Studying the risks before buying real estate in Bulgaria

Bulgaria is leading the list of popular destinations for real estate purchases by Russian citizens.

Bulgaria ranks first on the list of popular places for Russian citizens to buyreal estate. However, despite this, purchasing and owning property here can become a real headache. The International Property Rights Alliance has placed Bulgaria in 58th place in its property rights protection index, alongside Ghana, India, China, and Turkey. Meanwhile, other countries like Finland, Germany, and France are ahead.

Local residents have a saying, "Guarantee - France," which confirms the preference of risk-taking individuals to invest in real estate there. However, this does not mean that buying property in Bulgaria is a risky business. People have access to numerous advantages: resort vacations and affordable prices.

Mistakes and difficulties when purchasing real estate in Bulgaria

.ru offers a list of the most common mistakes, problems, and "pitfalls." One of them is buying without the help of professionals. People often trust their own judgment.

Acquiring property in Bulgaria: how to avoid troubles

Buying property on the coast of Bulgaria can turn into a real nightmare if certain rules are not followed. The first thing to remember is that you shouldn't take risks and purchase property without personally inspecting the site. It's better to spend a little extra on a ticket and go on a familiarization trip; this will help avoid unpleasant surprises and may ultimately save you money in the long run.

Risks associated with purchasing off-plan real estate

It is important to consider the potential risks associated with purchasing off-plan real estate. There is a case where a buyer entered into a preliminary agreement to purchase a complex that was supposed to be completed by a certain date. However, by the time the contract ended in 2014, the residential complex had not been completed, and the developer went bankrupt.

To avoid such situations, it is important to check for the developer's liability in the contract for failing to meet construction deadlines and other obligations.

Choosing a reliable developer

If you still need to purchase off-plan property, it is essential to be particularly careful and research the developer's reputation: how long they have been in the market, how many successful projects they have completed, and whether they have any unfinished constructions. It is also helpful to read reviews online and talk to people who have already bought property from this developer.

Be vigilant and don't forget about your safety.

In any case, it's important to stay vigilant and keep your own safety in mind when dealing with real estate in Bulgaria.

• Do not make real estate transactions through agencies that you are not familiar with.
• Check the legal validity of transactions and documents.
• Do not transfer money to the accounts of unknown individuals.

Following these rules will help you avoid unpleasant situations and make the process of purchasing real estate in Bulgaria successful and enjoyable.

It's best to consult with lawyers who can provide even more useful information beyond what is available in the official registries.

In Bulgaria, all disputes with the developer must be resolved within five years from the date of signing the preliminary contract, as this is the statute of limitations established by law.

It is also worth remembering that there are no companies in Bulgaria that provide insurance for properties during the construction phase. Because of this, it is not advisable to pay the full amount before the construction is completed.

Payment in installments

In most European countries, when purchasing real estate at the initial stage of construction, the money is transferred in stages as the construction progresses. 100% of the amount is paid only when the property is fully completed, commissioned, and has all the necessary documents confirming its readiness.

In Bulgaria, it is common for 100% of the funds to be transferred immediately after signing the purchase agreement. At the same time, the property may not be ready for handover, and in the event of the developer's bankruptcy, it could remain unfinished for an indefinite period. This can lead to various issues.

Buying real estate in Bulgaria requires special caution to avoid losing money and legal issues. Signing a preliminary contract does not provide full guarantees, and having it notarized may incur additional costs. Cash payments are limited, and all transactions over 15,000 leva must be conducted exclusively through bank transfer, otherwise, there is a risk of a fine from the government.

Important steps when buying real estate:

• Thorough inspection of the property:Check for any debts and encumbrances to avoid future problems.
• Hiring experienced specialists:Contact lawyers and notaries for a complete legal review of the property.
• Features in construction:In the contract, specify the responsibility of the developer if the property is not free from mortgage encumbrances at the time of the transaction.

These measures will help you avoid legal complications and provide protection against financial risks when dealing with real estate in Bulgaria.

Risks when buying real estate in Bulgaria

Purchasing property comes with a number of risks, one of which is the potential presence of mortgage encumbrances. Real estate expert Teodora Petkova warns that even when buying a new building, the developer may sell an apartment that is already encumbered by a mortgage. Some developers quickly resolve such encumbrances, but there are also those who may neglect this issue. If the buyer is unaware of such nuances and doesn't know where to turn, the situation can become extremely unpleasant.

Financial risks and unforeseen burdens

The financial director of Prime Property BG, Todor Stoyanov, talks about cases where, after signing a preliminary contract, the buyer starts making payments while the seller takes out a loan from the bank, using the apartment as collateral. As a result, upon completing the payments, the buyer may find that they do not have ownership rights due to the lien on the property.

The importance of document verification and notaries

A notary cannot guarantee that there are no debts or encumbrances on the property. Their capabilities are limited to accessing the real estate registry, where claims or mortgages can be checked. A competent notary will always require the seller to provide documents regarding the presence or absence of debts. However, there may be debts to private individuals, and only a lawyer, by conducting a check in the district or circuit court, will be able to identify potential issues.

Consider the types of real estate.

