Several years ago, Bulgaria quickly became an appealing destination for many foreign property investors, most of whom were attracted by the sea and mountain resorts. In fact, the purchase of a property in Sunny Beach, Pamporovo, Borovets and Bansko became a ‘must have’ amongst many British and Irish buyers.

Thousands of preliminary contracts for the purchase of off-plan property were signed amid great hope and expectation. All of the developers promised to build unique and luxury developments in a short time. Furthermore, they guaranteed huge annual rental yields from the properties and some even promised to furniture the properties free of charge.

However, that was then - this is now and time to look at the reality... Home Point BG investigate.

Nowadays, the construction of many of these developments have been delayed, even by a year or two.

The developers’ favorite excuse is the so-called “force majeure” – an order of the Mayor of the relevant municipality for ban on any construction during the tourist season. For the mountain resorts this ban is in place from December until April and for the coastal resorts the ban runs from June to September.

Having said that, these so called ‘bans’ do not really fall in the category of “force majeure” as it is a foreseeable and certain event which occurs every year, at the same time of year and for the same duration every year.

The investors are often not familiar with this and simply go along with what the developer tells them.

Indeed, even if the construction is completed, often the complex as a whole, or the individual property, does not meet the expectations of the investor and does not relate to what was written in the contract.

Either the infrastructure around the building has not been constructed, or the facilities (pool, spa, fitness, restaurant, etc.) are not working yet. All these things create a huge obstacle for letting the property and furthermore, for generating the expected long term ROI (return on investment).

Our research indicates that the main problem for discrepancies is the lack of communication between the parties - often this being on purpose from the side of the developers.

The party at fault in this usually does not wish to take part in any communication, preferring to hide and not respond to letters and calls.

During 2010 many of the investors who have fallen into the trap of the ‘global economic crisis’, are trying to solve their dilemma by either trying to find a way to complete their purchase – or to offload it as they are not convinced that having a property in Bulgaria is a profitable investment any longer – or they can no longer raise the funds to complete the purchase. Also, if they do try to offload the property, this could create additional problems which could prevent them from getting their funds back.

The truth is that there is no right decision.

No one can guarantee that the investment in any development will pay back in three, five or seven years. In the worst instance, a decision to proceed with a purchase may leave you in a situation where you lose money.

Undoubtedly, this is a hard decision to take for every investor, even though it is on an individual basis. As you are thinking of your fate as a Bulgarian investor you may wish to read the following advice from our experience which appeared to be solution to many of our clients:

• Often, in the preliminary contract, the developer guarantees that the property is clear from encumbrances and in such condition will be transferred. The payment of the final installment of the price is due on the day of the notary deal for the signature of the contract. However, in practice, things do not happen this way. The developer fails to invite the investor to the notary deal; he invites the investor to pay. Even completed, the complex turns out to be with a mortgage from a bank and the funds are used to pay off a portion of the debt. The reason for this is that the developer does not have financial ability to pay in advance. Hence, this is in breach of the preliminary contract.
• Often, the preliminary contracts contain information about how the property should look and what it should consist of when it is transferred over to the investor. Very few actually inspect the property prior to making payment and taking ownership. Transfer of ownership of property that does not match the requisites declared in the preliminary contract is a breach of the contract.
• The terms of payment included in the preliminary contract are usually payment via several installments. These are bound to varous stages of construction: Act 14, 15, 16 or “roof level”, “rough construction”, “finish of the construction”, respectively. After achieving these stages, the developer asks the investor to pay within the pre-defined terms but fails to provide the necessary documents to prove that the level of construction has been achieved.
• More often than not, developers delay payments on loans to their creditors and in order to avoid the unfavorable consequences of that, they try to get rid of their properties in a rush, in an attempt not to be blocked by the creditors. Often, these are properties of the investors who have already signed preliminary contracts on and have paid for. This way company “X” transfers its possessions of its available properties to the individual “Y” (other entity or a physical person) and puts itself in a position not to fulfill its basic obligation on the agreed contracts, which is – to transfer ownership to the purchaser.


One of the above hypotheses turned out to be a winner for one of our clients. This is the story of K.C. who purchased a property in Bansko:

'In 2006 I entered into a contract with a development company with the intention of purchasing a property in Bulgaria.

I found the property through a UK based real estate agency, which put me in touch with a law firm in Bulgaria who were going to handle the purchase and paperwork.

During this period, each time I wanted to know what was going on I had to contact the agents, who seemed uninterested in looking after my interests. When I decided to pull out of the contract, there were various excuses why the money had not been sent. Between inefficient, disinterested lawyers, and the agency, two years passed and I was still no closer to getting my deposit back. During this time the Developer contradicted himself several times, saying he would return the money, then claiming it had gone into the wrong account, then arguing that he had sent it, then even saying that I had never asked for it and had reneged on paying him the balance, despite the fact that the building was not finished and nowhere near the standard required for me to pay a further amount. This very fact that the development was not on schedule was enough to cancel the contract.

Once I got hold of Home Point BG positive things started to happen. After processing the required paperwork they passed it on to a lawyer who started proceedings and then it progressed to their partner (a Barrister) who have now won my case in court against the developer. He has been ordered to pay back my money and all legal fees. We are a step closer.

This man has taken my money, cheated many others out of their money, and relies on the fact that the legal system takes a long time, lots of patience and a substantial amount of money and effort to get any results from - which seems wrong, but it has worked, and Home Point and their lawyers have been professional and efficient and kept me informed every step of the way with clear concise information.

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