Purchase of Agricultural Land in Bulgaria – Question with many Answers and Ambiguities

During the last several years the question about the purchase of Bulgarian agricultural land is subject to huge interest, many discussions and interpretations. In order to answer the question we should examine what the actual legislation says and how it should be applied. It is an irrefutable fact that because of the accession of Bulgaria to European Union and the signing of negotiating chapter Free movement of capital, in the Annex VI part 3 of the Treaty of accession of Bulgaria and Romania to EU our country has agreed that within 7 years from the date of accession it will be prepared and it will change its legislation in such way that will allow citizens of the EU to buy agricultural land. This term has expired on 1st of January 2014. The only possibility for this term to be prolonged is if all EU member states of the EU agree to this. At present, this procedure has not even been started and the National Assembly of Bulgaria has unsuccessfully tried to prolong this term unilaterally, which has no legal ground in our opinion.

Bulgaria has changed its legislation as the text of the Constitution was amended to: “Foreigners and foreign legal entities may acquire land ownership under the terms ensuing from Bulgaria’s accession to the European Union, or by virtue of an international treaty that has been ratified, published and entered into force for the Republic of Bulgaria, as well as through inheritance by operation of the law.”

On 13th of June 2014 the long awaited amendment to the Agricultural Land Ownership and Usage Act was promulgated and thanks to this amendment the answer to the question ‘who can purchase agricultural land in Bulgaria’ became even more unclear.

Art. 3.4 of this Act refers to the Association agreement and the general interpretation is that citizens of the EU will have the right to purchase land. On the other hand, Art. 3.c.1 states that “The right to own agricultural land can be acquired by physical and legal entities that have resided or are established in Republic of Bulgaria for more than 5 years.”

Here comes the first ambiguity: literally this text means that even citizens and companies outside EU or countries from the Agreement on the European Economic Area will be able to purchase agricultural land if they meet the requirements regarding the domiciles – i.e. this part of the Act does not concern only persons from the EU but each person who resided in Bulgaria for more than 5 years.

The second ambiguity: there is no firm definition on how to prove the residency and the domiciles, as the currently established practices are not unified everywhere in Bulgaria.

The third ambiguity: tt seems that a 4-year old minor with Bulgarian citizenship cannot purchase land because the he/she does not meet the 5-year legal residence requirement.

The fourth ambiguity: is it enough for a Bulgarian legal entity simply to have been registered 5 years ago in order to be able to purchase agricultural land without further investigating whether the company’s owners are from the EU? Or is fulfilling the 5-year requirement not enough? Resolving this issue is crucial due to the controversial practices that the Notaries apply, as our law office has already faced this type of practice. The rationale behind this controversy is as follows:

Art. 3.c.2 sets the following requirement: “Legal persons that were registered in Bulgaria less than 5 years ago can acquire ownership right over agricultural lands in case the company shareholders, the members of the association or the founders of a joint stock company have resided or have been established in the Republic of Bulgaria for more than 5 years. It would mean that a company registered more than 5 years ago meets this requirement and it does not matter who is or are the owner/s of this company. At the same time art. 3.7. states that: “Companies whose associates or shareholders are foreigners, except for the physical entities who are citizens of EU or the EEA area, cannot acquire ownership right over land, I.e. in case the owners of the Bulgarian company are not from the EU or the EEA it means that such company cannot purchase agricultural land. As you may see those two texts contradict one another and it is quite understandable why the Notaries apply them differently.

Fifth ambiguity: does this prohibition applies to non-profit organizations?

As you may see five ambiguities in regards to one simple question “Who can purchase agricultural land in Bulgaria” are too much. That is why we hope that our legislation will be improved as soon as possible.
Our legal office’ opinion is that this part of the texts is anti-constitutional and we expect the Constitutional Court will pronounce them as such.

If you need assistance or advice when planning to purchase land in Bulgaria, please get in touch with us – we will be happy to help!