ID Law office provides legal consultations and full spectrum of legal services in regards with the purchase and sale of real estates. Below you will find more information about the procedure of purchase and sale, about services that we provide and problems that may arise.
SALE and PURCHASE of a real estate
According to the Bulgarian legislation sale and purchase of a real estate should be executed via a contract according to which the seller is obliged to transfer to the buyer the ownership right over a specific real estate for a price that the buyer is obliged to pay. According to the art. 18 of the Obligations and Contracts Act of Bulgaria this happens via a title deed.
We would like to mention that the present article examines acquisition of a property via purchase with a title deed as cases of acquisition of property via public sale, exchange, donation, court decision, administrative act and other will be explained additionally in other articles.
So, we are in a situation when the seller and the buyer have agreed about the selling price, about the terms of payment and signing of the title deed. On the first look it seems that that most important part of the work is already done and the only thing that remains before finishing of the process of purchasing the real estate is signing of the title deed. Unfortunately, it is not so.
From now on interests of the seller and of the buyer diverge and should be considered separately.
The SELLER. The most important thing for him is to receive the selling price. That is why the seller very often requires receiving the selling price before visiting the notary public for signing of the title deed. On the other hand, which is understandable, the buyer wants to pay after signing of the title deed. If the selling price is less than 10000 BGN and is paid in cash the payment can be made in front of the notary public but in case of higher selling price the law requires the payment to be made via bank transfer. In this case in order to be fair to both parties and having in mind the fact that the payment after all is a consequence of a signed contract, our law office advice is the selling price to be paid after signing of the title deed and before its registration at the Registry Agency by the notary. For this purpose after signing of the title deed the notary public requires a copy of the payment bank document that confirms making of the payment and only after receiving of such document the notary public registers the deal. In such a way interests of both parties are protected – the seller is sure that he has received the money and buyer is sure that the document that confirms transfer of the ownership right was signed. There is a possibility the selling price to be paid in advance to the bank account of the notary public who will transfer the amount to the seller’s account after registration of the title deed. The selling price can be transferred to a special escrow account as payment from this account can be performed only under special conditions. It is also possible the parties to make an agreement the selling price to be paid within specific term after the deal as in this case we advise the sellers to make a consultation about possible risks and consequences with a lawyer. We also advise sellers to require registration of a legal mortgage over the property which mortgage will provide some protection and security.
The main seller’s obligation in regards with a deal is to receive and to provide the buyer with all the documents required for execution of the deal. Those documents also are subject of agreement between parties. Very often the seller believes that the document that confirms the ownership right, the scheme and the tax evaluation are enough for one deal while our practice /and buyer’s interests/ require a set of additional documents. That is why our advice is parties to make a preliminary agreement about seller’s obligation to provide to the buyer a set of additional documents that will be described below and that depend on each specific case.
THE BUYER. After the buyer has chosen the real estate he becomes responsible for the check of this estate from the documentary point of view in order to be sure that after paying the selling price he really will become the owner. Depending of the buyer’s citizenship and type of the property the buyer must comply with the requirements of the Bulgarian legislation regarding the conditions for the acquisition of property in Bulgaria. We would like to remind about the limitations for purchase of agricultural land plots and impossibility the land to be purchased by non-EU citizens. In case of need our law office provides assistance and registers Bulgarian companies – legal entities that allow some deals to become possible.
Very often the buyers trust the seller or unqualified agent and as the result they are deceived.
Generally the checks that should be made and documents that should be provided are connected with proving of the following:
- That the person who claims to be the owner is the actual owner;
- That the real estate has no other owners including the check whether it was acquired during marriage; in case of inherited real estate it should be confirmed that all the owners were established;
- If the seller is a company is should be established who is the real owner and the manager of this company, it should be also checked whether the company is in the process of liquidation or in a bankruptcy procedure;
- That the seller has no tax obligations to the state;
- If the seller is represented by a proxy – that the later has the needed rights and declarations required for the notary execution;
- That there are no court cases in regards with the property;
- That there are no encumbrances, such as mortgages, injunctions, rents and other;
- In case the property is under the mortgage – what amount should be paid and what conditions fulfilled in order the mortgage to be deleted;
- That there are no restitution claims regarding the property;
- That the real estate was not contributed into the capital of a trade company;
- If the property represents a building or an individual item in the building it should be checked whether there are all the necessary building documents including the permission to build, architectural plans, floor area tables, certificate of usage and other;
- Depending on the intended purpose of the real estate it should be checked whether it has individual electricity and water client numbers;
- In case the real estate – subject of the deal represents a land plot then it should be checked if there are problems in regards with the regulation, whether all the fees and payments regarding the regulation were paid and what is the status and intended purpose of the land plot;
- Having in mind the variety of possible options and the specifics of each deal there is a number of other documents that must be checked.
The preliminary contract. The Bulgarian legislation provides the possibility the parties to sign a preliminary contract that will define under which condition and within what terms the seller and the buyer will sign the final contract in a form of a title deed. It should include agreement about the main conditions of the final contract such as: the subject, the price, the term of payment and term of transfer of the ownership right. The preliminary contract should be in a written form but the law does not require notarization of such type of contracts. The usual practice is this contract to include seller’s obligation to provide all the documents required for the deal within some specific term. The parties should be aware that according to the art. 19 of the Obligations and Contracts Act each party of the preliminary contract has the right to claim the court to announce the preliminary contract as the final one. It means that signing of the preliminary contract is not some action without serious consequences and refusing from an already signed preliminary contract is not always an easy and possible task.
OUR LAW OFFICE’ ADVICE – no matter if you are the seller or the buyer – is to contact an independent lawyer who is not connected with the deal before signing of any document in order this lawyer to make all the necessary checks and to protect your interests.
The present article is not a legal consultation but presents a summarized theoretical development of a certain legal sphere. ID Law Office is not liable in the event of a misunderstanding of the information contained in this article.
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