Beware False Price in the Deeds in Bulgaria
Overseas buyers looking to purchase property in Bulgaria frequently hear that the
regular practice is to put a lower price in the deeds to save money. Agents and even
lawyers often assure the purchaser that most property transactions in Bulgaria are
conducted precisely in this manner. The overseas buyer often poses no more
questions, because they believe this information to be correct.
How wrong they are - there are such enomous risks to the buyer; it?s really
important that people don?t get tricked with this.
Putting a lower price in the deeds during the last stage of the conveyancing process
in Bulgaria is generally done because the vendor wishes to avoid taxes and fees
which are due on final signing and which depend upon the property price which is
declared in the deeds. The higher the value of the property, the higher the taxes
and charges. But by declaring a lower price in the deeds than that which is actually
being paid is an evasion of Bulgarian law and creates an ?invalid? or ?fake? deal and
can lead to serious consequences.
From a civil law point of view this kind of ?fake? deal would be considered null and
void anyway. To add to this, if you were found guilty of having been party to such a
deal you could be charged with a fine of up to 1,000 pounds and even
imprisonment of up to three years.
It is also a common practice at the moment with Bulgarian constructors who are
trying to avoid VAT which has to be paid on new build or off plan sales. They offer
the potential of putting in a low and false price in order that they do not pay all or
any of the VAT due.
For the overseas buyer, one can only imagine what any mortgage company might
have to say about all of this if at a later date they become aware of the property
being under-declared on the deeds! Bulgarian estate agents often say, 'oh well,
don't worry, you can do the same; just find someone else to pay you part in cash
later', but it?s not that simple. With European entry looking increasingly likely in the
immediate term, it won?t be so easy to find a buyer willing to do this and people
trying to operate in this way will find it increasingly difficult to do so. Any buyer
really has to ask himself whether he would do this in Britain with a similar proposal
from an agent, paying in some cases up to 70% of the price in cash and then hoping
to find a future buyer who would do the same.
Even if after all this, anyone still thinks it's a good idea to put a lower price in the
final deed, then let?s take a look at the financial implications on just a small scale
when it comes to re-sale. :
Firstly, if the full purchase price is declared
Taxes and Notary Fees about 3.5% 1,400
Re-sale Price 60,000
Gains Tax at 15% 3,000
Secondly, if a lower price is declared (the real price remains at 40,000 as in the first
Taxes and Notary Fees about 3.5% 700
Re-sale Price 60,000
Gains tax at 15% 6,000
Initially,it looks good - 700 pounds is saved on the initial taxes and fees when
buying. However, when it comes to re-sale there?s an additional tax burden of
The best advice we can give to anyone is to get your own independent lawyer who
will act in your interests. Buyers should not be tempted by those that say this kind
of practice in Bulgaria is above board, it?s certainly not and purchasers could end up
in real difficulties all round.
Quest Bulgaria is the specialist english language magazine for those interested in
buying property, moving to and investing in Bulgaria. Impartial and in-depth articles
written every month by practicing lawyers, accountants, real estate and other
experts. No-nonsense, factual and impartial.
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Jain Goodall, Marketing Director
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* Government Statistics on Legal Verdicts and Jury Awards - $ U.S. district courts terminated approximately 512,000 civil cases during fiscal years 2002-03. Nearly 20% or 98,786 of these cases were torts in which plaintiffs claimed injury, loss, or damage from a defendant’s negligent or intentional acts. $ Of the 98,786 tort cases terminated in U.S. district courts in 2002-03, about 2% or 1,647 cases were decided by a bench or jury trial. $ An estimated 9 out of 10 tort trials involved personal injury issues C most frequently, product liability, motor vehicle (accident), marine, and medical malpractice cases. $ Juries decided about 71% of all tort cases brought to trial in U.S. district courts; judges adjudicated the remaining 29%. $ Plaintiffs won in 48% of tort trials terminated in U.S. district courts in 2002-03. Plaintiffs won less frequently in medical malpractice (37%) and product liability (34%) trials. $ Eighty-four percent of plaintiff winners received monetary damages with an estimated median award of $201,000. $ Plaintiffs won more often in bench (54%) than in jury (46%) tort trials. The estimated median damage awards were higher in jury ($244,000) than in bench ($150,000) tort trials.
April 2006 - A Jury in New Jersey found last week that Vioxx significantly contributed to a 77-year-old man's heart attack awarded him $9 million in punitive damages yesterday, raising Merck & Co.'s liability in the case to $13.5 million and intensifying pressure on it to settle such lawsuits.
Example of Personal Injury Case 2004 : Ford Explorer rollover-prone and roof not crash safe and worthy- CASE TYPE : Product Design Defect, Auto Truck Vehicle - SUV,
Motor Vehicle – Rollover CASE : Buell-Wilson v. Ford Motor Co., San Diego Co.,
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JURY VERDICT: $369,000,000 (369 Millions Dolalrs
2005 - In what may be one of the biggest massive medical malpractice tort verdicts in the state of Texas, a state jury awarded $606 million - including a remarkable $ 600 million dollars in punitive damages - to the family of an 82-year-old patient who had cancer and then who died after receiving an overdose of chemotherapy drugs.
2005 - In the 9th big loss for Ford in SUV Explorer rollover cases, a Florida jury awarded $61.2 million to the parents of an 18-year-old boy who was killed in a 1997 (wrongful death & Product Defect and Product Liability Issues)
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Product Design Defect, Wrongful Death, Motor Vehicle -
Rear-ender, Motor Vehicle - Passenger, Motor Vehicle - Minivan
CASE : Flax v. DaimlerChrysler Corp., Davidson Co., Tenn., Cir. Ct. O2C-1288
JURY VERDICT : $105,500,000 (105 Million Dollars
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