Land Mortgage and Constructions


Because of a case of our client and the following legal proceedings we decided that it will be useful us to provide an explanation on whether a mortgage placed over a land plot transfers over apartments built after placing of the mortgage.

Very often people are convinced that it is enough to check for lack of encumbrances /including mortgages/ only the specific apartment that they plan to purchase. Such check is necessary, but it is not sufficient. It is possible the real estate – subject of the purchase to have a placed mortgage despite this check.

The case of our client is as follows: in 2015 he purchased an apartment, as the certificate about encumbrances that was issued ONLY regarding the apartment shows that there are no encumbrances placed over the apartment. In 2018 he received a message stating that his apartment will be put on a public sale because the apartment serves as security for a contractual mortgage from 2009 concluded between the owner of the land plot and the bank.

After the check we have found out that the owner of the land plot had received a building permit in 2008 and in 2009 he had established a contractual mortgage in favor of the bank, which contractual mortgage was placed over the land plot and future facilities on the plot, i.e. over buildings that will be built according to the issued building permit during the period of validity of the mortgage. This means that there was an agreement between the parties confirming that the mortgage spreads its effect over the future buildings. Such an agreement is permissible and it does not violate the regulations of the law. The development of the land plot and especially dense development would have made the land plot unfit for satisfying of the claims of the creditor. Especially since the mortgage creditor cannot put limits over the right of the owner of the land plot to build facilities on the territory of the plot. It is a fact that when establishing a mortgage the collateral object should be sufficiently defined /specified/, but the agreement that the mortgage will extend to the buildings that will be built in accordance with the issued building permit is sufficient. Such an agreement does not contradict with the requirement of the art. 166, par. 2 of the Obligations and Contracts Act of Bulgaria where it is said that for the purpose of establishing of a mortgage the items should be individually identified, because the individualization of the real estate by specifying its location, boundaries, area of the land plot and the building permit is sufficient for determining of the subject of the mortgage, especially since the Mortgage agreement explicitly specifies that the mortgage will also apply to the objects that will be constructed on the basis of the issued building permit. It is considered that this is a mortgage established under a certain condition which will enter into force from the moment of completion of the construction. It is not necessary all future individual items in the future building to be specified in the mortgage agreement with their complete description in order the mortgage to have an effect over those individual items. In such a way the mortgage registered in the batch of the owner of the land plot cannot mislead a bona fide subsequent acquirer of an individual item in the building – i.e. the mortgage is opposed to any subsequent acquirer of an individual item in the building and the subsequent property transfer deals with individual items performed by the owner of the building do not exclude those individual items from the scope of the mortgage.

All this means that before purchasing of a property it is necessary to make a check not only in the batch of the real estate but also in the personal batch of the transferring party /i.e. in the batch of the seller/. Very often owners of land plots credit construction via concluding of an agreement about crediting of construction and establish mortgages over the land plot and the future buildings/items.

Everything said above is confirmed by the decision No. 39/2014 of the Supreme Court of Cassation.

All the aforesaid leads to the conclusion that professional legal services are required when buying a property. For more information about purchase of real estate property please visit:
If you need assistance regarding purchase of a real estate or if you have any questions you can contact us at:

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