Preliminary Agreement in Bulgaria
Bulgarian law governs in detail the conclusion of real estate purchase agreements. A preliminary agreement does not transfer a property from a seller to a buyer and does not need to be registered with the Bulgarian property register. Instead, it contains promises made by the parties to enter into a definite real estate purchase agreement. Preliminary agreements need to be in writing in order to be enforceable.
Preliminary vs Definite Agreements in Bulgaria
If a party to a preliminary agreement refuses to comply with it, the other party may request a competent court to transform the concluded preliminary agreement into a definite agreement. If the court grants such a request, the parties will immediately become parties to a definite agreement and will need to comply with all obligations in the definite agreement. Hence, parties who are not completely sure about whether they would like to enter into a definite agreement are advised not to sign a preliminary agreement.
Possible Disputes in Bulgaria
Preliminary agreements usually contain scarce information about the real estate transactions to which they relate. For example, they often lack detailed information about the real estate to be sold and the payment methods that will be used to transfer the purchase price. This may lead to serious disputes as to the content of such incomplete preliminary agreements. It is preferable to avoid cash payments in real estate transactions. The reason is that it is more difficult to prove the receipt of a cash payment than the receipt of a bank transfer payment.
Expenses and costs in the agreement
It is customary practice that all expenses and costs associated with real estate transactions must be paid by the buyer. However, the parties may agree otherwise.
What to include
It is of utmost importance to include in each preliminary agreement a clause defining the period within which the parties need to conclude the respective definite agreement. For example, the parties may agree on the time and the date when the definite agreement will be concluded as well as on the notary who will witness the conclusion of the agreement.
If you need any assistance with regard to preliminary agreements or any other aspects of purchasing a property in Bulgaria, please do not hesitate to contact our consultants.