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Ownership of Real Estate Bulgaria and Construction

Legislative framework
The major legislative acts governing the real estate Bulgaria and real estate transactions in Bulgaria are the Bulgarian Constitution, The Property Act, The State Property Act, The Municipal Property Act, The Civil Procedure Code, The Encouragement of Investments Act, The Territorial Development Act and The Contracts and Obligations Act.
Direct acquisition of real estate Bulgaria by a foreign company
In Bulgaria foreign companies can directly acquire buildings, premises within a building and limited property rights (e.g., a construction right, right of use), but not property on land.

Indirect acquisition of real estate Bulgaria by a foreign company
Indirectly, foreign companies can acquire any type of real estate Bulgaria, including land, by registering a Bulgarian company to act as acquirer. It is possible for such a company to be 100% owned by the foreign investor.
The transaction
The general rule under Bulgarian law is that transactions involving real estate (e.g. a purchase, exchange, etc.) should be executed by a notary deed performed before a registered notary in the region where the real estate is located. After execution of the deed the notary is obliged, by law, to register the transaction in the Real Estate Registry in order to make the ownership title of the acquirer defendable against third parties.

There are also special rules and procedures governing the acquisition of real estate Bulgaria arising from enforcement, insolvency and similar procedures, and for in-kind contributions of real estate Bulgaria.
Resolution of the competent corporate body approving the acquisition of the targeted real estate Bulgaria.

Where a foreign company indirectly acquires real estate Bulgaria through a Bulgarian subsidiary company it should ensure that the following document is presented:

· - Resolution of the competent corporate body of the Bulgarian subsidiary approving the acquisition of the targeted real estate

Fe Fee for registration in the Real Estate Bulgaria Register – 0.1% of the higher of the purchasing price agreed between the parties, or the tax valuation made by the tax office prior to the transaction.

Title review (Real estate Bulgaria legal due diligence)
Before purchasing real estate Bulgaria it is recommended that the buyer ensure verification of the ownership status of the targeted real estate Bulgaria, including that there is/are:

a clean, valid and marketable ownership title held by seller. The seller has to be, and his predecessors should have been the valid owner of the targeted real estate Bulgaria in order to avoid any risk of rescinding or annulment of the transaction.

The buyer should be fully aware as to whether there are any registered liens and/or encumbrances over the targeted real estate Bulgaria, e.g., mortgages, interlocutory injunctions, going-concern pledges, limited property rights established in favor of third parties.

if there are registered rental or lease agreements over the targeted real estateBulgaria then the buyer shall be bound by them until the expiration of their term;

Depending on the type, usage, location and zoning of the real estate Bulgaria and the complexity of the transaction zoning, construction and business feasibility studies and a business valuation might also be considered by the buyer.

Acquisition of marketable state owned real estateBulgaria
Marketable state owned real estate Bulgaria can be acquired through a purchase transaction or through its exchange with other real estate Bulgaria owned by the foreign investor or its Bulgarian subsidiary. The person authorized to dispose of marketable state owned real estate Bulgaria is the Regional Governor of the administrative region where the property is located.

The contract has to be registered at the Real Estate Bulgaria Registry in order to make the ownership title of the acquirer defendable against third parties.

Acquisition of marketable municipality owned real estate Bulgaria
The person entitled to conclude a contract for sale or exchange of marketable municipal real estate Bulgaria is the Mayor of the municipality in which the property is located.

The contract has to beregistered at the Real Estate Bulgaria Registry in order to be opposable to third parties.

The contract has to be registered at the Real Estate Bulgaria Registry in order to make the ownership title of the acquirer defendable against third parties.

Real estate Bulgaria transactions of registered businesses are normally subject to VAT, except for transfer of land and rights in rem with respect to land, and letting out residential properties.

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