Legal Advice

In the last 10 years, the country has experienced macroeconomic stability and strong growth. The Bulgarian government is committed to economic reform and responsible fiscal planning. Low inflation and steady progress on structural reforms have greatly improved the Bulgarian business environment; Bulgaria has averaged 4% in economic growth since 2000 and has begun to attract significant amounts of foreign investment.

Buying an ‘off plan’ apartment in Bulgaria is essentially the same as buying in the UK and means reserving a property on a new development before the property is completed, often before construction has started. Buying ‘off-plan’ can prove a fantastic investment and prices are extremely competitive at this early stage as potential investors only have floor plans and artist impressions of the finished development to view, and developers are keen to sell to minimise risk and to provide the project with some forward momentum.

You then have the option of selling straight away upon completion for a profit, or you can hold on to your property for further rental/ capital growth whilst having a great holiday destination to visit. Holding on to the property for a longer-term means you can benefit from Bulgaria's accession to the EU in 2007 which has led to considerable appreciation throughout the Bulgarian real estate market, with holiday apartments expected to continue leading the way and appreciating the most in value.

'Off Plan' purchases have provided spectacular returns for hundreds of people over the last couple of years. The real key to why buying 'Off Plan' can prove such a good investment lies in the fact that in many cases you only have to pay initially a deposit as low as between 10% - 25% of the purchase price and then nothing until various stages of the project are completed.

The lawyers we associate ourselves with are independent and act solely on their clients (your!) behalf. All lawyers are English & Bulgarian speaking and have previously handled numerous investors - including under the authority of Power of Attorney. We can offer this full legal service which according to Bulgarian Property Law are required and enough to protect your interests in the best possible way.

Legalities
According to the Bulgarian law, embodied in the Constitution of the Republic of Bulgaria, the Property Act and the Foreign Investments Act, foreign physical and also juridical persons such as companies, cannot acquire the ownership of land in the country. However, they are permitted to acquire the ownership of houses or flats and limited ownership rights with regard to every kind of immovable property situated in Bulgaria. Under the category of 'limited ownership' Bulgarian law includes the rights of use (usus), the right to build a house on a piece of land (superficie) and the servitudes (e.g. the right of access to the street through another person's piece of land). An old limitation on purchases by foreign persons of property within 'border areas' was removed in May 2004.

Loosely interpreted foreigners can buy buildings, have the right to build and other land related rights such as the right of use and passage, but cannot buy the land (until the year 2014, when this rule will change). You will have the right to use the land (in proportion to your ownership of the building on which it stands) so the lack of outright ownership of the land is a fairly academic point.

Foreigners can even now acquire land by setting up a Bulgarian registered company. If you are thinking of buying a number of apartments this might be worth considering, as the taxation in Bulgaria may well be more favorable than at home (Bulgarian corporate tax for 2005 was 15%) - but you should take professional advice before making any decision.

Some Brief Information On Forming A Company (if you need to)
Private Limited Company (a limited liability company) - "OOD" - is a commercial company with share capital owned by its members whose liability is limited to the amount of the capital subscribed. A private limited liability company may be founded by one or more persons, including foreign natural or legal persons. The minimum foundation capital is Leva 5,000 divided into shares with nominal value of Leva 10 each and at least 70% of the capital must be paid up on foundation. Contributions to the foundation capital may be paid in cash or in kind. The statutory bodies of the private limited companies are the general meeting of shareholders, which must be held at least once a year, and the managing director or board of directors.

Formation and Registration of a Company
A company is considered incorporated as from the date of its registration into the commercial register of the relevant district court. The application for registration furnished with certain documents required by the law shall be filed with the court by the elected managing body.

Private Limited Company - in order to be registered in a commercial register, a private limited company must:
• produce its articles of association (Memorandum of Association -
in the case of a single-person private limited company), the Law on
Commerce stipulates the obligatory provisions of the articles.
• have appointed a managing director (or board of directors).
• have paid up at least 70% of its authorised capital, including at
least one-third of each member's contribution (in round numbers
just over L1000!).

This information together with details of the management, etc., is recorded in the commercial register and promulgated in the State Gazette.

Don't worry! It's not as complex as it seems and we and our associates in Bulgaria can help you at each step of the way.