... of-lawyers Please note the disclaimers.

Use an independent translator

If you do not have a good understanding of Bulgarian, make sure that you get all contracts and relevant documentation translated by an independent translator. Make sure that any translations are true/legal. Please note that only the Bulgarian version of the contract is valid in a Bulgarian court.

Off-plan developments

Off-plan development in Bulgaria means property for which no Use permit (Act 16) is issued.

There are statutory stages of construction of an off-plan development which are certified by certain documents specified in the law. The most important documents are:

planning permission/Visa for design (виза за проектиране) – it entitles the developer to prepare architectural design and construction plans for the development in accordance with certain statutory parameters for height of the building, density of the construction, layout of the building, etc.
construction permit (разрешение за строеж) – it entitles the developer to start construction process as per the approved architectural, construction and other technical plans for the property
opening of construction site and determining of construction line and level (Protocol for commencing of construction)
certificate for completion and approval of rough construction (Act 14)
certificate acknowledging the compliance of the construction with the statutory rules (Act 15)
use permit (Act 16)

It is not advisable to buy off-plan development for which no construction permit is granted.

In practice, a usual transaction for buying off plan development has two stages: the signing of preliminary contract;
and the signing of public deed before a Bulgarian Notary (Notary deed). The transfer of the property is made under the notary deed.

It is advisable the payment for the purchase of off plan property to be made in instalments each of which is made after the completion of the relevant construction stage and obtaining of statutory certification document.

Completion

As of January 2014 all restrictions on buying Bulgarian land by EU nationals have been lifted. If you need more information about the latest changes in legislation, please consult your legal adviser.

Before you complete your property purchase you should make sure you have seen:

the Land Registry extract (кадастрална скица) which provides all the information on the land’s use, regulation (building restrictions) and structure.
for the properties which are not included into the Cadastre Register (not available for all areas) a Municipality Sketch (регулационна скица) is issued.
planning permission (виза за проектиране): you must ensure that when buying off-plan from a developer, the development has been approved from the local municipality (town hall). It is also worth having a look at the Urban Plan which will state whether or not the plot you wish to buy has any building restrictions, is in a green zone or includes a public pathway or similar
the paid-up receipt for the previous owner’s annual property tax. It is also wise to make sure that there are no unpaid fees and taxes from previous years
the Cadastral certificate giving the exact boundaries and square metres of your land
the Use Permit (Act 16) which is issued by the town hall for new buildings or restructured ones and certifies that the property is habitable. You will need this document to connect to electricity and water companies.
It is wise to require from the seller of the property to provide evidence for absence of any liabilities concerning the property (taxes and other statutory costs and fees) or its use (consumable expenses) Ask the property agent for information regarding any costs the owner has not paid. You should be aware that if you later find that there are any outstanding debts, as the new owner, you assume the debts for the current and previous year (two years in total). For this reason it is strongly advisable to ensure that you have a copy of an affirmation stating that the previous owner has no debts
a property survey: this is not obligatory but it is wise to get a chartered surveyor (независим оценител) to check the property before you complete
if you are buying an off-plan property, confirm that there is an architectural plan for the property approved by local municipality. Ensure that the developer/constructor has the necessary insurance to cover build defects.
the preliminary contract – this contract is not obligatory but is usually signed between the buyer and the seller before the public deed is granted. You should make sure that you fully understand the contract before you sign it - if you are not fluent in Bulgarian you should get it translated
the title deed – it is important to check that there is an accurate description of the property in the deeds

Fraud

Bulgarian authorities

You should report the fraud by registering a complaint with the Bulgarian police or Regional Prosecutor’s Office. [You must be registered and logged in to see this link.] ... anization/

Usually, in Bulgaria, property frauds fall under civil law and therefore are settled as private disputes held by a mediator or in court. If serious fiscal frauds have occurred (such as payments taken without receipts), the controversy is likely to fall under penal law. The Bulgarian police should deal with all fraud allegations once they are brought to their attention.

UK authorities

We have published advice on which UK authorities to contact if you think you have been a victim of property fraud. [You must be registered and logged in to see this link.] ... d-guidance
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