Buying an apartment for an office and/or dwelling purposes in Bulgaria should NOT be different than buying of an apartment elsewhere in Europe.
However, things are not as easy and as straightforward as one might think.
In practical terms the deal should go within the following parameters:
1. First of all, the buyer should sign a preliminary contract for the purchase of the estate and pay to the owner a sum of 10% of the total purchase price as a down payment. Usually those contracts are signed in order for the owners to prepare themselves with the necessary documents for the signing of the Title Deed before a Notary Public (one should think that if a person wishes to sell, he would have to be ready with all papers. Well, not if you are buying in Bulgaria).
2. After certain period of time (usually one month) the buyer pays the remaining 90% of the purchase price and obtains a Title Deed for the ownership over the estate.
All potential buyers should be aware that all dealings with real estates in Bulgaria MUST be done before a NOTARY PUBLIC.
In many cases apartments also come with some proportional ownership (co-ownership) over the land on which the building is erected, which has its own complications.
The expenses on the deal are: 2% State tax (something similar to a stamp duty, to be calculated on the purchase price), Notary fee (which is calculated in accordance with the price stated in the Title Deed, but usually for one-two-bedroom apartment would be approx. 650 BGL or 325 euro), fee for inscription in the Land Registry (0,1% of the value) and legal fees.
An example: if the property costs 50 000 euro all these fees (except legal fees) would come up to nearly 1300 euro, for a deal where the property costs 100 000 euro they are around 2400 euro and for a deal where the property costs 200 000 euro they would be around 4500 euro. The usual practice was (when the deal was between two Bulgarians at least) that these expenses are be covered 50/50 by the parties. Nowadays, it is a subject of an agreement between the vendor and the buyer.
Things to be aware of:
It is QUITE LIKELY that the owner will NOT want to declare the real price of the property on the Deed of Transfer. This is done for the owner to AVOID paying CAPITAL GAINS TAX (which would be approx. 30% of the real purchase price). You might end up in a situation where the owner proposes that either you pay the market value BUT get an official document (Title Deed) stating far lower price or you do not have a deal. Usually, we recommend that this should be EXPLICITLY agreed in writing before the signing of any document, but if your situation comes to such a dead-end, you should know that having a Title Deed with lower price does not invalidate your deal. However, such situation has its financial consequences, such as not having official documents for the money spent and higher taxes if you decide to sell the property afterwards on its real value. Please, consult with your broker/lawyer every aspect of the deal for to avoid any misrepresentation and misunderstanding at a later stage.
General warning:
When the search for good root to title is carried out in the Land Register (especially applicable for SOFIA’ Land Register), there are 3 to 5 BLANK DAYS, immediately BEFORE the search, for which your attorney would not be able to give you any data – i.e. there is a possibility that the owner of the estate might have put a lien on it, etc. This does not happen on an everyday basis, BUT buyers should be aware of it, as there may be unscrupulous owners who take advantage of this opportunity. Therefore, we would recommend that the deal be guaranteed by an escrow account set up either by the Notary or by a Bank.
Info kindly supplied by LM Legal Services (www.lmlegalservices.com)
