The most important issues when purchasing real property


Purchasing real property is a complicated process demanding advance preparation. Its correct running is a guarantee of a good result. In this publication we shall review the main and most important issues in real property transactions.

1)    Documents for title over real property. Types of documents.

The most popular documents for title are:

 - Title deed registered with the Registry Agency. This document has several types: title deed for sale and purchase; deed for donation; title deed for exchange; reconstituted title deed, etc.

- Title deed, with which there is a record of its registration;

- Agreement for sale signed pursuant to Ordinance on State Properties,

- Agreement for sale signed pursuant to the Municipal Property Act and the State Title over State or Municipal Properties Act. If these were signed after 01.06.996 they have to be registered with the Registry Agency.

  - Constitutive court judgments(Art.19, Para.3 from the Contracts and Obligations Act, Art.33 of the Ownership Act and Art.349 of the Civil Procedure Code). These judgements are connected with preliminary agreements for purchase of real property declared by court to be final. In these instances the court judgement replaces the title deed.

- Agreement for voluntary partition of property

 - Writ of possession.

2)    How do you check the legality of the document for title?

Each dispositive action with real property, including the transaction for purchase and sale, is a subject of registration into the respective Office for Registrations (Property Register) with the Registry Agency. This is also the first possibility for examination of the document for title.

The title deed can bechecked with the Notary Public who has issued it.

The check in the Property Register is the most detailed and the most reliable.

3)    What documents are to be provided by the purchaser?

These documents usually exist as forms filled in personally by the purchaser at the moment of transaction. If the purchaser is not personally present, he/she has to notarize and hand over some of the declarations to the person empowered by him/her. The notarized declarations are valid for the calendar year, in which they have been notarized.

These declarations are two, as follows:

- Declaration for civil status pursuant to Art.25, Para.8 of the Notaries and Notary Activity Act. This declaration refers to the civil status of the person purchasing the real property and is directly related with the title they acquire. For instance, during the marriage ownership is considered as joint, irrespective of who of the two spouses acquires the title over the specific piece of property. Former and current marriages have to be indicated.

 - Declaration pursuant to Art.4, Para.7 and pursuant to Art.6, Para.5, Item 3 of the Measures against Money Laundering Act. The declaration is pursuant to the act on measures against laundering dirty money and is related to the origin of finances for purchasing the real property. The purchaser declares the origin of their money in their own wording.

Both documents are declarations, in other words the contents presented is not subject to proof by the declarer at the moment of transaction. They are filled in voluntarily and the person declares the truthfulness of circumstances specified on the document. It is important to note that due to the nature of transaction itself and due to the fact that incorrect filling in or willful misrepresentation of facts can cause damage to third innocent person, law foresees, in Art.313 of the Criminal Code, the respective measures for legal jeopardy.

In case the purchaser cannot be personally present at a transaction, by law he/she is entitled to empower a third person to represent him/her with a power of attorney. It stipulates the rights that the principle grants to the empowered person in case of representation. The power of attorney is notarized: the signatures and the contents of the document are notarized.


4)    What documents are to be provided by the seller?

The seller’s documents can be divided into two groups: mandatory for a transaction, and additional, or advisable.

The mandatory documents are those without which a transaction cannot be performed, namely:

-       Original document for title

-       Cadastral diagram of the property.

-       Tax assessment certificate: it is issued by the respective taxation and revenue office in the area where the property is located. The address of the property on the tax assessment certificate has to be identical with the address of the property as per title deed; otherwise the office in the respective area has to issue a certificate for identical addresses. The tax assessment certificate has to list all joint owners of the property. The joint owners must not have outstanding liabilities for the property (they are to have paid taxes and garbage collection charge) and this has to be stated on the tax assessment certificate for the property.

-       Declarations: like the purchaser, the seller also provides a set of declarations, such as:

·      Declaration for citizenship and civil status pursuant to Art.25, Para.8 of the Notaries and Notary Activity Act. This declaration is related to the seller’s / sellers’ civil status. It is directly related to the title over the property being sold.

·      Declaration pursuant to Art.264, Para.1 of the Taxation and Social Security Procedure Code. The declaration is about seller liabilities to the state. Through it he/she declares that he/she has no outstanding liabilities, such as taxes, customs duties, social security and medical insurance payments to the state budget.

As with the buyers, law foresees legal jeopardy pursuant to Art.313 for incorrectly filled-in information or willfully misrepresented information.

-       If there is a registered real right of enjoyment of the property, its holder needs to abandon the real right established for him/her; this is done by way of a declaration for abandonment of right of enjoyment. It happens before a Notary Public and is subject to registration. In case the person enjoying the property is deceased, a copy of the death certificate has to be submitted.

