The Building and Construction Sector
Bulgaria does not restrict foreign ownership of buildings but does impose restrictions on foreign ownership of land. Therefore for foreigners wishing to own real estate, including the land it occupies, the only available route is through the establishment of a Bulgarian Company which can freely purchase Bulgarian real estate and land. There are no restrictions on the foreign ownership of shares or quotas in Bulgarian Companies.
Whilst Bulgaria joined the European Union in 2007, it is unlikely that the aforementioned law will change until 2014, therefore it is essential that real estate transactions are dealt with in a manner that secures title of ownership for the foreign buyer.
The OCRA Worldwide team based in the capital, Sofia, are able to deal with all aspects of property investment, including:-
The most common safeguard for creditors, according to the Bulgarian legislation, along with the guarantee and the pledge is the mortgage of a real estate. The mortgage is a safeguard giving the creditor the right to settle his receivables by disposing of the real estate and is a serious burden over the real estate.
Subject to mortgaging could be only real estates, buildings, land or ships. There are two different types of mortgage, according to the Bulgarian legislation - contract mortgage and mortgage given by the law. In general a mortgage is made in the form of a notary deed or on the grounds of certain, legally defined documents, but it is obligatory to be registered in the respectful Real Estate Register. The general term of a mortgage is 10 (ten) years.
The most specific detail in contract mortgages is a contract where one of the parties is always an owner of the real estate, while the other is a creditor.
The mortgage contract must be made in the form of a notary deed before every public notary. It is not obligatory to do this before the notary in whose region is situated the real estate.
Once made, the mortgage contract must be registered with the Real Estate Register, where the real estate is situated. The filing with the Real Estate Register gives the right to the creditor to dispose of the real estate in case the debtor does not fulfill the main obligation in time.
There could be several mortgages over one real estate and it is the time of the filing, which is important, and matters in disputes for disposal of the real estate. The creditor in whose favour was made the preceding filing shall be settled before the creditor with the subsequent filing.
Mortgage Given by the Law is a special guarantee and gives protection for certain types of creditors and gives them the right to establish and register such a mortgage just by filing a request with the respective Real Estate Register and without the permission of the owner of the real estate.
Generally the mortgage expires after the obligation is settled and the creditor applies for deregistration of the mortgage. After a period 10 years the mortgage can be deregistered by any interested party.
Building and construction activity may be performed by any person or legal entity. Companies with their main scope of activity in the building and construction sector do not have to apply for any specific registration or license. There are no restriction or preferences with respect to the taxation of such companies.
Every territory has its main designation, which is determined with organizational territory schemes and plans. According to them, there are the following types of territory:
The detailed organisational territory plan regulate streets, district areas and real estates. The borders of a regulated real estate could be changed only with a regulation plan and the agreement of the owners of the estate.
The law regulates the construction rights. The owner of land may grant to another person the right to construct a building on his land, whereby the other person becomes the owner of the building. It is also possible that the owner transfer independently from the land the ownership of an already existing building. The owner of the building may use the land to the extent that is necessary for the use of the building.
According to the Bulgarian legislation, construction permission is required for the realization of a building project. The construction permission is issued by the chief municipal architect or by the district governor. It is issued for the whole procedure of building. Permission is not required for painting buildings, internal changes and other procedures, which do not change the construction of the building.
The construction permit is issued to the name of the owner of the real estate or to the name of the person who has the right to build in the plot. A proven technical investment project is required for issuing construction permit. When several persons own the real estate, the agreement of all of them is required for issuing the permit.
The construction permit is issued 7 days after filing an application and approval of the investment project. The building process must start 3 years or the rough building must be finished 5 years after permission is obtained otherwise the construction permit will be invalidated because of the expiry period.
The municipal authorities refuse permission and granted permit is invalidated when the building contradicts with the city regulation plan or the building does not follow the law requirements.
The construction process shall be supervised by a licensed construction supervisor. The supervisor controls the legitimate initiation of the construction, the exhaustiveness and correct preparation of the acts and protocols, adherence to the approved investment project and the law requirements, the safety of the construction work. He also appraises the building with respect to the issuance of utilization permit.
