Irish investors go bankrupt in Bulgaria

A number of Irish owners of apartments in the Sunny Victory apartment complex in the Bulgarian resort town of Sunny Beach have been left angry, bewildered and with serious financial losses. The story is an unusual one. The building had no problems and construction was completed, apparently without any major complications. The owners have received their apartments and the complex is being successfully managed with good occupancy rates. The apartments were paid in full, and the owners received unencumbered titles - at least they thought so.

The Sunny Victory complex has been sold since 2006, when Irish investors were significant buyers of Bulgarian real estate on the coast. Construction was completed, apparently without problems, in 2008. The complex''is popular with visitors, offering comfortable apartments, good facilities and a convenient location. It is in the quieter northern part of the resort town, within walking distance of the beach and lively promenade. The owners were generally happy with their purchases.

In late 2015, however, the 31 owners learned that their apartments were subject to a lien executed by Tokuda Bank of Japan. The bank claimed it owned the land on which the apartments were built, and if the owners did not pay the arrears, the apartments would be auctioned off.

Local experts explain it as a "perfect storm." When representatives of the buyers went to the land registry looking for liens on the land on which the building was constructed, they did not''found nothing because the Bulgarian land registry could not cope with so many transactions taking place at the time. It is estimated that up to 100,000 properties were sold per year between 2002 and 2006.

The developer Sunny VIP Tours obtained land loans to finance construction, but did not disclose this at the closing of the transactions. According to the buyers' representatives, their clients purchased the properties debt-free when''This is not actually the case. Some owners reject this explanation and argue that those who had better or less conflicted legal representation were able to get their apartments debt-free.

So why did the bank only call in its loans in 2015? The developer did not default on payments until 2012, and once that happened, the process of repayment through the Bulgarian legal system pretty much stops.

The Bank has spent these intervening years to gain legal access to the block of apartments.

As if that wasn't enough, many of the affected owners didn't even know that their apartments had been described. The bank is required to send the notice in respect of the affected apartments and not the home address of the owners. It is alleged that wo''In many cases the bank did not even do this. Some received a registered letter from Tanya Madzharova, a private bailiff in the city of Burgas, about the 'systematic qualification of the property to be pledged' followed by pages of Bulgarian legal information.

Bank Tokuda declined to comment on the case despite being offered the opportunity. If you believe you have been defrauded in a Bulgarian real estate transaction, you should contact the Bulgarian prosecutor's office at prb.bg/en/contacts.

Diarmaid Condon is a real estate writer and independent overseas real estate consultant, [email protected]