Frequently Asked Questions

General Questions

Find out more in relation to additional purchase costs, maintenance fees and letting fees.

How do I go about buying a property in Bulgaria?

Below are the full details of Platinum’s purchasing procedure from initial booking deposits to closing.

Once you have decided on a property to purchase please fill out a booking form.

A EUR€1,000 booking deposit is required to book an apartment. Please note that this booking deposit is non-refundable. This should be paid immediately, however if paying the deposit by bank transfer, monies must hit our account within 5 working days or the unit will be automatically cancelled.

Your agent will issue you with a receipt and preliminary contracts.

Preliminary contracts need to be signed and returned with first payment within 21 days from the date of booking the apartment.

Platinum Developments or your sales agent will advise when the next payment is due which is at the rough construction phase; this is when construction is at roof level.

Once the development is nearing completion, Platinum Developments will issue you with a closing pack. This includes management contracts, rental contracts (if applicable) and a POA document. The POA is a power of attorney document which you sign to allow a Bulgarian lawyer to sign on your behalf. You also have the option to travel to Bulgaria to close in person.

For each stage of the purchasing process Platinum Developments or your sales agent will have an account manager to help you with any queries.

After closing (if through POA) you will be issued with title deeds and keys.

Cancellations after 1st stage payments will result in the property being put back on the sales lists and websites as available and payments will not be returned as client will be in fundamental breach of contract.

When should a client forward 20% for completion of the rough construction?

Agents will be notified in writing by Platinum Developments giving at least 4 weeks notice.

In the Preliminary Contract 5, Ownership title transfer, it states: «Each party shall bear the costs for its private councillors (Architects, lawyers, accountants, etc) if any. The transfer costs & expenses e.g. Transfer tax, notary fee, registration fee etc., shall be on account of the buyer». How much will these additional costs be approximately?

Transfer tax  — 2% (stamp duty);

Notary fee (approx)  — 0.4%;

Registration fee  — 0.1%;

POA & Admin Charge (Optional) — 0.5%;

These fees are charged on the value on the apartment.

Architects, lawyers, accountants, etc  — are optional, normally not needed.

How is the maintenance charge determined?

This is calculated by the number of square meters of built up area plus common area. Typically this cost is between €10 and €12 per square metre.

If property is to be let, what is the cost of the letting fee?

The letting fee will be determined by the contract we take with the tour operator, for example: if the tour operator wants the rooms changed every day, there will be a different price. Investors are not obliged to rent their apartment. The rental yield that we offer will be nett of all management and rental fee’s.

What is the approx. net % rental yield for the apartments?

The approximate gross % rental yield is averaged between 6% & 10% per annum.

Mortgages

Your questions answered from «How much can I borrow?» to «How long does it take to arrange?»

Note: we hope to have a simple mortgage solution in place in the coming weeks.We do have some options available from Rational Mortgages — we can provide on request.

How much can I borrow?

The maximum is 3x single income or 3.5x joint income up to 40% of joint net take home pay. All your existing liabilities including any mortgage/rent payments, personal and bank loans, credit card payments (if the balance is not cleared on a monthly basis) and any maintenance payments together with your proposed Bulgarian mortgage payments must not exceed 40% of your net monthly income.
Example: Net joint monthly income ?2,500 X 40% of that figure is ?1,000 minus existing monthly mortgage payment ?300 — No other liabilities. This leaves a balance of ?700 for a proposed Bulgarian Mortgage payment.

Who can own land in Bulgaria?

A foreign legal entity (Ltd, joint stock company etc) is entitled to own land, a foreign person is not. However, a foreign person may have full rights on an edifice, as he/she may own title of an edifice without owning the underlying land, e.g. you can own an apartment in a development without the need to own the land.

How long does it take to get a mortgage arranged?

Typically, it takes around 2 to 4 weeks for a mortgage offer although we can often obtain a decision or indication based on the financial aspects of your application within a few days of the lender receiving your application from us.

Can a non-earning partner or spouse join in a joint application?

Yes, assuming the non-earner has not had any serious past credit problems they can join in a mortgage application with an earning spouse or partner.

Can I let out my property in Bulgaria?

