Bulgaria has modern laws governing the buying and selling of property, more
or less the same as those found throughout the European Union (EU), yet rough
spots remain in their administration. After all, the country’s transition from
communism to a multi-party free market system has been long and bumpy, and is
still not quite finished.
Foreign citizens are free to own buildings, but only Bulgarians can own land.
So foreign citizens buying properties with land—including apartments, most of
which include partial land rights—usually register as a Bulgarian firm, most
often a limited liability company, in whose name the purchase is then made. A
Bulgarian lawyer would handle the work for about $600 (Rs24,600).
According to recent changes in the Bulgarian Constitution, EU citizens will
have the right to own land when Bulgaria’s accession treaty takes effect, as it
was scheduled to do on 1 January 2007. But there is a seven-year moratorium, so
the right will not take effect until 2014. The measure, similar to those enacted
by other new EU member-states from Eastern Europe, is intended to stop Western
Europeans from making big acquisitions of cheap land right after accession.
“It’s all really absurd because anyone can buy land,” said Kalina Milanova,
a senior lawyer responsible for the real estate dealings at CMS Cameron McKenna
in Sofia.
She recommends that anyone intending to buy should form a company to save
taxes on any eventual sale. Legal entities pay a corporate income tax of 15% on
sales while individual owners are charged about 25%.
Most foreign buyers, especially those acquiring property on the Black Sea
and around the ski slopes of Bansko, buy new properties directly from
developers. These are straightforward deals usually completed through a real
estate office in the buyer’s home country.
Any complications generally are the result of foreign buyers “parachuting”
into the country to buy older properties and then neglecting to check on the
reliability of their local contacts.
Bulgarians with all kinds of backgrounds are trying to profit from the real
estate “gold rush”, the recent swell of foreign interest in the country’s
property market. Frauds are a small minority of problems; the much greater risk
is doing business with people who have little or no professional experience in
real estate.
“It used to be that every Bulgarian knew everything about politics and
soccer,” said Georgi Dutchev, editor-in-chief of Properties Xpress, a
magazine published in English and Bulgarian in Sofia. “Now every Bulgarian is
also an expert about real estate.”
Professional agents automatically check the titles of older properties, but
those new to the business sometimes do not realize the need.
Thorough checks will help avoid fraud, corruption and poor administration
of paperwork, and will uncover any complex ownership problems connected to
post-communist restitution among family members and their descendants. Title
insurance is not available.
Nor is there a national property registry. One is being constructed with EU
help, but it is still years from completion. So, all transactions must be done
where the property is located, a lot of travel for agents if the property is on
the Black Sea and the buyer is in Sofia.
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