14 Jan Buying a real estate property in Bulgaria

 

14.01.2024

 

Author: Doychin Ivanov, attorney-at-law

 

We at Ivanov and Yonkova Law Firm receive often questions from our clients how to buy a real estate property in Bulgaria, can a foreigner buy a real estate in Bulgaria, is it worth buying a real estate in Bulgaria, is Bulgaria good place to invest in real estate, etc.

 

Though the procedure may vary and comprise many different issues and obstacles on the way, below we shall try to summarize the main steps so that the information represents a starting point for further discussions on specific cases.

 

Whether for vacation purposes on the sea or in the mountains, or for investment and renting purposes like apartments and offices in Sofia or other big cities, Bulgarian real estate properties became rather popular because of their potential. Compared to the real estate properties in other EU countries the Bulgarian properties are still less expensive. However, the trend of constantly rising prices is visible for the last more than 25 years and there are no signs of stopping it.

 

1. Main stages of the procedure of buying a real estate property

 

So, let’s see what are the main stages in the procedure of buying a real estate properties in Bulgaria.

• Contact with a real estate agent and finding an attractive real estate property according to the buyer’s preferences
• Negotiations between the buyer and the seller and general agreement on the price
• Thorough research of the property and its history, gathering of evidence that the property is clear of any duties and other encumbrances (mortgages, pledges, restrictions for sale, etc.)
• Preparation of a Preliminary contract, which serves as a promise between buyer and seller that they will conclude the final deal in certain foreseeable point in the future
• Preparation of a market evaluation of the real estate property by a certified evaluation company – mandatory step only in case of financing of the deal by a bank loan, otherwise this step is only voluntary under buyer’s discretion
• Gathering of all necessary documents related to the real estate property, such as notary deeds establishing its history of ownership, certificate for tax evaluation, sketch of the real estate property, establishing its location and configuration in space, etc.
• Conclusion of the final deal between buyer and seller before a Notary Public

Registration of the notary deed with the Property Register

 

2. The meaning and the purpose of the Preliminary contract

 

The conclusion of a Preliminary contract is not mandatory. Should the buyer have all funds necessary for the purchase and the seller has all documents necessary for the deal the parties may skip this part and go directly to a Notary Public for the final deal.

 

However, in many cases after finding an appropriate real estate and reaching to an agreement on the price with the seller the buyer needs some time to apply for a bank loan or to gather the necessary funds for the deal in other ways.

 

On the other hand, in many cases the seller also needs some time to gather necessary documents for the final deal or resolve any other pending issues related to the real estate property.

 

That is why the parties often conclude a Preliminary contract so that both of them are sure that they will go to the final deal and none of them will give up from the agreement meanwhile.

 

Usually, upon signing such a Preliminary contract the buyer pays to the seller an advance payment amounting to 10 % of the purchase price. Should the buyer give up from the final deal the seller keeps the advance payment, whereas should the seller give up from the final deal, then the buyer is entitled to receive back the advance payment in a doubled amount, i.e. 20 % of the price.

 

The most important particularity of the Preliminary contract, however, is the right of the buyer instead of claiming back the advance payment in a doubled amount to claim the proclamation of the Preliminary contract as a final one by the court. This is a complicated case scenario, but should the buyer consider that the price is good enough and the real estate property worth it, the buyer is entitled to pursue this goal, as well.

 

3. Fees related to the purchase of a real estate property

 

The buyer must know that there are several types of fees regarding the purchase of a real estate property in Bulgaria.

 

The most common fees are:

• Fee of the real estate agent – usually within 1-3% of the price of the property
• Notary fees, depending on the price of the property

For the most common cases, related to purchasing price within BGN 100,000 and BGN 500,000 the notary fee shall be calculated under the following formula:

BGN 730.50 + 0.2 % of the amount over BGN 100,000

• Local tax – usually around 3 % of the price of the property
• Fees for the registration of the notary deed with the Property Register – 0,1% of the price of the property
• Attorneys’ fees under agreement with the attorney

 

 

We at Ivanov and Yonkova Law Firm usually charge attorneys’ fees for provision of legal advisory services regarding sale or purchase of a real estate property in Bulgaria within EUR 700 – EUR 1,300 net of VAT depending on the price of the real estate property.

 

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The team of Ivanov and Yonkova Law Firm remains at disposal for provision of legal opinion and answers to any supplementary questions regarding the present or any other topic, which you may have.

 

The present article does not represent legal opinion or advice on specific case or situation. The present article is based on the provisions of the Bulgarian legislation effective as of 14.01.2024. Should any amendments are made thereto afterwards some of the information above may become obsolete.

 

Author: Doychin Ivanov, attorney-at-law

Managing Partner Ivanov and Yonkova Law Firm