Freehold and Leasehold in Bulgaria

The legal concepts of Freehold and Leasehold do not exist in Bulgarian law. Unlike British law, all ownership in Bulgaria is for the entire property / unit and for eternity, a ‘freehold apartment’ so to speak. In the case of apartments, Bulgarian property is owned from the middle of party walls to the middle of concrete plinths (floor and ceiling). In addition to the living space within the apartment (after the front door), Bulgarian property owners also own a proportion of common areas (reception, corridors, stairwells), which is calculated in accordance with the size of their apartment and the building as a whole. Common areas are unallocated, no one owns a specific area, everyone owns each square metre collectively and proportionally. As such, collectively all owners own the entire premises. In some cases, Bulgarians might also own a proportion of the land the building sits on, but it is quite rare. Typically, the original developing company continues to own the plot and lacks any legal right to what sits on it.

The advantage of British law is that a Freeholder enforces the overall condition of an entire building by maintaining consistency in its design, upkeep, fascia, amenities connections and key services such as heating systems. In doing so, they license parts of the property (units / apartments) to Leaseholders (tenants) for 0-999 years. Leaseholders treat them as their own but cannot make physical changes without consent and without paying a fee, such as putting up a TV aerial or replacing carpets etc. The Freeholder carries the risk of the structure of the building and must cover the cost of its major maintenance and repairs, the Leaseholder pays an annual fee to the Freeholder for the privilege. 

The advantage of the Bulgarian structure is that there are no license fees payable each year to an overlord. The clear disadvantage is that the management and maintenance of the property then falls to the collective efforts of the owners and this small democracy can often be imperfect, especially when budgets vary considerably.

Under Bulgarian law, in place of a Freeholding company there is an ‘owners committee’, which is made up from all owners of the building and is a democratic structure. A considerable section of Bulgaria law governs the practises and rights of owners committees, the effectiveness of which can often steer the value of the building it maintains. Every owner has an equal right to raise issues, to request repairs, to call for a vote to replace servicing companies such as security, cleaners, gardeners or an entire maintenance company (as is common in tourist resorts). As such, the general feel of a building and its physical condition will largely depend on the availability of owners and their willingness to spend.

Should you purchase in a building where your annual maintenance contribution is 50 Euros, you can be sure that there will be nothing other than the absolute legal minimum achieved (clearing the snow in front of the building for example). Should you purchase within complexes such as Silver City in Sofia, where apartments pay as much as 850 Euros / year, you can be sure that the gardens are pruned weekly and the car park floor is washed. For residential buildings (not tourist complexes) the concept of an owners committee encourages buyers to gather in cohorts of broadly likeminded individuals at similar socioeconomic levels, which can help or hinder the value of your property. An active owners committee that succeeds in collecting funds and spending them is always prefers by buyers and banks.

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