It's important to remember that in Bulgaria, "atelier" - working studios or offices in residential buildings - are often sold. Such premises are classified as non-residential, which results in higher taxes for their owners. Only owners of residential properties are entitled to a multiple-entry visa to the country. To find out if a property is classified as residential, one must refer to the notarial deed, which should indicate "for living."

The importance of checking infrastructure and utilities

It is also important to consider that in Bulgaria, central heating is often absent, especially in resort complexes where many come only for vacation. This also applies to regular residential buildings in coastal towns.

Conclusions

Therefore, when purchasing real estate in Bulgaria, it is important to be informed about potential risks and to carefully check all documents to avoid unpleasant surprises in the future.

Heating and ventilation

In the Bulgarian city of Varna, central heating is only available in a small number of neighborhoods. When planning a trip to Bulgaria not only in the summer but also in the winter, it is important to consider the availability of heating in the complexes or to think about the possibility of heating the apartment independently. Electric heaters can be a good option, but during the winter period, strong winds can lead to power line outages. A fireplace with a stove is also not always safe due to the risk of fire. Some complexes prohibit the installation of a fireplace because of its weight, which can damage the building's load-bearing structures. Apartments without heating that are left vacant for the entire winter season are prone to mold growth, so it is important to have a ventilation system.

Features of calculating the area of housing

It is important to remember that in Bulgaria, the concept of living space is calculated somewhat differently than in other countries. All areas, including walls, balconies, and common spaces, are included in the total living area. Therefore, when choosing accommodation, tourists should keep this market feature in mind.

Buying real estate in Bulgaria: nuances

When paying a tax of 3% upon the transfer of ownership rights, the buyer can save 750 euros, excluding other fees. However, this strategy is not without its drawbacks. For example, in the event of a deal falling through for any reason, the buyer is only entitled to claim the official amount. Additionally, upon subsequent resale, there will be a significant capital gains tax to pay. There are also cases of dishonest sellers who insist on lowering the price in the notarial contract, and if the buyer refuses, they threaten not to return the deposit. In such situations, the buyer has to either agree to the terms or go to court. However, legal proceedings can drag on for a long time.

Problems of acquiring housing in Bulgaria

Most Russians choose to purchase apartments in Bulgaria, located in residential resort complexes. When signing a contract with a management company, owners are required to hand over the keys to their apartments for emergency situations, such as accidents and other mishaps. Some dishonest management companies, having access to the keys, rent out the apartments without the owners' knowledge in their absence. To prevent such situations, it is recommended to install surveillance cameras with remote access and alarms in the property. If violations are detected, one should contact the police, which will result in the management company being fined.

• Management companies unjustifiably increase service fees without prior notification to the residents.
• Ban on carrying out legal repairs.
• The management company can change the locks on common doors in the absence of residents.

In case of dissatisfaction with the service, there is always the option to change the management company, provided that the majority of the owners agree.

Checking real estate for heirs

It is important to conduct a thorough check for potential heirs. There is a case where a Russian citizen purchased property that belonged to three deceased individuals. Subsequently, heirs of one of them emerged, claiming a share of the property.

Don't buy without the help of professionals.

Often, buyers do not turn to realtors but trust their acquaintances who have already purchased property in Bulgaria. Teodora Petkova, the director of the real estateagency "Mir," considers this a big mistake: "You can always ask your acquaintances how they bought their property, what the procedure was, or inquire about the area where they purchased. However, foreign citizens are not aware of all the laws, nuances, and procedures in Bulgaria." When buying property in Bulgaria, it is always advisable to contact local agencies or their representatives in Russia.

Don't reach out to multiple agencies at once.

Many buyers reach out to multiple agencies at once (sometimes up to 20 companies simultaneously), believing that this will speed up the process of purchasing a home and allow them to receive the maximum number of offers. Theodora Petkova does not recommend this approach, as buyers end up with too much information, making it difficult for them to make a choice and understand the pros and cons of each property.

Don't buy without seeing it in person.

Some Russians choose to buy property in Bulgaria without leaving their homeland, relying solely on photos and descriptions. They make a deposit, and upon arriving in Bulgaria, the apartment turns out to be completely different from what they imagined. They are unable to get the deposit back and are left with the choice of either purchasing the undesirable property or losing their money. To avoid such a situation, it is essential not to buyreal estate without seeing it in person. It's always better to spend an extra 350-370 euros on a flight to Bulgaria than to buy a pig in a poke.

Remember the risks of off-plan.

Buying off-plan real estate in Bulgaria is a risky endeavor, as developers often face financial issues or go bankrupt, and projects can be frozen for years. If possible, it's better not to take risks and choose property on the secondary market, as there are plenty of options available. However, if you still need to buy a property during the construction phase, you should be cautious. Some people ask the construction company to provide guarantee letters confirming that the construction will be completed, but in practice, such documents are not helpful. It's better to check the developer's reputation—find out how many years they have been in the market, how many successful projects they have completed, and how many have turned into long-term constructions; read reviews online; and ask acquaintances who have purchased property from this developer. Information about the company (details about the founder, charter, annual reports, existing problems) can be found on the commercial register's website.