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