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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 or buy an already renovted place.
- 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 & see properties
– allow at least a couple of days to view property
in an area, get a good feel for the region, look around the village and
if you decide to purchase start the paperwork. Aim to visit various
different regions. 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.
3.
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 to 2013. 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.
There are basically 3 ways
a company can be set up:
1. Go to Bulgaria, visit a
lawyer there and start the process by choosing a company name,
registering this name (small fee), signing company paperwork like
articles of association and memorandums and then go to a notary and
give the lawyer power of attorney to set up your company. This route
should cost you around 220 Euros, plus maybe a little extra for a
translator if required by the notary. Once started, it will be around 2
to 4 weeks until your company is set up. It is also an idea to give the
lawyer power of attorney to deal with the purchase of your house at the
same time to save time, hassle and costs. Then everything else can be
completed in your absence.
2. It can all be done by post. The lawyer in Bulgaria will prepare all
the paperwork and send these documents to you by email. You need to
print these off. Bulgarian costs are 220 Euros. A couple of the
documents need to be signed before a notary in the UK which will incur
further fees, maybe another £80 to £100. You then need to
send these documents to the foreign office in London for apostiling.
Again will incur a further charge, used to be around £40 but
think it is much more now. Also takes a while. Over-all looking at
probably an 8 week time scale to get company set up.
3. Easiest route, especially if on shorter timescales or not coming to
Bulgaria or simply do not want the hassle of hours in a lawyer's office
and notaries office is to buy an off the shelf company. Cost is
£400. You just need your passport details, UK address and choice
of company name. A company is then set up for you by the agency and
takes about 2 to 4 weeks. This company is in trust for you. When you
decide to go to Bulgaria and can really be any time over the following
12 months, you just need to sign one piece of paper at the notaries and
you are all done. This route also means that the agency can sign for
your house transfer as they set up the company and are the signature
for it (until such time as you visit Bulgaria and change this).
4. 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.
5.
Once back in the UK, you will need to send the deposit (usually 10%) to
secure your property and sometimes 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.
6.
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.
7.
Once your company is registered and you have sent the rest of the money
required to complete the purchase, plus any taxes and legal fees, the
agent/lawyer 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.
8.
The agent/lawyer 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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