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The buying process for purchasing Bulgarian Real Estate depends quite simply on whether the sale includes the ownership of the landplot or is without.
In the case of an apartment sale the property is normally leasehold not freehold so formation of a Bulgarian Company is unnecessary.
Buying a property with land (freehold) requires you to form a company which then purchases the property with you as its Managing Director this can either be a trading or non trading company dependant on your personal requirements.
The normal methods and processes which are used in Bulgaria for both freehold or leasehold buyers are these:
Buying a leasehold property e.g. an apartment, allows you to buy as an individual or through a Bulgarian limited company. An apartment purchase does not usually include ownership of land so most are bought leasehold. The term of the leasehold is an indefinite number of years and you will own a percentage of the communal areas of the building based on the sq m2 of your apartment compared to the total
You start the procedure by sending your Estate Agent your personal details. This can be done through an e-mail or by fax if you are not in Bulgaria!
Please note that it is not necessary to be in Bulgaria in order to buy your property. You can reserve your property online, sending a deposit with your passport details via a scanned copy, e-mail or by fax.
Subsequently we can send you your documents via your e-mail address, with a detailed explanation about them and the specific information about where they have to be signed, that is whether they need to be notarised (in front of a Public Notary) or apostilled (for example by the Foreign and Commonwealth Office in London).
However we really recommend that a short visit to Bulgaria is a far simpler and quicker method of purchasing your Bulgarian real estate.
The buying process here is....
1. Signing a Preliminary contract for purchase which is similar to the “sold subject to contract“ in the UK.
This contract is very important and you should read everything in detail. You must ask your Estate Agent or Lawyer if there is something which you can’t understand or wish to disagree. It is illegal in BG to sign any legal document without the presence of a Bgn Registered Translator .
2. With this contract comes the obligation to pay a Deposit which is approximately 10 % of the properties value. As in the UK this will ensure that the property will be withdrawn from the market
The deposit can also depend on a particular developer’s payment requirements which will be stated in their Contract with you.
3. Granting Power of Attorney (POA) in the event that it will not be possible for you to be in Bulgaria at the necessary times then we recommend a POA
.
This Power of Attorney must be restrictive – to protect yourself – and applicable only to your property and the remit must be described in detail together with a time limit. This is a standard and normal procedure in BG and gives you flexibility.
4. Forming a company is necessary when you are buying a property with land. Since 2001 when Bulgaria released the embargo on non Bgn citizens buying land this system was introduced. Many thousands have now availed themselves of this facility.
This situation will, in the future, be changed to a new law which has already been approved by the Bulgarian parliament, but will not be enforced until as late as the end of 2014 to comply with European Union requirements. Foreign buyers establish a Bulgarian limited company which will own the property The buyer then owns the company and respectively the property.
Please note that the establishment of a company is only done once any subsequent purchases can be made by your Bgn company.
You can also have more than one named Director named in your company which can theoretically cover friend buying properties together..
All of the above is an easy and standard procedure, which our company can process, on your behalf, for a reasonable fee.
5. The second requirement for Company Set up is to open a Commercial bank account with a starting capital of minimum 2 Leva or approximately 1,2 Euro – this deposit has to be verified at the Company Registration. The company when formed is then added to the register of the National Tax Registration Authority.
Please note that the bank account is a formality and when you have completed the deal, you can close the bank account.
In this bank account you can transfer the sums needed for buying your property. It is very convenient, especially if you are buying on-line or if you are making scheduled installments.
6. Signing the final contract is the last step and includes both leasehold and freehold buyers. Bear in mind that as the buyer you can appear at the Notaries office personally or be represented by the person designated as your legal representative (POA). If you wish to be present at the completion of the transaction you will be identified by your Passport. You will be required to sign documents in triplicate, one of which will be registered in the Legal system. This document will be in Bulgarian and if you are present it will be translated for you before signing by a Bulgarian Registered Translator and the document can also be translated for your personal information. Signing the final contract means receiving the Notary Deed (Act) which is the document that gives you or your Company the outright ownership of the property. The original Notary Deed (Act) is given into the care of the owners – it is possible to obtain another but in any event we advise you to make a copy of all your legal documents and keep them separate from the originals.
7. Upon establishment of a company you will be required to submit an Annual Tax Return in Bulgaria. Most property owners companies never actively trade and so submit a zero tax return. We can provide this service which is inexpensive.
We believe that we have covered most of the procedures involved in buying in Bulgaria, but should you require any more information on the process please get in touch with us and we will be only too pleased to answer your query.