Bulgaria is a politically stable country, and the introduction of a currency board in 1997
stabilized the country's economy. However, as is the case elsewhere in Central and
Eastern Europe, legislation, including that governing real estate, is volatile and subject
to frequent change.
Foreign investors are guaranteed full repatriation of profits resulting from an investment
in Bulgaria. The transfer abroad can be made only after the bank effecting the transfer is
presented a certificate proving payment of all Bulgarian taxes due.
Bulgaria has one of the most liberal foreign investment laws in the region. Foreign
investment typically assumes one of the following forms: establishing a joint venture
with existing companies, state-owned or private; acquiring a company through
privatization; setting up a new (green field) venture; or making a portfolio investment.
Portfolio investment has been minimal given the relative lack of development and
inefficiencies of the capital markets.
The law does not limit the extent or amount of foreign participation in companies.
Foreign companies have the right to open deposit accounts in hard currency and
Bulgarian Leva.
Foreign Ownership
Under the Bulgarian act on Foreign Ownership, foreigners are allowed to buy
buildings but not land. Foreigners can however own land by setting up a Bulgarian
company. This restriction is simply avoided by setting up a Bulgarian company that
owns the land. The situation is summarised below:
No land ownership for foreigners in Bulgaria.
Foreigners can own buildings.
Foreigners wishing to own land can do so through incorporating a company.
Bulgarian company incorporation costs 550 Euro.
Bulgaria's ownership policy will be harmonised with the EU in the future.
All our off-plan developments do not require company incorporations and when you
buy an apartment, you buy a section of the building. This section of the building is
freehold and there is no lease, the apartment is yours forever, or until you sell.
The Contract
Buying off plan' in Bulgaria is essentially the same as buying 'off plan' anywhere else.
A preliminary contract signed by all parties (similar to Sold Subject to Contract' ) is
drawn up to cover the purchase of the property. It is known as the preliminary
contract because both parties effectively promise to enter into a final contract to buy
and sell the property.
After verbal agreement and all the necessary details provided, the contract will be
drawn up by the developers solicitors and will set out timescales, payment terms,
prices and the terms and conditions agreed. At this stage, the agreed deposit
normally between 10%-25% of the purchase price is paid to the seller and such
contracts will also detail scheduled payments thereafter, up to and including the
completion date in front of the Notary.
There will be penalty clauses contained in this document in the event of either party
withdrawing from the sale or purchase after this contract is signed. We advise you to
obtain your own legal advice before committing to any significant financial
transaction.
Deposit
A deposit is usually required upon signature of the contract. There is no limit for this
but experience shows that usually buyers are not prepared to put up front a
substantial deposit. It may vary but be prepared to pay a minimum of 10% of the total
value of the property. It is advisable that this amount should never exceed 50%.
