Bulgaria

The Essentials of Buying Off-Plan Property In Bulgaria

⋅ January 15, 2008 ⋅  Email this post ⋅  Print this page ⋅ Post a comment

The purchase of off-plan property in Bulgaria for nearly all investors and property buyers is a very rewarding experience however the process does contain some specific features and possible legal and financial risks to the buyer which the property agents and legal advisers pay special attention to.

In general when you have made your decision to invest in a specific off-plan property and development in Bulgaria and then agree to sign the preliminary contract with the developer the development and project you have chosen has not yet been completed. Depending on the development and project it may be that the project has yet to be started but possesses all the permissions to begin, or that the project has started and is at some level of construction, or the project is nearing completion or in fact has completed. The buying and selling of off-plan properties possesses a number advantages to both the buyer and the developer. For the buyer the purchasing of an off-plan property offers opportunity of acquiring a quality property at a reduced cost. For the developer the selling of off-plan properties reduces the overall costs of the project since the project is essentially financed by the buyers and not through the more traditional but expensive method of bank financing.
Due to this construction financing relationship between the buyers and the off-plan developer in which the buyers of the apartments or properties within each development are in fact acting as the primary financing the project from beginning to completion specific safeguards must exist within the preliminary contract. These specific safeguards within the preliminary contract should insure that the buyer’s investment is protected from construction and delivery delays which result from the developers management of the project. In addition further contractual clauses must also exist within the preliminary contract which are designed to insure the overall quality of the apartment or property, the quality of the construction materials used and the specific items requested by the buyer to be installed by the developer.
Britsestates.com recommends to all buyers to make sure that the following considerations and clauses exist within any preliminary contract signed with a off-plan developer.

Preliminary Contract Recommendations

1. Before you sign a preliminary contract with a off-plan developer in Bulgaria you should check in detail the documentation and contract wording from the developer. These documents should contain clearly state the milestone stages of buying the apartment or property, the milestone stages of the development’s construction and the direct relationship between what you pay and when for each stage of construction completion. The preliminary contract should also contain the development’s design layout, copies of the governmental permission and approval of the construction documents and the various details regarding the materials used in the construction and final finishing of the building and the property.
2. Often within the preliminary contract initially offered by the developer he has placed certain clauses or removed certain clauses which are not beneficial to the buyer or in the buyer’s best interests. The main area of concern is the inclusion (or lack of) of a fixed payment clause and schedule which is not directly linked with the development’s major construction milestones and deadlines. Milestone payments made by the buyer should always be directly linked to the developer meeting construction milestones and commitments and Britsestates.com strongly recommends do not sign a preliminary contract with a off-plan developer where buyer payments are not linked to construction commitments and deadlines. Also the preliminary contract should contain clauses which give in concise detail the financial penalties which the developer will incur or compensation which is to be given to the buyer when the developer does not meet the agreed to construction commitments and deadlines within the contract.
3. An additional item and area of concern within any preliminary contract being considered by the buyer is the detailed description of the quality of the construction methods and materials to be used by the developer and furnishing works which the developer has committed to. We also recommends the preliminary contract contain a clause in which buyer is not required to accept the apartment or property without he performing a visual inspection and site visit unless such a visit and final inspection is not feasible or convenient by the buyer.
4. The off-plan industry and market practice is that the last required installment by the buyer be paid during the legal ownership transfer of the property. Generally it is not compulsory to be done when the building is fully completed however we recommends a clause be included within their preliminary contract stating such a requirement. Many of developers prefer to sell the building when is on stage rough construction be based on the assumption that buyers will reduce their transfer costs. In fact the developers are serving their own business interests evading VAT taxes. The most given advice is the ownership to be transferred when the building is totally completed or in rough construction stage.

We also recommends to buyers further increase the security of their purchase and property transactions by verifying their signatures over the preliminary contract and agreement by stamp duty. The contract issues and legal advice given above regarding the purchase of off-plan property in Bulgaria are the most critical areas of concern and their evaluation and recommendations pertaining to preliminary contracts are only a few of the legal services Britsestates.com recomends.

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