-       If the property has been divided by way of partition, the respective agreement has to be provided.

-       When the property has been inherited, it is necessary to submit a certificate for heirs, death certificate of the testator, or last will and testament.

-       In case the seller cannot be present in person at the transaction, he is legally entitled to empower a third person to represent him/her by way of a power of attorney. The power of attorney has to specifically enumerate the rights that the principle grants to the empowered person in case of representation. The power of attorney is notarized: signatures are notarized, as well as the contents of the document.

-       When property in a newly-constructed building is being conveyed, the following documents are to be provided by the respective construction company / investor: construction permit, architectural design and floor space / distribution of areas, Usage Permit: Act 16, etc.

Documents that are not mandatory, or in other words you could perform a transaction without them but still they are an integral part of it, are:

-       Certificate for registrations, entries and deletions: it is issued officially by the Office for Registrations, with a reference number. It will be explained in detail in section 5.  

-       Utility bills paid as of transaction date.

-       If the property is part of gated complex, document for paid maintenance fee.


5)    How can we be certain that we are buying property that is free of charges or encumbrances?


Certificate for property charges: it is issued by the Registry Agency following a specific procedure. An application has to be filed, with the following documents enclosed: title deed, in case of inheritance: a certificate for heirs as well. If there is land together with the property, or share of land, a diagram of the property has to be enclosed as well.

The document received is called “Certificate for Registrations, Entries and Deletions”. The document by itself does not declare whether there are or there are not any encumbrances on the real property. It lists chronologically all actions performed with the real property. From it precisely it becomes clear whether there are any mortgages, claims, attachments, etc. over this property.


6)    How is the title over real property conveyed?

Conveyance of real property happens before the Notary Public. It is important to know that not every Notary Public can perform the formalities related to a real property transaction. The only competent Notary Public is the one, in whose are the real property is located.

This is the step-by-step procedure:

·      The Notary Public verifies the identity, legal capacity and the vicarious powers of the persons who have appeared before him.

·      The Notary Public verifies whether there are any legal obstacles to property conveyance.

·      The Notary Public ascertains that the Title Deed project submitted to him/her is in compliance with statutory provisions.

·      The Notary Public verifies whether the seller is the property owner.

·      The Notary Public reads to the parties the contents of the title deed and the parties confirm to the Notary Public their declarations of intention specified on the title deed project.

·      The Title Deed is signed by the parties and by the Notary Public.


7)    What are the expenses for purchasing real property?

The expenses for purchasing real property are, as follows:

-       Notary charge. It is estimated in accordance with the Tariff for Notary Charges on the certified material interest. The material interest of the transaction is the selling price of the property. There are instances, however, when the selling price of the property is lower than the sum of its tax assessment. In case of such difference the material interest is estimated in accordance with whichever value is higher.

-       Charge for registration of the Title Deed in the Property Register with the Registry Agency, amounting to 0.1% of the material interest of the transaction.

-       Tax for acquiring properties for consideration, ranging between 0.1 and 3%. The tax is estimated on the basis of material interest.

-       Attorney fee: it is estimated in accordance with endorsed tariff, and on the basis of the material interest of the transaction.


8)    When do I receive my documents for title?

After performing the notary formalities relating to the sale, the Notary Public submits the Title Deed to the Office for Registrations in the respective area. The deed is registered by the Registry Judge. Henceforth the new owner is fully entitled to dispose with the property. The registration procedure takes about three – four business days. After that the document can be received from the notary office where the transaction was performed.


9)    What follows the real estate purchase?

After the procedure is completed it is necessary that the property be declared to the “Local Taxes and Charges” department with the municipality in the area where the property is located. In compliance with the Local Taxes and Charges Act anyone who has acquired real property has, within two months upon the notary transaction and its registration in the Registry Agency, to file a tax return for estimating the annual real property tax. It is essential that declaring be done on time, because otherwise fines are foreseen, and their amount ranges between one hundred and one thousand leva.

Water and electricity accounts are to be registered to the new owner. This happens in the territorial offices of the respective electricity company and the Water and Sewerage Company.


10)What are the probable risks?

The risks connected with property frauds shall be reviewed in greater detail in another article of ours. Here we shall only give highlights.

-       Existence of charges on the property

-       Incorrect determining of heirs, owners of a piece of property

-       Not authentic/false/ property documents

-       Properties with attachments

The detailed and systematic investigation of documentation connected with property subject of a transaction is a guarantee for a job well done and absence of flaws or problems. For this reason we advise that you turn to a specialist realtor. Practice shows that less time and money are spent in this way, and the result is guaranteed.