Yes, letting out the property for short term holiday lets, several weeks at a time is fine with all our panel lenders. If you wish to let out for long periods with a formal tenancy agreement, you will need to ask the lenders permission before creating any long term tenancy. You will need to check your buildings and contents insurance covers you during any third party occupation of the property, including short term lettings.

Will I need to be present at the signing of the Notary Act (Contract of Purchase) in Bulgaria?

The completion of a Bulgarian mortgage takes place in front of an appointed Bulgarian Notary and all representatives of the parties to the mortgage need to be present. A power of attorney will need to be presented to the lender in good time before completion — a draft document will be provided by the lender.

BULGARIAN LAW SECTION

Questions answered on subjects such as notaries, land ownership, power of attorney and search of title procedures.

Who is your solicitor?

Mariana Velichkova, Sofia Bar Association.
Ms Velichkova studied law at Sofia University (1999-2005) and worked as an Associate at Lawyer’s office (January 2006-October 2006) and as an Assistant at Lawyer’s office before that (2003 - 2004). Barrister and member of the Sofia Bar Association (from July 2006).
e-mail: Mariana@pdi.ie

Must I arrange my own notary in Bulgaria as I have no idea who to use?

By Bulgarian law, a notary within whose jurisdiction the property is located must be used. There are many notaries along the coast.
The notary deed can be signed personally by you or someone else can sign on your behalf once they have been given power of attorney (above).

What is the name and telephone number of the Notary in Pomorie?

The phone number of the Notary is +359 596 22 330, roydev@pomonet.bg. The name of the Notary is Mr. Hristo Roidev. He speaks English. The Notary does not work at the weekends, office hours are 8.30 - 12 and from 13 - 17pm Monday to Friday.
The notary deed itself will be in Bulgarian only. However, you can get a certified translation subsequently. Preliminary contracts will generally be made bilingual.

I do not wish to travel to Bulgaria. Can Platinum Developments look after this matter?

If an investor chooses not to go to Bulgaria upon signing of the notary deeds, the investor can use the power of attorney provided by Platinum.

What is the procedure if I choose the use Platinum Developments power of attorney?

Platinum will send you a POA document prepared by independent Lawyers in Bulgaria, this document then needs to be Notarized by your local Notary. Once we receive this document back along with any management/rental contracts we will send it to the Dept of Foreign Affairs (Eire) or Foreign & Common Wealth Office (UK) or similar in other countries to get it apostiled. Platinum cover the cost of this transaction. Documents are validated and sent to Bulgaria and a time slot is booked with the Notary in order to close and register relevant declarations on your behalf. This ensures the customer does not have to travel to Bulgaria to close in person. Title documents and keys will be DHL’d to the customer typically within 4 weeks. The cost of this service is 0.5%.

Are there any restrictions on the resale of the apartments in the future?

There are no restrictions.

Is the property bonded?

No, the property is not bonded. It is highly unusual for any residential property to have a bonding in Bulgaria. Stage payments are the most common form of payment, Platinum as the Developer controls the construction and will only request a further stage payment when the next phase of construction is complete.

I assume that the legal right of ownership is indefinite, that is there is no time restriction like on a leasehold property, right?

The ownership is indefinite. Banks are very comfortable with the title ownership rights of Bulgarian projects and that is why interest rates have dropped from 18%-7% in the last 2 years.

Can I open a bank account in Bulgaria?

Yes. Bulgarian non nationals can open bank accounts in any currency. They can also freely repatriate any money that they have invested in such accounts.

I have heard that there are restrictions on foreigners owning land in Bulgaria. Do I have to reside for a certain period in Bulgaria, or set up a local company to buy my apartment?

Not at all. The restriction is only for possession of land. If you buy an apartment, or even a whole building there are no restrictions. You do not need a company, nor to reside in the country.

What does a preliminary contract mean? Why is it not a full contract?