When the construction process is finished permission for utilising the building must be obtained. The utilisation permit is issued by National Building Control office.
The Cadastre is the national system for gathering, treatment, keeping and rendering of data for quantity and quality characteristics of territory with the ground and underground objects.
In the Cadastre, plans are contained data for the location, borders and sizes of real estates, stockyards and buildings, together with the lasting plants and all underground equipment (tunnels, passable collectors, channels, telephone and communicational cables, steam, heat, gas and electricity conductors) and the major technical parameters.
Building and Regulation Plan /BRP/ - for each district s preliminary BRP is done and after its confirmation and coming in force, at necessity is performed CBPP.
BPP-Cadastre building and profile plan - it is composed in the cases when for the building is necessary to be done deviations from the rules or to be established connected building in more than two parcels.
In the interest of the buyer of building parcel is preliminary to be done major investigation. The investigations should be mostly in two directions:
Possibilities for parcel usage for building - it is necessary to be checked the town-planning decisions and the acting building and regulation plans.
The property price at the moment and the market interest - competent information through the companies processing deals with real estates.
To owner desired to build is issued from the respective town council a projecting visa in case there are effective for the respective district BRP and CBPP.
Idea project - the base on which is composed the work project. Purpose: to form the total view of the building - entrances number and stages, location of premises, stairs and elevator cages, garages, shops and etc.
Work project - the final phase in projecting of buildings and equipment. There are anticipated parts: architecture, construction and technology, electricity and water-supply installation, heating and ventilation and others.
The building right is independent property right at which one /or several/ persons acquires separately from the land the ownership on existing building or possibility to build on foreign land. Building right may be established from the owner /private person, municipality, state / and without land participation /parcel/ and only for building of specific living place or object /studio, garage and others/. In this case the parcel and all rights on it are kept by the person that has established the building right.
In the notarial act is registered the square meters of the living place and the percentage from the ideal parts of the building.
The non-correspondence comes from the circumstance that in 1991 was accepted new Order for specification of the basic market prices of real estates. Before this the real estate area was only from the area of terraces, lodges and verandas. According article 30 paragraph 2 of this Order, "to the built area of the living place is summed the whole area of terraces and etc, measured on their external constructive borders."
The constative ACT standard 15 is created according Application ¹1 from the Order ¹6 for state acceptance and permission for the usage of buildings in Bulgaria. This is document between the builder and the investor and if the object is built through order to economic organization ot only from the investor, if the object is performed in economic way.
After consignment of ACT 15 the investor has the whole responsibility for keeping and maintenance in regularity of the object till the consignment of Protocol according standard 16 which is the document of the accepting committee of the object.
This is a document with which is completed the activity between the investor, the projector and the builder. Protocol according standard 16 is signed between the building organization, built the object, the investor and the accepting complex commission at specified level of building completing, regulated by the legislative order.
It is obligatory to be done the following building-montage activities:
The moment when the building right is transformed to ownership of specified real estate is the construction of the building at rough building level.
The charges for transferring of real estate built at rough building level are approximately 60% from those that are given if the object is completed, i.e. has license for legal usage issued on the basis of Protocol according standard 16 or report from the executing independent building control.
The ownership of real estate in building may be transferred, but at level rough building and much favorable from economic point of view compared with ownership transferring at building completing.
The building is illegal when includes activities that contradict to law requirements independent with they are conscious or not, whether are provoked from urgent necessity of the owner or from non-application of the Law on territorial structure.
According this law illegal are the buildings when they are executed without verified project, without permission or in deviation from the building documents.
A bespoke 'offshore' solution can be complex and requires careful planning and execution. We
therefore encourage our clients to contact us directly, without obligation.
While all of our consultants in our offices provide a Free Initial Consultation, the
office and consultant listed below has particular expertise in this area and will gladly assist with advice
on how to approach your unique challenge.
Alternatively, to select one of our multilingual offices, click here for a list of our office contact details.
Languages spoken in this office: English, Albanian, French, Italian, German, Portuguese and Arabic
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