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.