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 Scam list - can you add any?

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fruitlover
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PostSubject: Scam list - can you add any?   Sun May 15, 2011 12:40 am

These are some scams I heard of that had happened to buyers of rural properties. I thought it might be a good idea to make a list to help new buyers avoid falling into the same traps. I expect most of you are familiar with them already and can probably add a few more!

1) The deed substitution. You are shown a property in need of renovation, like it, buy it, and spend your money and enthusiasm doing it up to a good standard. When it is all repaired and furbished, some strangers arrive to claim it, bringing with them the deeds that show their ownership. On investigation you discover that the property you signed for so trustingly at the lawyer's office is not the one you thought you were buying, but another in worse condition in a different part of the village. You have no legal redress as you never bought the property you thought was yours and thus were not entitled to do any work on it. Moral - inspect the deeds personally and make absolutely sure they do represent the property you are buying

2) The Debt Trap. Before selling the property, the owner who already owned it outright, has just mortgaged it to the hilt and taken the cash, passing the debt on to you with the property. Safeguard - make sure your (independent) lawyer checks that there are no loans against the property before you buy.

3) You buy a property as seen complete with contents. When you arrive to take possession you find the seller kept back a set of keys and with the money you paid, has hired a van to remove every stick of furniture and every last one of that barn full of logs you thought you were promised for your stoves (which have also gone) First thing to do once the contract is signed - have the locks changed immediately!

4) I expect most people know this but it's possible some newcomers may not. The property you buy had been inherited by several members of a family, one of them "
sells"
it to you without the permission of the others, so the sale is not legal and you don't own it. Again, they may not come forward until after you have spent your money repairing and fitting it out!

This is for starters, I hope members who have come across more tricks will add them please?
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LisA
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PostSubject: Re: Scam list - can you add any?   Mon May 16, 2011 9:16 pm

I'm sorry to say it but you will never get a definitive list because they are always finding new ways to rob you and I don't just mean the Bulgarians some of the Brits are far worse and very clever at ripping you off so be very careful. There's a few here for you.

1. The building under sale has not been granted Act 15 or Act 16

According to current legislation all buildings in Bulgaria have to be in line with the construction and earthquake-proof regulations and official plans. Therefore the buyer should check whether the building has been built in line with those requirements. In other words, the purchaser should ask the vendor to provide the “Usage Permit” or "
Habitation Certificate"
(also known as Act 16) which is issued by the local municipal authorities or the National Construction Control Directorate.


Act 15 is the last step prior to Act 16 and a lot of developers sell properties which have only Act 15 with the promise that act 16 will follow very soon. But even if Act 15 is in place it is possible Act 16 never to be granted and without this certificate the property cannot be either used or rented legally and the owner cannot subscribe to the utility companies.

2. Cash payment is requested

Cash payment is still not illegal but is rather risky.

It is very difficult to prove such payment – while if the payment is made via bank transfer, it can be easily traced because banks are obliged to keep record of all payments.

The risk remains even in the event you have a receipt for the cash payment signed by the vendor. If the receipt is not drawn up properly, for example a date or another reference is missing or simply the one who has signed it does not have the capacity to do so, that may prevent you from proving that you have actually paid the amount in question.

3. The vendor refuses to sign a preliminary contract for sale–purchase of the property

If the vendor refuses or is reluctant to sign a preliminary contract, that could be a sign that there is something wrong. The lack of a preliminary contract is risky especially in cases when advance payment is agreed. In case an advance payment or a deposit is made without a preliminary contract, it will be almost impossible to prove what the deposit or the advance payment has been paid for. The lack of a written agreement relieves the vendor of any responsibility – for example the vendor could not be held responsible in the event of any burdening or mortgages on the property or in case the vendor delays transferring of title.

4. The vendor insists that a lower price is put on the title deed

That almost certainly means that the vendor is trying to evade tax payment.

At first glimpse this offer sounds tempting to buyers as in most cases buyers pay notary fees and transfer tax which are calculated as percentage of the price put on the title deed. The lower the price stated on the deed, the lower the expenses for the buyer. However, in case the contract is broken (for example due to encumbrances) the vendor shall be obliged to give back the property to the vendor but the vendor shall be obliged to give back the price as per title deed. If there is a difference between the price put on the deed and the actual price paid the vendor cannot be chased to give back the balance.

