Very often foreign investors make joint venture companies. This type of investment has to be specially analyzed by a specialized council, solicitor or barrister. Ask your lawyer a lot of questions and never hesitate to do so.
What is the problem? I will give you a an example with the fictive Mr. And Mrs. Smith.
Mister Smith with his wife Mrs Smith own a beautiful house and a green garden in the Bulgarian countryside. In order to do that deal they have incorporated a Bulgarian company (Smith Real Estate LTD). Mr Smith has a friend his name is Mr. Peterson. Both of them are very close friends. They decide to buy a new property together near the Sea.
How they have to proceed?
The first option is the use the established company of Mister Smith who will be the buyer in the deal.
In fact Mr. Smith and Mrs. Smith do not possess directly their house. They possess only shares in their company.And their firm is the owner of the house and the plot of land.
If their company buys the new plot of land they have to solve the shares property problem.
Mr. and Mrs. Smith have to transfer a fraction of their shares to Mr. Peterson. Otherwise he will not have any legal document conferring him any property rights for his purchase.
But doing so there will be Assets and Shares confusion. Mr Peterson will own shares of the company Smith Real Estate.
For example he will own 30% of the total shares of the company Smith Real Estate LTD. But legally that means that he owns 30 % of all the assets of the firm (the house of the family Smith and the new plots).
That is a problem and to solve this problem a better solutions is to create a joint venture company for the new deal. That may sound complicated but it means to start a new Bulgarian company for the new deal.
Ask your Bulgarian legal counsel before making any deal. Ask specific questions to your barrister or solicitor and explain in detail your situation. Do not just say "I want to do a real estate deal". On the other hand you will divide the costs for the new company and the solution is cost effective.
Real estate brokers in Bulgaria. Do you need to be assisted by a real estate agency in Bulgaria?
The term real estate broker according its definition describes a party who acts as an intermediary between sellers and buyers of real estate and attempts to find sellers who wish to sell and buyers who wish to buy "Real estate broker", Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/wiki/Real_estate_broker, (accessed August 17, 2009).
It is important to know that in Bulgaria the Real brokers activity is not regulated by a special law. The relation is based on the Bulgarian Law of obligations (ЗЗД). Logically a person or firm is not required to have a license in order to receive remuneration for services rendered as a real estate broker. There are no state requirements and standards for professional ability and qualification of the real estate brokers. That leads that the spectrum of the real estate agencies in Bulgaria is very large from the beginners to the well established agencies. But you need to know is that the personal relation to your real estate broker is very important. You can work with a little firm but still establish a trustworthy relationship. Now in Bulgaria the crisis leads to a considerable reduction of the personal of all the real estate agencies. What really matters is their contacts what can the really offer to you or how they can help you to sell your property.
So the point is:
Do you need to be assisted by a Real estate agency?
Answer
You are not legally obliged to be assisted by a real estate firm in order to sale purchase a real estate property. But it is a practical necessity. You need the service of a good agency if you want to find the place of your dreams.
As a barrister i would give an advice to find a lawyer before finding a real estate agency or as soon as reasonably possible. In fact the interests of the real estate agency is to sell, the interest of the barrister is to protect his client's interests.
It is important to know that in Bulgaria the Real brokers activity is not regulated by a special law. The relation is based on the Bulgarian Law of obligations (ЗЗД). Logically a person or firm is not required to have a license in order to receive remuneration for services rendered as a real estate broker. There are no state requirements and standards for professional ability and qualification of the real estate brokers. That leads that the spectrum of the real estate agencies in Bulgaria is very large from the beginners to the well established agencies. But you need to know is that the personal relation to your real estate broker is very important. You can work with a little firm but still establish a trustworthy relationship. Now in Bulgaria the crisis leads to a considerable reduction of the personal of all the real estate agencies. What really matters is their contacts what can the really offer to you or how they can help you to sell your property.
So the point is:
Do you need to be assisted by a Real estate agency?
Answer
You are not legally obliged to be assisted by a real estate firm in order to sale purchase a real estate property. But it is a practical necessity. You need the service of a good agency if you want to find the place of your dreams.
As a barrister i would give an advice to find a lawyer before finding a real estate agency or as soon as reasonably possible. In fact the interests of the real estate agency is to sell, the interest of the barrister is to protect his client's interests.
