This article details the purchase procedure for buying a home in Bulgaria, which is slightly different from that in most Western countries. Although relatively straightforward, the procedure isn’t without potential problems and it’s therefore highly advisable to engage a lawyer who’s familiar with it before paying any money or signing a contract.
Once you’ve found a home you plan to buy and agreed the selling price, you will need to take the following steps:
The buying process is generally straightforward and is often completed within a month. EU citizens can purchase and own property in Bulgaria in the same conditions as locals.
If the property has land (i.e. is anything other than an apartment) and you are not an EU or EEA citizen (European Economic Area), you will have to form a limited company in order to begin your purchase. Property with land includes all houses with gardens, flats/apartments that include 'ideal' parts of land, offices and commercial properties.
Bulgarian law does not allow foreigners from outside the EU/EEA from owning land in Bulgaria. The only way around this is to set up a company in Bulgaria, which is an accepted and recognised practice.
If you are a Bulgarian resident, you can go to a notary public’s office to sign the requisite documents or use a local lawyer, but most estate agents can organise company registration for you.
For non-Bulgarian residents it’s not as straight-forward. As the Bulgarian real estate lawyer Vasil Markov points out, since 2019 you can’t open a company bank account unless the company director is a resident of Bulgaria. However, what you can do is either apply for a Bulgarian residency or purchase a Bulgarian ready-made company.
The process of registering a limited company can take a single day or several weeks but normally takes between three and four weeks, so you should allow at least this amount of time between signing the preliminary contract and completion. The cost of registration currently varies between regions, ranging from around €300 to around €750.
The minimum amount of capital required to set up a company is €1.This isn’t the cost of setting up a company but the amount that must be deposited into a bank account in order to form a company in Bulgaria. Once the company has been formed, you can access the money.
You must give your company a name (which will have the suffix ‘OOD’, equivalent to Ltd in the UK or Inc. in the US), determine a registered office address and appoint directors/shareholders. These are normally the buyers themselves, e.g. a husband and wife, although you should check the tax, inheritance and other implications of your choice of shareholders.
Your company must be registered with the National Insurance Institute (NOI) within seven days of its formation and with the local tax authority within 14 days. You will receive confirmation of the company’s registration, a tax registration card (with the company’s tax numbers on it) and a stamp to be used on all official documents.
At the end of the financial year (March) you will need to file an annual tax return for your company. In almost every case your account will be ‘zero’ (i.e. no trading for the entire year). Nevertheless, unless you can read and write in Bulgarian and are familiar with the Bulgarian tax system, you will need an accountant firm in Bulgaria or lawyer to ensure that your tax return is filled out correctly; he shouldn’t charge more than €100 if non VAT registered.
The first stage in buying a home in Bulgaria is the signing of a preliminary contract. Your lawyer is responsible for ensuring that this is drawn up correctly and you shouldn’t rely on an estate agent to do so.
It’s important not to pay a deposit or sign a preliminary contract prior to performing an in-depth due diligence of the property. Check that the property has the same dimensions as advertised, if there are any undisclosed encumbrances (i.e pending costs) and that all the necessary permissions and documentation are in place.
While some agents or developers will provide a properly-drawn up contract, some won’t – and unless you’re a Bulgarian-speaking lawyer you won’t be able to tell which is which! For peace of mind it’s recommended that you have the contract drawn up or at least checked by a Bulgarian property lawyer .
There are a number of types of preliminary contract, depending on whether you’re buying an existing (built) property or a new property off plan (i.e. yet to be built or under construction).
Signing the notary act (sometimes referred to as the notary deed, purchase contract or final contract, which is equivalent to a title deed) is the final step in taking ownership of your property. If you’re unable to be present at the signing, you can have your agent or lawyer sign it on your behalf if you’ve given him power of attorney.
You should always sign the notary act in person if you’re buying a brand new or off-plan property, to make sure that all the requirements of the preliminary contract have been met.
The signing of the notary act takes place in front of a notary public, who first checks that all the conditions contained in the preliminary contract have been fulfilled. It’s normal for all parties concerned to be present when the final contract is read, signed and witnessed by the notary, including the estate agent, developer (for new or off-plan property), your lawyer and your translator.
Either party (buyer or seller) can give a representative power of attorney. In the case of an off-plan purchase, the final contract isn’t signed until the building is complete.
To make payment of the final amount to the seller it’s preferable to have a bank account in Bulgaria. That way you can transfer the money from your home country to the euro account and withdraw it when you’re in Bulgaria. It isn’t advisable to carry large amounts of cash into Bulgaria (or anywhere for that matter!) and you must declare any amount over €10,000 in cash or its equivalent.
Most sellers will be unwilling to accept a payment from your home bank account, as they will usually have to pay a fee for receiving a foreign currency and may be at the mercy of foreign exchange rates. Some sellers will ask for the final payment in cash (usually for smaller amounts), but most will accept payment in the form of a bank transfer, telegraphic transfer or bank draft from a Bulgarian account.