Last but not least, if a lower price is included in the deed and the vendor decides to resale the property shortly afterwards, there will be a large capital gains tax due.

5. The vendor recommends a conveyance solicitor to handle the deal

This is a potentially dangerous situation. Unfortunately, it is quite possible the recommended solicitor, no matter how respectable looking he might be, to act against your best interest and to overlook some important information.

Therefore an independent solicitor is always recommended in property deals.

6. There is a discrepancy in the papers presented to you but you are reassured that this is an insignificant typo that will not affect the deal

In some documents the change of a single digit or letter can be fatal and can lead to a number of problems afterwards. For example all properties have identification numbers and one different digit may mean a different property, in other words, it may turn out that the buyer has purchased a totally different property of what he was thinking he was buying. For example suddenly you may find out that you have become the owner of the apartment next door to the one you have initially viewed, liked and paid a deposit for. Sometimes such mistakes are due to typos and negligence but there are cases when such frauds have been made deliberately by developers. In any case it is always recommended any discrepancies to be clarified before the transfer of title even though it may take a few days or even weeks.

7. The property is shown to the buyer only on photographs or plans but the image is actually of a different property

That is a very common property fraud. And it is only after the purchase that the vendor realizes that he has been mislead and has bought something totally different of what he expected. But since the title deed has already been signed it will be almost impossible to cancel the deal. Therefore, it is recommended either the property to be viewed in advance by the buyer himself or at least to be acknowledged that the documents describe exactly what the buyer has seen on the photographs.

8. At the time of the transfer of ownership there are defects in the property which the seller promises to be rectified after the sale

In this case it is necessary to bind this agreement in writing;
otherwise the seller may simply take the money from the buyer and then leave him to deal with all defects at his own expense. The legal binding in writing is not enough;
all stipulations should include effective mechanisms for the fulfilment of the obligations of the seller. For example, in case there are no penalties stipulated or in case the expenses for the repairs exceed the amount of the penalties provided under the contract, it is very likely for the seller to choose deliberately not to fulfil his contractual obligations. In case of any outstanding defects in the property the best option will be part of the purchase price to be withheld and kept by a third party which will hand the amount to the seller only after the latter has fulfilled his obligations to rectify the defects.

9. The vendor refuses to provide a Certificate of Encumbrance

In this case it is very likely that the property is mortgaged or burdened. Actually it will be better and safer if the vendor checks the property and whether there are any encumbrances related to it himself as it is possible the seller to provide an invalid certificate of encumbrance. In case a burdened property has been sold, for example one mortgaged with a bank, the bank has the legal grounds to sell the property and to keep the money.

10. The vendor presents fake documentation

A very common property fraud is the vendor to use fake papers, most commonly fake powers of attorney which vitiate the sale purchase contract. The contract is proclaimed null and void and the buyer may find himself in a situation where he stands with no property and no money.
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fruitlover
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PostSubject: Re: Scam list - can you add any?   Mon May 16, 2011 11:01 pm

Thankyou for your contribution. Do these acts 15 and 16 apply to all property or just new builds? If one buys an old rural house to renovate does it have to comply before one can inhabit it? Is there any rule or regulation to prevent one moving into an old property legally, to "
camp"
in it while working on it?
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sallyann
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PostSubject: Re: Scam list - can you add any?   Wed May 18, 2011 11:54 am

Those acts only apply to new builds unless anyone knows differently? If you but a shack and you want to move in then no one will stop you so long as its your property you are virtually free to do what you want with it so long as you don't change its intended use but even then it will depend on the municipality that your in but its really quite easy from that point of view unlike the uk there aren't any planning officers sneaking round trying to catch people improving their homes without permission because you just don't need it at the moment but eventually it will come to Bulgaria where you will have to apply to blow your own nose [You must be registered and logged in to see this image.] just like the uk.
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Esta
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PostSubject: Re: Scam list - can you add any?   Wed May 18, 2011 12:52 pm

Just a couple from me that people should be aware of:

1) You are introduced to a good builder. The "
builder"
can speak a bit of English - says the right things - promises all will be done to a high standard, has a few good photos for you to have a look at. He puts in a reasonable quote - maybe a bit on the high side - but hey he seemed like a nice fellow and seemed to know what he was talking about. You send the money over - the "
builder"
then goes and subcontracts the work on your house out to the lowest bidders who basically bodge your house up, he sits back and counts the money he has made.