The contract is preliminary in the sense that it precedes the Notary deed, which is available once the property is completed.. The preliminary contract binds the two parties into entering a final contract in the form of a notary deed which transfers the ownership of the property. The preliminary contract is binding on both parties and is subject to execution and enforcement. The preliminary contract is needed as the property is still under construction and therefore the Seller cannot transfer the ownership title until it is built. The preliminary contracts offered by us oblige the developer (1) to construct the property and (2) to transfer the title over it when completed. Failing the former, the Seller is liable to return payment and pay damages (if any); failing the latter he is liable for the same OR the title may be transferred to the Buyer by Order of the court, which substitutes the notary deed (the buyer can choose the most suitable remedy).

What guarantee does the preliminary contract provide if the Seller’s defaults?

The guarantee is provided by the Contract and Obligations Act which provides that in case the Seller under a preliminary contract such as yours does not transfer you the title, the property shall be delivered by a Court order. This order can also be made against an insolvent Seller, and you will probably be given precedence over the other creditors. Therefore you are in a stronger position than you may have believed even though you are not the owner of the property (as your property has not yet been completed).

What is a notary deed? Does it prove ownership?

Yes, the notary deed is the standard and by far the most common title deed under Bulgarian law, and is generally accepted as proof of the statements it contains. It is by virtue of this deed that the property is transferred to the owner. It is concluded by the Seller and the Buyer in front of a Notary Public, with the latter certifying the truth of their signatures and their will to sell or buy accordingly. A copy of it is kept at the respective Notary’s and is subsequently registered with a special Registrar Agency.
The Notary deed however is NOT a security bill i.e. the property is not transferred by its delivery to a new owner (which is the case in some common law countries) and should the Buyer wish to transfer the title to a third party a new Notary deed will need to be concluded under the described procedure.

I am buying the apartment together with my partner and other investors but I have already made a booking and signed a contract in my name alone. Can I add these additional parties now?

If you have already signed a preliminary contract, it is very difficult to add new people to it, but this is NOT necessary if there is trust amongst you because when your unit is being signed over you have to name the persons you want to have on the title of the unit. If these are different from the preliminary contract the only thing we will need is a written statement from all of the persons named in the preliminary contract stating that they are happy with the additional names being added.

I have a contract with a partner but now I want to buy his share. How can I do this?

It is very easy if you want to do so before you have the title delivered to you. You only have to notify us before closing and provide a written document from that partner that he or she is withdrawing. (If you need help with drafting this document, our lawyer can help you). It is more complicated if you have received the title deed in both names. In such cases, this will be viewed as a completely new sale, i.e. both of you will need powers of attorney, new deed, new stamp duty etc. However, any lawyer can do that for you, at any time after you have received your property.

Who is the Seller? How can I verify his credentials? How can I verify his capacity to sell the property or execute contracts?

A certificate from the responsible public authority — the Commercial Companies Registry, evidencing the incorporation, the registered capital, the seat and business address, the shareholders and the legal representative of both the agent and the developer (the Bulgarian equivalent to a CRO search) can be obtained and translated for you upon request.

Who currently owns the plot of land upon which the property is being built? Does the seller own it?

The land is owned by the Seller who is developing the site. You can receive a certified translation of the notary deed, along with drawings of the land plot and any other title documents, or your Bulgarian solicitor can contact us to be shown the originals.

What is your procedure for search of title?

When we buy the land we are building upon, we make a thorough investigation of the title of the seller and of any preceding owners for the last ten years (ten years is the maximum duration for which ANY third party claims over the property are precluded). This is fairly easy to do, as all claims that can be opposed to a good faith possessor of a property must be registered with a special public authority. Before we purchase any property, we check with this authority to check if the previous owner (or some of his predecessors) has mortgaged the property, sold the construction rights (see below) or had a court claim filed against him for that property etc. If no claim is registered against him then no such claim can be held against us and subsequently against you.

Similarly, you can undertake a verification of our title on the unit we are selling to you to find out if we have mortgaged your apartment; sold it to someone else before you, etc. Such activity would be registered under our name in the Registrar. If there is no such registration on our name for your apartment, you can be certain that there are no encumbrances over it.