Transfer of real estate property in Bulgaria
This is a minimum knowledge that you need to know very well when you negotiate real estate matters in Bulgaria.The approach is very simplistic and consider it as a minimum legal knowledge for a foreign real estate owner in Bulgaria. This information is useful when you negotiate any transfer of real estate in Bulgaria.
There are two different set of rules that apply in this case. The first set of rules concerns the Bulgarian corporate law and the second set of rules concern the Bulgarian Real Estate Law.
Imagine a situation when you need to buy a real estate in Bulgaria and the owner is another foreigner just like you who have bought a real estate by his established Bulgarian company.
You have the choice to buy his shares of his own company or to buy the real estate which is an asset in this company. In both cases very formalistic procedures have to be followed because the corporate law and real estate law are very formalistic
1. The Bulgarian corporate law
The Bulgarian corporate law is a formalistic law.
If you transfer shares there have to be three steps
1.1. A signed contract with notary certified signatures
1.2. A decision of the company shareholders with majority of 3/4.
1.3. The decision has to be registered in a public register
Normally you have to be assisted by a lawyer in this steps. A legal representation by a barrister is not necessary as this is an administrative procedure.
2. The real estate law
The real estate law is very formalistic too. All you need to know is that to transfer a real estate property you need a title deed signed at a Public Notary. The preliminary contract is a guarantee for the signature of preliminary contract.
3. The difference between the corporate law and the real estate law
The difference is very straightforward.
When you buy a company you buy everything within, you buy its assets and liabilities. Imagine you buy a company with an asset a country house, but the same company has a mortgage loan. If you buy the company you buy the company and the loan. So the price may be 1 $ if the loan is as big as the value of the house.
4. Special cases
Sometimes the first option is not possible. Imagine that the company holds two houses. You need to buy only one. If you buy 50% of the shares, you will have 50% of the two houses which you may not want.
5. The good use of the two options
Sometimes it is useful to use a mix of the two options. Imagine three persons want to buy a big plot of land. It is possible to incorporate a joint venture company with only this task. In this case every shareholder will have a fraction of the property of the land. As the plot is bigger the future resell is possible. It is also possible to divide the plots in several plots and to transfer the plots to another companies. It is possible also when the construction is finished to transfer the buildings from the company to the physical persons. Analyzing all this questions it is necessary to bear in mind the tax considerations especially the VAT Tax. Ask your solicitor or barrister for those consideration to obtain the best legal advice for your investment
There are two different set of rules that apply in this case. The first set of rules concerns the Bulgarian corporate law and the second set of rules concern the Bulgarian Real Estate Law.
Imagine a situation when you need to buy a real estate in Bulgaria and the owner is another foreigner just like you who have bought a real estate by his established Bulgarian company.
You have the choice to buy his shares of his own company or to buy the real estate which is an asset in this company. In both cases very formalistic procedures have to be followed because the corporate law and real estate law are very formalistic
1. The Bulgarian corporate law
The Bulgarian corporate law is a formalistic law.
If you transfer shares there have to be three steps
1.1. A signed contract with notary certified signatures
1.2. A decision of the company shareholders with majority of 3/4.
1.3. The decision has to be registered in a public register
Normally you have to be assisted by a lawyer in this steps. A legal representation by a barrister is not necessary as this is an administrative procedure.
2. The real estate law
The real estate law is very formalistic too. All you need to know is that to transfer a real estate property you need a title deed signed at a Public Notary. The preliminary contract is a guarantee for the signature of preliminary contract.
3. The difference between the corporate law and the real estate law
The difference is very straightforward.
When you buy a company you buy everything within, you buy its assets and liabilities. Imagine you buy a company with an asset a country house, but the same company has a mortgage loan. If you buy the company you buy the company and the loan. So the price may be 1 $ if the loan is as big as the value of the house.
4. Special cases
Sometimes the first option is not possible. Imagine that the company holds two houses. You need to buy only one. If you buy 50% of the shares, you will have 50% of the two houses which you may not want.
5. The good use of the two options
Sometimes it is useful to use a mix of the two options. Imagine three persons want to buy a big plot of land. It is possible to incorporate a joint venture company with only this task. In this case every shareholder will have a fraction of the property of the land. As the plot is bigger the future resell is possible. It is also possible to divide the plots in several plots and to transfer the plots to another companies. It is possible also when the construction is finished to transfer the buildings from the company to the physical persons. Analyzing all this questions it is necessary to bear in mind the tax considerations especially the VAT Tax. Ask your solicitor or barrister for those consideration to obtain the best legal advice for your investment