The Buying Process

Buying in a foreign country can be a daunting and confusing process until you become accustomed to the way the conveyancing process works. Below you will find a brief over view of the buying process - this is based on my experience but should be similar across Bulgaria.


 

1. Research into various regions of Bulgaria – use books, internet, magazines etc.
- Decide on the kind of area you wish to purchase in – mountains, lakes, coastal areas, rural village, city…..
- Decide on the kind of property you want to buy – apartment, small old house, modern villa, plot of land….
- Decide on whether you are prepared to renovate a property or whether you want to build from new.
- Decide on your budget for purchasing (and renovating)
- Decide on what you want property for – rental, holiday home, investment…

2. Arrange to visit Bulgaria and the regions you are interested in – allow at least 3 or 4 days to view property in an area and if you decide to purchase start the paperwork. Please try and give at least 3 or 4 weeks notice of visit so the agent can arrange for you to view property suitable to your requirements.

3. Visit Bulgaria and view properties - Viewing trips involve a fair amount of driving around (often 200 to 300km a day) and can be fairly hectic if you have lots of properties to view, especially if seeing places in different areas with different agents. Try and plan to have the odd day for sightseeing, relaxing and make sure you leave enough time for getting from one area to another.

4. Hopefully you will find a property you wish to buy. If you intend to go ahead with a purchase then you will require at least half a day but a full day is better (Monday to Friday) to start the paperwork for your Bulgarian company. Currently all foreigners (non-Bulgarians) require a company to purchase land (not an apartment) and while the Government has passed a Bill to repeal this necessity inline with EU requirements, it is not likely come into force until around 2012. Therefore to purchase a house in Bulgaria you need to set up a limited company here. This process now takes around 2 or 3 weeks for company registration, but can be started while you are in Bulgaria and completed by someone having Power of Attorney for you here.

The first steps for creating your company are as follows and are done while you are still here in Bulgaria:

a) Choose a company name and who will be shareholders. If there is just one share holder then your company will be an EOOD, if there are more than one, then it will be an OOD.

b) You will need to visit a notary and sign a Power of Attorney in front of him or her giving the chosen agent/lawyer authority to act on your behalf in setting up the company. You will also have to give a specimen signature and sign a money laundering declaration. A translator will be arranged to read through the documents to you in English. You will also need to sign a contract for you as manager of your company.

The agent/lawyer will then complete the registration of your company in your absence. Usually takes around 2 weeks. 

You will also give Power of Authority to the agent/lawyer to purchase the house in your company name and complete the registration of the purchase with the local municipality (to be done within 2 months of a change of ownership).

Fees

Company Registration – will be between 300 to 600 Euros depending on agent and lawyer you use [You should bring this with you to Bulgaria.]

Company Deposit – There is now no requirement for a large company capital to be deposited. It used to be 5000 levs, but is now just 2 levs or 1 Euro. 

5. A lawyer (not a notary) will check the title deeds to ensure the Seller has the legal right to sell the property, there are no encumbrances on it such as mortgages etc and that there are no other problems in the paperwork.

6. Once back in the UK, you will need to send the company deposit (10%) to secure your property and usually the commission to the agent/lawyer. You should be informed as to when the rest of the purchase price is required so you can arrange for this to be sent over and your purchase completed (once company registration is done). You will also need to send the notary fees (~4% of total purchase price) for the notary to check and prepare the title deeds, and government taxes.

7. Once the deposit is received, a Preliminary Contract will be signed with the Seller(s) and the 10% deposit paid to secure the property. The Preliminary Contract states what the property is, the purchase price, the amount of money paid at this point to secure the property and a completion date as to when the rest of the money will be due and when the actual Notary title deeds are to be signed by. The Preliminary Contract also states the penalties if either party backs out of the deal – seller has to return deposit (often twice the amount paid) or the buyer loses the deposit if they pull out.

8. Once your company is registered and you have sent the rest of the money required to complete the purchase, the agent will arrange a convenient time to meet the seller at the appropriate Notary office for the municipality where your house is located to complete your transaction and transfer the house into your company name. The property is then officially yours. Title deeds and Skitsa (property plan) are usually available 10 to 20 days after the transfer papers are signed and copies will be collected to hold on file for you (originals often kept by Notary). Translated copies can be made and sent to you back in the UK.

9. The agent should then arrange to register the new ownership of your property with the local tax authority within 2 months of the purchase (maybe additional costs involved). This means you are registered to pay the local council taxes – municipality tax and rubbish collection tax. The amount depends on the municipality and the value of your property but is usually only around 20 to 50 BGN a year. Demands for these payments are sent out in around April each year to your registered company address. Again management can be arranged for payment of these taxes at an additional cost, as well as your annual tax form. The agent can also arrange for your electric and water accounts to be changed into your name or company name.

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