The papers that due diligence requires in a search of title are the Notary deed (as well as the Notary deeds of any previous owners for the last 10 years), scheme of the land plot which accompanies it, Liens and Encumbrances Certificate (issued by the Registrar Agency described above), certificate from the State and Municipal authorities that the property is not registered as their possession and that there are no restitution claims on it and, if the construction has started, a building permit is also required. We seek to obtain all of these documents before building begins and we can produce them for you before the sale takes place. In fact, in order to conclude a sale with you the public notary will ask us to produce all these documents. Upon closing we also provide a completion certificate and a habitation license. (For some specific purposes, i.e. title insurance, mortgages etc, more documents may be required).

How can I ensure there are no mortgages or other rights of third parties over my property?

You should ask for a liens and encumbrances certificate and we will obtain the most recent one for you. However, this will take quite some time as the authorities who issue these certificates are not very efficient. There is also an additional delay as they will have to be translated for you. It will be quicker if you have a Bulgarian lawyer to whom we can provide the original.

Do I own the land my apartment is situated on?

No, currently foreigners cannot own land in Bulgaria. However there is no limitation on owning certain rights over it, which according to Bulgarian law can be separated from the ownership. Thus, you may own the ‘construction right’ — superficia, which entitles you to build on the land and subsequently to own the property built indefinitely. If you buy an apartment, i.e. part of such a building, you will own part of the respective construction right. For all practical purposes the owner of such rights enjoys the same status as if he or she possessed the land, while the owner of the land upon which the property is built retains, the title, denuded from substantive content.

At a later date, if a foreigner insists on having title over the land as well, he can establish a sole trader company in Bulgaria. All companies, incorporated within the country are considered local, regardless of where the shareholders reside and therefore a company with capital 100% possessed by you may acquire land with no limitations whatsoever.

If Bulgarian law says non-nationals cannot buy land, who will be the owner of the land plot after the development is completed and the units transferred to their new owners?

The developer, or whoever was owner of the land, before it was built upon, retains the ‘nude’ property, i.e. the formal title over the land, denuded from any content. The owner of the unit has superficia (‘over the surface’) rights, i.e. the right to build, and keep indefinitely and without charge the property built.. For all practical purposes the possession of such rights is as potent as the property title over the land. This right does not expire in any way, and therefore prevents the land owner from interference. Even if the building is destroyed by natural disaster, the holder of this right over the unit has the right to rebuild (in the same volume). The owner of such land may sell it to third parties but this rarely happens as no one is interested in buying such land. The only right that may have practical significance is the land owners right to build on or extend the existing building (in the cases of zoning ordinances allowing further construction upwards, which they normally do not allow).

Is the purchase freehold or leasehold?

The property is neither freehold, nor leasehold; both of these terms are unknown in Bulgarian law. What you shall obtain is superfica meaning ‘above the land surface rights. This is the right to posses a building or part thereof. (i.e. apartments). For practical purposes it is comparable to the freehold. By holding this right the client will have full ownership of the apartment for an indefinite period and will owe nothing to the landowner. Unlike the freehold in common law that is expected to be touching the ground, you may have your unit on the fifth floor and still owe nothing to the landowner (or to the owners of the apartments beneath you).

The landowner in Bulgarian law is not like the freehold owner under common law, as the latter is entitled to payments under a long lease, while the former is not. By transferring the ownership of the units in the building, the landowner (i.e. the developer) actually disposes completely of his rights over the respective parts of the building and has no claims against the unit buyers whatsoever. Unlike the leaseholder in common law the owner of a building, or a unit owes nothing to the landowner; he is the full owner of the apartment. Most importantly, unlike a leasehold owner, the rights of the Buyers over their units never expire.

If we are buying the individual units, who owns the structure and common parts of the building?

Unlike the leaseholders in common law who own the individual units while the landlord owns the structure and the common areas, the owners of units in an apartment building under Bulgarian law also own a share in these common areas. The whole building is owned by the apartment owners (and not by the landowner) –the respective individual units and ideal shares from the common parts. (The share in these is determined by the ratio between the unit area and the total built up area.) It should be noted that your possession of the common areas is mandated by law, and when you receive title over the apartments you receive your share in the common areas by virtue of law, irrespective of the sales contract, i.e. even if this share is not explicitly transferred by the sales contract (though it is made explicit in our contracts) you shall receive it.

Do I have any obligations on my property after it has been paid for and the title transferred? Who is managing my property after that?

