Legal Framework


The major legislative acts governing the real estate and real estate transactions in Bulgaria are the Bulgarian Constitution, Law on property, Law on state property, Law on municipal property, Civil procedures code, Law on promotion of investment, Law on territorial development and Law on contracts and obligations.

Direct acquisition of real estate in Bulgaria by a foreign company

In Bulgaria foreign companies can directly acquire buildings, premises within a building and limited property rights (e.g., a construction right, right of use), but not land.

Indirect acquisition of real estate in Bulgaria by a foreign company

Indirectly, foreign companies can acquire any type of real estate, including land, by registering a Bulgarian company to act as acquirer. It is possible for such a company to be 100% owned by the foreign investor.

The transaction

The general rule under Bulgarian law is that transactions involving real estate (e.g. a purchase, exchange, etc.) should be executed with a notary deed before a registered notary in the region where the real estate is located. After execution of the deed the notary is obliged, by law, to register the transaction in the Real Estate Registry in order to make the ownership title of the acquirer defendable against third parties.

A notary deed is not required for the sale of state or municipal property or in privatization transactions where the simple written form is sufficient for a valid title transfer. There are also special rules and procedures governing the acquisition of real estate arising from enforcement, insolvency and similar procedures, and for in-kind contributions of real estate.

The price

The purchase price is freely negotiable and may be stipulated and paid in BGN or in any other currency.

Legitimacy of the buyer

Direct acquisition

Where a foreign company acquires directly buildings, premises or limited property rights it should ensure that at least the following documents are presented:

  • Resolution of the competent corporate body approving the acquisition of the targeted real estate. The resolution has to be notarized and apostilled in the respective country and translated in Bulgaria by a certified translator
  • Certificate for Good Standing – apostilled in the respective country and translated in Bulgaria by a certified translator, and
  • Power-of-attorney signed before a notary and apostilled in the respective country and translated in Bulgaria by a certified translator, for the person who will represent the foreign investor before the Bulgarian notary.

Indirect acquisition

Where a foreign company indirectly acquires real estate in Bulgaria through a Bulgarian subsidiary company it should ensure that at least the following documents are presented.

  • Resolution of the competent corporate body of the Bulgarian subsidiary approving the acquisition of the targeted real estate
  • Certificate for Good Standing of the Bulgarian subsidiary –original or a certified copy
  • Power-of-attorney signed before a notary for the person (if this is not the person referred to in the Certificate for Good Standing as the person representing and binding the Bulgarian subsidiary) who will represent the Bulgarian subsidiary before the Bulgarian notary handling the transaction
  • Certificate for tax registration for the local subsidiary – the original and a copy for the notary, and
  • BULSTAT (statistics) registration card of the Bulgarian subsidiary – the original and a copy for the notary.

STATUTORY COSTS AND EXPENSES

  • Transfer tax – 2% of the higher of the purchase price agreed between the parties, or the tax valuation made by the tax office prior to the transaction. The tax may be shared between the parties or be just born by one of them
  • Fee for registration in the Real Estate Register – 0.1% of the higher of the purchase price agreed between the parties, or the tax valuation made by the tax office prior to the transaction. The fee may be shared between the parties or be borne by just one of them, and
  • Notary fee – according to the statutory Notary Tariff not more than BGN 3,000 (approx. Euro 1,550) per transaction. The fee may be shared between the parties or be borne by just one of them.

TITLE REVIEW (Real estate legal due diligence)

Before purchasing real estate it is recommended that the buyer ensure verification of the ownership status of the targeted real estate, including that there is/are:

  • a clean, valid and marketable ownership title held by the seller. The seller has to be, and his predecessors should have been the valid owner of the targeted real estate in order to avoid any risk of rescinding or annulment of the transaction. Usually, this title review covers the last 10 years since the maximum acquisitive prescription term in Bulgaria is 10 years
  • no liens or encumbrances over the property. The buyer should be fully aware as to whether there are any registered liens and/or encumbrances over the targeted real estate, e.g., mortgages, interlocutory injunctions, going-concern pledges, limited property rights established in favor of third parties. A general principle in Bulgarian law is that liens and encumbrances “follow the property”, i.e., the registered liens and encumbrances can be enforced against the new owner
  • no other registered rights in favor of third parties – if there are registered rental or lease agreements over the targeted real estate then the buyer shall be bound by them until the expiration of their term, and
  • no court or restitution claims.

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