2) You are renovating your house yourself - you employ cheap general labour (often gypsies) to give you a bit of a hand. You pay them the agreed daily amount maybe 10-15 Leva a day. You go back to the UK for winter or a few months - come back and your house is gutted. Everyone knows who has done it - but all the Gypsies, or whoever you employed, will say, when the police get involved, is that they worked for you all over summer and you did not pay them so they have taken this amount of things from your property. Their word against yours - all the other villagers saw them working at your house after all..... - Get a receipt for any money you hand over!!

c

Sounds bad - but most of the people you will meet here in BG are good honest people - there are always a few wherever you are in the world. Don't read this and think everyone is out to get you. Just be aware.
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fruitlover
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PostSubject: Re: Scam list - can you add any?   Wed May 18, 2011 7:26 pm

Good points! Although the majority are not out to cheat us it makes sense to always get things in writing, and unless it's absolutely unavoidable don't have work done when we aren't there. Even with honest trustworthy contractors there will always be misunderstandings that crop up or things that need clarification in some way. If you are happy to go with your builder's idea of style you may be well satisfied, but In my experience even here in the UK it's tricky getting things done exactly how you want even when you are on the property with them. Unless every detail is translated to drawings with measurements there can be a lot of difference in how people interpret a description.
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seven
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PostSubject: Re: Scam list - can you add any?   Sat May 21, 2011 2:58 pm

Some words to remember:

1.There is NO conflict of interest for lawyers here in Bulgaria, so get your lawyer to sign a notary act to say that he is only acting on your behalf and not the sellers OR has any agreements or deals with other parties, i.e. Notary, municipality.

(most lawyers have a preferred notary saying that they already have the right paperwork etc.. they can get this done quickly. Don't use them - for piece of mind walk down the high street and just pick one, more chance of them doing what the lawyer asks with you present).

2. No property deal is 100%, even after you have done everything possible there are still possibilities that something will jump up and bite you in the butt. So after all has been signed sealed and delivered, but before you start shifting gear and paying for things, send all your documents to another Independent lawyer to double check everything. Pick one in another town and pay that 200 euro fee so that you can have peace of mind or at least have a good idea where your butt is exposed

Like has been said relatives can appear from no where and so you want to be sure that even if they do that there is something in place i.e. that the people you bought from signed a court judgement to say that have worked/lived/maintained the property/land for 7/10 years and therefore all rights on the property are theirs to sell, relatives can still pop up and there may still be a court case, but they will have little to no chance of success and the cost of the case should put them off.
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fruitlover
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PostSubject: Re: Scam list - can you add any?   Sat May 21, 2011 8:13 pm

Thankyou Seven this is valuable advice and indeed everyone's input much appreciated!
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Daisy
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PostSubject: Re: Scam list - can you add any?   Sat May 21, 2011 8:51 pm

I was recently sent this buy a friend of mine who thought it was interesting and I've searched through my emails so I could post it here s

This is the newest scam I have found that sellers use. As you can imagine, it is also in connection with the payments. The seller provides a bank account to which the purchase price should be sent. However, the account holder of that account is usually an offshore company, which has nothing to do with both Bulgaria and the ownership of the property that is being transferred. The seller is counting on the fact that the buyer wouldn’t notice that this is a bank account with different holder.

Reason for doing this:
The seller obviously wants to avoid taxation. This is why this scam is usually used when selling whole complexes of apartments, but not single units, but there is always a risk about it. The worst thing with this scam is that if the buyer is scammed, the lawyer has very little chance to recover the funds. The main reason is that the court case has different jurisdiction: the case should be heard in the offshore country. Bulgarian lawyers are not entitled to practice in full out of the Bulgarian jurisdiction, especially in offshore zones (except in EU).

As a summary, one should be very careful when buying property. Not all sellers/agents are fraudulent, but you should be careful. To be sure that everything goes right, do hire a good lawyer. The benefits of hiring a lawyer or law firm are not only the legal knowledge, but also the experience with dealing with local agents/sellers. The lawyers are aware of the reputation of the local developers/agents.
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