No, you do not have any further obligations. After selling all of the units the developer has in effect no rights over your property (and you have no obligations respectively). Apartment owners may conclude property management contracts with the developer (or related company) but they are not obliged to do so. Apartment owners are free to choose another property manager (if they have already concluded a property management contract, after its term expires) if they find his conditions more favourable. There is no connection between construction of the property and its subsequent management under Bulgarian law.

The only obligation that you will have as the property owner is to pay the property taxes. Normally you would like the property maintained to a high standard, so you would choose a property manager, but this is not required by law, and apartment owners may choose a property manager at will.

What is «rough construction»? It seems too vague to my lawyer!

«Rough construction» is defined by the Spatial Development Act as a building whereof the surrounding walls and the roof have been concluded, and the finishing work has not been executed at all or has been partly executed. The precise moment when it is concluded is defined by a certificate issued by the public authorities supervising the construction. The moment such a certificate is obtained is thus very precisely defined and this is when the second instalment payment is due. You may request translation of this certificate and it will be shown to you at the time of the respective payment.

Why is the payment made out to the PDI account and not to the Seller? Where is my money going?

The client monies are held in our PDI client account, and the money is only transferred to the developer when the necessary conditions are satisfied by both the client and the developer. This account is subject to audit by our Auditors KPMG twice a year to ensure that we are compliant in the process of handling client monies.

What is the relationship between PDI and the developer/the Seller (the name featuring in my contract?

If you are concerned about the relations between PDI and the developer, you may request a copy of the agency agreement and a memorandum explaining the relationship between PDI and the developer.

Why is there no date in my contract indicating when the Seller will commence construction?

There is no starting date in the contract as there is a stipulation that the Seller has to complete the construction by certain fixed deadline. Accordingly, he has to start construction well before that to have sufficient time to meet this deadline and any delay in commencement will be at his expense. Should he delay, the commencement he will have to bear the cost of speedier construction. As a delay in commencement is no excuse for any delay in delivery it should be of no concern to you.

Why does Bulgarian law apply to the contract and why to Bulgarian courts rule on disputes?

Bulgarian law applies and Bulgarian courts will resolve any disputes because both the developer and the property are located in Bulgaria. An Irish court would be neither able to deliver you the property nor to compel refund against a Seller outside of its jurisdiction. Please note that even though Bulgarian law applies, English language versions of documents will prevail in case of discrepancy in the text, which is made entirely for the convenience of the buyers.

How can Bulgarian law apply, but English language versions of documents shall prevail?

This is entirely for the convenience of the clients — as they prefer the version that they can understand to prevail. Even though the Bulgarian law applies and disputes shall be decided by the Court where the property is located, there is no legal requirement for the contract documents to be written in Bulgarian. They can be written in English only (A certified translation would have to be provided to the court in the case of a dispute).

Who will inspect my unit during construction? What happens if the construction has defects or is not built according to the specifications in the contract?

According to the law, the Buyer is entitled to inspect the construction at any time and can, raise objections about inappropriate performance at the time of the delivery. In such cases the developer is obliged to repair the work within a period specified by the Buyer. The Buyer may also ask for a discount or may request that someone else carry out the repairs on behalf of the Seller. Furthermore, if the deviation or the deficiencies are so substantial that the unit is deemed unfit for its intended use the Buyer may void the contract. The Buyer may also claim compensation for damages suffered (including loss of future profits) in so far as they are a direct consequence of the delay in the development completion.

Who is in charge of issuing construction permits in Bulgaria?

Building permissions are issued by the Architect-in-Chief of the respective Municipality along with approval of the developer's architectural projects for the building. No construction project in Bulgaria may physically start before the permit and project approval.

Why is there no stipulation in my contract that the developer must obtain a building permit?

Precisely because he is statutorily obliged to do so. Seller undertakes to construct the building which implies he also undertakes to obtain any permission or license that the law may require for such construction. Therefore, the Seller is liable to obtain such permission and his failing to do so will be a substantial breach entitling you to a full refund.

Are you going to obtain completion certificates for the developments? Will I be able to view them?

