The subject of the Preliminary contract for purchase of Real Estate is the aim of a future transfer of ownership of the respective Real Estate from the seller to the buyer where the later must pay the price upon specified conditions. According to a decision of the Bulgarian High court No. 1023/1998, II civil division, the preliminary contract must content the following minimal requirements in its content: clauses that individualize its subject; the price; the term upon which the buyer shall receive from the seller the Title of deed/Notary deed and the term upon which the buyer shall pay its full price. If all this minimum requirement did not exist in the content of the contract than it is not a contract for preliminary purchase of Real Estate, but only a receipt for a received amount of money.
It is very important before signing the contract each party to know and collect information as much as it is possible for the other party, so to know clearly and better with whom it negotiate and is going to be involved in a contracted relations. Each party must legitimate itself in a manner that shall prove that they as parties to the contract has legal rights to sign it and to care for the obligations that are included in the respective contract.
Usually in the preliminary contracts where there is a payment of a certain amount it must exist a clause that this initial payment is named as "earnest". The Obligations and Contracts Act art. 93, say that if the buyer reject to fulfill his obligation to buy the property, then the seller has the right to keep that amount. The same article also say that if the seller reject to fulfill his obligation to sell, the the buyer has the right to claim and to receive the "earnest" in double. That is why my personal advice is when there in the contract has a clause about the "earnest" also to be included art. 93 from the Obligations and Contracts Act. It is also very important in the contract to be included a clause which says that or something similar to: this contract shall play the role of a receipt that prove that the earnest is paid by the buyer and received by the seller.
The preliminary contract for purchase of Real Estate must be in written form according to the rules of the Bulgarian law especially where the respective contract is for Real Estate. The law did not require the contract to be notarized, but for your security although you must pay a tax for the notarization of the signatures of the contract it will be better if you sign the contract in front of the notary. This safeguard shall help the buyer to have a quicker action in front of the court if the seller did not sell and the buyer claim for the earnest (ask your lawyer to explain you the meaning of art. 417 from the Civil Procedure Code). In connection to that it is also important for you to ask your lawyer and to explain fully with given examples the legal meaning of art. 362 from the Civil Procedure Code which is connected with art. 19 from the Obligations and Contracts Act that regulates the preliminary contracts.
The main question: "Did the preliminary contract for purchase of Real Estate guarantee that the buyer shall become the owner of the property - the Real Estate", The clear answer is NO. This is so because according to the Bulgarian legislation any deals that concern Real Estate transfer of rights and ownership must be made upon Title of deed/Notary deed form, which is well explained and for which reason you must use a lawyer that shall explain you all that in details and to tell you how you will be protected from any future problems. So, if I have to generalize all that it must be known that the preliminary contract for the purchase of the Real Estate did not make the buyer owner of the respective property. The ownership must be approved in front of the court that shall come with a final decision to establish who is the owner. If the contract is made fully and precise and one of the parties did not agree to go and to sign the Title of deed/Notary deed then the seller or the buyer has the right to break the preliminary contract or to ask the Region court (the region where the property is situated) to establish the preliminary contract as final. Have in mind that this rights can be used in term of 5 /five/ years from the signing of the preliminary contract and only in case if in the contract is not mentioned other short term.
Usually the risk is for the buyer - shall he receive the ownership rights over the Real Estate or shall he receive back the money he paid in advance. Because of the fact that the respective contract usually is not notarized the buyer must make a proper research about the status of the Real Estate and the rights of the seller to sell legitimately. That is why if you did not use the services of a lawyer who shall examine precisely the property you must notarize the contract and to ask the notary for support to examine for you carefully the property and the represented documents.
It is very important before signing the contract each party to know and collect information as much as it is possible for the other party, so to know clearly and better with whom it negotiate and is going to be involved in a contracted relations. Each party must legitimate itself in a manner that shall prove that they as parties to the contract has legal rights to sign it and to care for the obligations that are included in the respective contract.
- In case where the Real Estate is owned by several owners (family members, or individuals) or is going to be purchased by several buyers then all parties must be represented in the contract and the contract must be signed by all of them or by authorized person that has the right to sign it. If this requirement is not fulfilled then there is no a legitimate contract and no transfer of Real Estate shall exist.
- In case where the seller or the buyer is a legal entity then each of the parties must ask the other party to represent a clear, signed and approved minutes from the shareholders or from the general meeting that the person who is going to sign the contract has their permit to go into such a contract.
Usually in the preliminary contracts where there is a payment of a certain amount it must exist a clause that this initial payment is named as "earnest". The Obligations and Contracts Act art. 93, say that if the buyer reject to fulfill his obligation to buy the property, then the seller has the right to keep that amount. The same article also say that if the seller reject to fulfill his obligation to sell, the the buyer has the right to claim and to receive the "earnest" in double. That is why my personal advice is when there in the contract has a clause about the "earnest" also to be included art. 93 from the Obligations and Contracts Act. It is also very important in the contract to be included a clause which says that or something similar to: this contract shall play the role of a receipt that prove that the earnest is paid by the buyer and received by the seller.
The preliminary contract for purchase of Real Estate must be in written form according to the rules of the Bulgarian law especially where the respective contract is for Real Estate. The law did not require the contract to be notarized, but for your security although you must pay a tax for the notarization of the signatures of the contract it will be better if you sign the contract in front of the notary. This safeguard shall help the buyer to have a quicker action in front of the court if the seller did not sell and the buyer claim for the earnest (ask your lawyer to explain you the meaning of art. 417 from the Civil Procedure Code). In connection to that it is also important for you to ask your lawyer and to explain fully with given examples the legal meaning of art. 362 from the Civil Procedure Code which is connected with art. 19 from the Obligations and Contracts Act that regulates the preliminary contracts.
The main question: "Did the preliminary contract for purchase of Real Estate guarantee that the buyer shall become the owner of the property - the Real Estate", The clear answer is NO. This is so because according to the Bulgarian legislation any deals that concern Real Estate transfer of rights and ownership must be made upon Title of deed/Notary deed form, which is well explained and for which reason you must use a lawyer that shall explain you all that in details and to tell you how you will be protected from any future problems. So, if I have to generalize all that it must be known that the preliminary contract for the purchase of the Real Estate did not make the buyer owner of the respective property. The ownership must be approved in front of the court that shall come with a final decision to establish who is the owner. If the contract is made fully and precise and one of the parties did not agree to go and to sign the Title of deed/Notary deed then the seller or the buyer has the right to break the preliminary contract or to ask the Region court (the region where the property is situated) to establish the preliminary contract as final. Have in mind that this rights can be used in term of 5 /five/ years from the signing of the preliminary contract and only in case if in the contract is not mentioned other short term.
Usually the risk is for the buyer - shall he receive the ownership rights over the Real Estate or shall he receive back the money he paid in advance. Because of the fact that the respective contract usually is not notarized the buyer must make a proper research about the status of the Real Estate and the rights of the seller to sell legitimately. That is why if you did not use the services of a lawyer who shall examine precisely the property you must notarize the contract and to ask the notary for support to examine for you carefully the property and the represented documents.
