Transfer of Property Act at Bulgaria
In Bulgaria, the transfer of property is governed by the Civil Code of Bulgaria (Граждански кодекс), which covers the legal framework for ownership rights, contracts, and the transfer of immovable property. While there isn't a specific "Transfer of Property Act" like in some countries (such as India), the Civil Code and other related laws outline the procedures and requirements for transferring property, especially real estate.
Key Aspects of Property Transfer in Bulgaria:
1. General Legal Framework: Civil Code
The Civil Code of Bulgaria (adopted in 1950 and updated periodically) regulates the transfer of ownership of both movable and immovable property. Property law in Bulgaria is also influenced by EU law (as Bulgaria is an EU member state), especially regarding real estate transactions, property rights, and registration.
2. Methods of Property Transfer
Property in Bulgaria can be transferred in various ways, including:
Sale and Purchase: This is the most common method for transferring property.
Gift: Property can be transferred as a gift.
Inheritance: Property can be transferred through inheritance upon the death of the owner.
Exchange: Property can also be transferred by way of an exchange.
Lease: Transfer of leasehold rights is possible under specific conditions.
3. Sale and Purchase of Property
The sale and purchase of property in Bulgaria is one of the most straightforward methods of property transfer. It involves the following steps:
Sale Agreement: The parties (buyer and seller) must enter into a written agreement, which details the terms of the sale. The sale agreement should specify the price, description of the property, and other relevant terms.
Notarization: The sale agreement for immovable property must be notarized by a notary public. The notary’s role is to ensure that both parties understand the terms of the contract and that the transaction complies with Bulgarian law. The notary also verifies the identity of the parties involved.
Property Registration: The transfer of property is not legally effective until it is registered in the Property Register (Търговски регистър) maintained by the Registry Agency of Bulgaria. The registration ensures the public and legal recognition of the change of ownership.
Payment of Taxes: Property transfer tax (also known as stamp duty) must be paid during the sale. The rate depends on the location of the property and the local municipality’s tax policy. The tax is typically paid by the buyer, but it can be negotiated otherwise in the sale agreement.
4. Gift (Donation)
Gift of Property: Property can be transferred as a gift. A deed of donation must be executed for immovable property, and like a sale agreement, it must be notarized and registered with the Property Register.
Taxation: Gifts of property are subject to gift tax in Bulgaria, with rates depending on the relationship between the donor and recipient. Direct relatives typically pay lower taxes than distant relatives or unrelated individuals.
5. Inheritance
Testate and Intestate Succession: Inheritance in Bulgaria can occur under the provisions of a will (testate) or, in the absence of a will, according to intestate succession rules set out in the Civil Code. The inheritance of immovable property follows specific procedures outlined by Bulgarian law.
Inheritance Agreement: The heirs must complete an inheritance agreement to transfer the deceased’s property to the rightful heirs. This may require the involvement of a notary, especially when transferring immovable property.
Probate: The process of settling the deceased’s estate, including the transfer of property, typically involves probate procedures, which may also require a court ruling, depending on the circumstances.
6. Real Estate Registration
Property Register: All transactions involving the transfer of immovable property must be registered with the Property Register (which is a part of the Bulgarian Registry Agency). This ensures that the buyer’s ownership rights are officially recorded.
Title Deed: Once registered, the buyer is issued a title deed, which is proof of ownership. The title deed serves as the legal document confirming the new owner’s rights over the property.
7. Formalities for Property Transfer
Notarization: Any transfer of immovable property must be executed through a notarial deed. The notary public ensures the authenticity of the transaction, confirms the identity of the parties involved, and ensures the legality of the contract.
Written Agreement: The agreement for the sale, gift, or exchange of property must be in writing. This is essential to ensure the transfer is valid under Bulgarian law.
Registration: After notarization, the property transfer must be registered in the Property Register. Without this registration, the transfer is not legally effective.
8. Mortgage and Encumbrances
If the property being transferred is subject to a mortgage, lien, or other encumbrances, these must be addressed during the transfer process. For instance, the buyer may need to pay off the outstanding mortgage or accept the property with the encumbrances in place.
The existence of mortgages or encumbrances is recorded in the Property Register, and the buyer is advised to perform due diligence before completing the purchase.
9. Taxes and Fees
Property Transfer Tax: In Bulgaria, the property transfer tax is typically paid by the buyer, although this can be negotiated otherwise in the contract. The tax rate is usually between 2% and 4% of the property’s value, depending on the local municipality.
Notary Fees: The notary public charges fees for their services in certifying the transfer of property. These fees are typically based on the value of the transaction.
Registration Fees: There are also fees for registering the property in the Property Register.
10. Foreign Ownership
Foreign Nationals: Foreign nationals can own property in Bulgaria, but they must comply with specific conditions. Foreigners are generally not allowed to own land (real estate), but they can own buildings or apartments. For land ownership, foreign nationals must establish a Bulgarian legal entity (such as a company) to purchase land, or they can purchase property in certain cases (e.g., if they are EU nationals).
EU Nationals: Citizens of EU member states are treated the same as Bulgarian nationals and can buy property, including land, without needing to form a Bulgarian legal entity.
11. Special Considerations for Rural and Agricultural Land
Agricultural Land: The transfer of agricultural land is subject to additional regulations. Agricultural land may only be purchased by Bulgarian citizens or EU nationals. Non-EU foreign nationals generally cannot purchase agricultural land directly unless they are part of a legal entity.
State Land: The transfer of state-owned land requires government approval, and these transfers are typically subject to additional legal requirements.
Conclusion:
In Bulgaria, the transfer of property is governed by the Civil Code and involves the execution of a notarial deed, registration of the transfer in the Property Register, and payment of relevant taxes and fees. The process is relatively straightforward for sale, gift, or inheritance of immovable property, but it requires compliance with formalities such as notarization and registration. Foreigners can own property in Bulgaria under certain conditions, and agricultural land has additional restrictions.
RELATED Blog
0 comments