The developer is statutorily required to obtain the relevant documents to support the various stages of readiness of the property. Normally the final documents are the completion certificate and habitation license. These documents will be required by the Notary Public to conclude the title transfer. Without these the Building will not be considered complete, and therefore our obligation to build your property is discharged only after we have obtained these documents.

The documents can be translated and supplied to you upon request. Obviously, this will only happen after the building is built and not at the point of signing the preliminary contract. If you are buying your unit after construction work has begun you can request a copy of the certificate for the last stage of completed work.

Can I examine the property during construction to ascertain the quality of the building?

Certainly. The law entitles you to make inquiries and inspect construction at any stage. It also obliges us to produce relevant documents upon request. If you would like to inspect the site it is highly recommended to authorize an expert to do so on your behalf.

Do I have to pay taxes in Bulgaria?

Unfortunately, yes; fortunately the taxes are not very high!

Transfer tax:
You have to pay stamp duty and few other taxes amounting to about 3% of the actual price of the apartment in order to transfer the property to your name. 3% is the highest amount payable and is a once off payment made at the time of delivery of your unit.

Property tax:
Once you acquire your property you will have to pay annual property tax and sewerage taxes to the municipality, which differ in the different areas but everywhere the amount due is negligible. You should ask for details for the development you are buying in. You should also be aware that while the transfer tax is a percentage of the real price, the property tax is percentage of the tax evaluation of your property. This is estimated by the public authorities and is lagging well behind the market price. Tax evaluations currently are 5 to 10 times lower than real prices and as a result property taxes are always negligible.

Income tax:
Finally, if you are letting your apartment to third parties, i.e. if you have an income within Bulgaria, you will have to file an annual tax return to declare this income and it will be taxed accordingly. The percentage payable varies but is generally lower than the respective percentages in Ireland. There is a double taxation treaty between Bulgaria and Ireland so you will not be charged twice for the same income.

Do I pay the cost of the title transfers? How much are they?

The transfer costs as per today are approximately 3% of the price of the property according to the Notary deed. This includes 2% stamp duty, 0.4% notary, 0.1% registration fee and 0.5% for administration (translations, PoA verification and the like).

You do not need to use your own solicitors and architects unless you choose to do so as developer undertakes to arrange everything necessary for the transfer and this will be included in the 0.5% above. Should you choose to use your own solicitors and architects their costs vary greatly.

(This arrangement applies for the title transfer only; there is a property tax which is different, see above).
Вам не надо привлекать своих адвокатов и архитекторов, если толко вы не предпочтете так поступить. Застройщик сам предоставляет таких специалистов, для того, чтобы перевод в собственность прошел беспрепятственно, и их услуги включены в вышеуказанные 0.5%.

Can several of us buy a single unit together?

Yes, and in such case the property shall be common for all of the persons on the notary deed (they can be different from the preliminary, i.e. other persons may be added subsequently) in equal shares if the deed do not indicate otherwise. In case anyone dies his share will go into his estate, and not to the other owners.

Does my wife/husband have to be included in the contract?

It is very important for you to note that according to Bulgarian family law the property acquired by any spouse during marriage is jointly possessed by the two spouses, i.e. the spouses will acquire respective share even if they are not named in the contracts and deeds. This is very important as you will need the permission of your spouse if you want to sell the property at any time latter.

Can I mortgage the apartment I buy in Bulgaria to fund my staged payments?

Yes. There is no problem borrowing money from a Bulgarian bank, against mortgage, to pay your final instalment on your apartment. It will however be your responsibility to find such a bank. PDI can recommend financial agents who have helped previous clients. The mortgage will have to be arranged before your final payment and title transfer, and the bank will require that the mortgage is written in the title deed of your property. You will receive the property delivered to you and the bank will make the final payment a few days after the date of transfer. Although there will be some administrative difficulties for us PDI and the developer are flexible.

A similar arrangement can be made for payment of your second instalment but it is much more difficult to organise. Because when your second payment is due only the rough construction is completed and banks do not give loans against such property, or the amount they agree to extend is less than you need. Further, PDI will have to transfer the title of the property to you earlier than projected; leaving it vulnerable in case you stop paying your instalments to the bank and the bank seizes the property. Nevertheless PDI strives to be as flexible as possible in accommodating such arrangements.