Buy an Unfinished Home | KGK Law Firm

Buying a property in a building that has not been completed, and often before construction of the building has begun - is a popular choice for many people. This type of transaction has grown significantly in Bulgaria in recent years.

This type of purchase often means a lower price, better conditions for the buyer, a choice of floor, exposure, layout or a choice of certain features of the property before its completion. But this type of transaction also has its risks.

In this article, we'll look at the key issues to look out for in order to make an informed choice.

1. Trusted investor - who is behind the project?

As soon as you have identified the property and before you sign any contract, your first task is to check the construction company and the investor. Look for information on:

Previous projects - have they been completed on time, what is the quality of the construction, opinions of clients who have bought properties from this investor, reputation of the builder.
Financial stability of the investor - if the company has debts or financing problems, there is a high risk that the construction will not be completed.
Reviews from previous buyers - forums, social networks, reviews from acquaintances and specialized sites can give you valuable information about how the contractor company works.

2. Documentation - check everything carefully

One of the biggest mistakes people make is not paying enough attention to the paperwork. Before you sign, make sure:

All necessary permits are in place - building permit, approved architectural plans, etc.
The land or building right is owned by the developer; there is a building contract - it sometimes happens that construction starts on land with disputed rights.
There is a preliminary contract - this should clearly state the final price, terms, penalties for delay and other important conditions.

It is best to consult a real estate lawyerbefore signing any contract.

3. Pay the amount in instalments - don't pay everything at once

In this case, payment is usually made in instalments, depending on the progress of the building or the investor's wish. It is best to choose a scheme where:

The last instalment is paid when the construction is fully completed and the building is put into operation.
Payments are linked to objective construction events (e.g. completion of the rough construction (Act 14), completion of the construction (Act 15) and commissioning of the building.
You use a bank guarantee or escrow account - so your money is protected if the project is not completed.

4. Main acts during construction

The most important thing to know about the progress of construction is:

Building permit - an official document that certifies the right of the owner or investor to construct a certain type of building on a specific site, according to approved investment projects.
Building line and level protocol - actual start of the construction process.
Rough construction - a building or structure on which the enveloping walls and roof have been completed, with no or varying degrees of finishing. Completion of the "Rough construction" stage shall be certified by an explicit protocol under Art. 181, para. 3 of the Spatial Planning Act.
Act 15 - a declaratory act establishing the suitability for acceptance of the construction. This act shall be the basis for the final report drawn up by the person exercising construction supervision and shall be the basis for the handover of the construction and the construction documentation from the builder to the contracting authority;
„"Certificate of Occupancy"for constructions of categories 1 to 3 inclusive) or"Certificate of Commissioning"(for constructions of categories 4 and 5) - final documents for commissioning the building. Their issue allows the use of the building.

5. When will you get the ownership of the property - terms and penalties

Construction delays are a common problem - so the contract should mention :

A clear deadline for completion - when the building will be commissioned.
Delay penalties - if the developer misses the deadline, is there compensation for you.
What happens if construction stops - possibility of cancelling contract and getting money back.

6. What exactly are you buying

Often buyers imagine one thing and end up getting another. So before the deal you should specify:

What goes into the price - finishes, flooring, electrical switches, sockets, joinery - everything should be clearly spelled out.
Square footage - Is there a difference between "net floor area" and "floor area" ? Net area - the area you will occupy is usually smaller, watch out for this.
Common areas - what proportion of the area you will pay for are common areas (should not exceed 15-20%).

7. Is there a risk that construction will stop?

There are several signals that construction may be delayed, even stopped:

The investor does not give clear information about financing.
Construction is slow or there are frequent stoppages.
The project does not have a clearly announced deadline.
There are litigation or land problems.

Always look out for this and keep an eye on construction progress!

How can KGK's team of lawyers help you?

Buying property can be a great investment, but it also carries many risks. The "key" to a successful transaction is checking all documents, investors and contract conditions. If you are unsure, always consult a real estate lawyer to avoid unpleasant surprises.

In our practice, we have encountered a wide variety and cases related to the purchase of real estate. Some are for buying and selling properties, others, for finished properties.

Our team of real estate attorneys will not only make sure to give you a complete and quality legal service, but will also do everything possible to save you unnecessary costs. If you are our client, we will pay attention to the smallest detail of your case so that you can be protected from any problems.

Sometimes the biggest risks lie in the most mundane of everyday activities, which are often underestimated when in fact they should be given due care, for example:

Ownership Verification;
Preparation of documents - the complete set of documents (preliminary contracts, deeds, declarations, powers of attorney, etc.);
Notary representation - the lawyer can represent you in front of a notary to negotiate the best terms for you in the transaction and ensure that all documents are in order;
Assistance in partition and inheritance cases - if the property is part of an inheritance or is co-owned, the lawyer will help you settle the legal relationship between heirs and co-owners;
Assistance with mortgages or financing;
Dispute resolution.

Should you require legal assistance, you can contact us at office@kgk.bg or via the contact form on our website.