The Act for the Amendment and Supplementation of the Bulgarian Physical Education and Sports Act (PESA), enacted on the 7 December 2010, introduces a new Article 50 (d) (ie, “г” in the Cyrillic alphabet) into the statute it amends. The new provision creates a new legal category – the gratuitously granted right to build on real estate held by the state or a municipality (except for real estate expressly reserved by law for state ownership).
The beneficiaries of this species of right may only be sports federations, and the right permits only the construction of sport buildings and/or facilities. The right to build can be of no greater than 30 years’ duration. To take advantage of the right, a sports federation needs to meet the requirements in para. 2 of article 50(g)(ie, “г”). The beneficiary would need to complete construction and obtain a usage permit for the structure and/or facility within 5 years of the grant of the right.
Although the right is granted free of charge, all planning, design, construction and usage permit application costs have to be borne by the sports federation. The sports federation is not entitled to transfer the right to build in any way whatsoever and may not dispose of the building and/or facility during the duration of the right to build. The right to build cannot be used to secure the contractual obligations of the federation or third parties either (which is a less understandable restriction which surely minimises the range of efficient uses which the beneficiary could make). The beneficiary must cover the costs of reversion of title to the state or municipality on the termination of the contract establishing the right to build.
It remains to be seen to what extent this will permit an optimisation of financing arrangements for sports facilities, but it would certainly be capable of assisting those sports federations which are able to mobilise state support in order to make lawful arrangements where they would not otherwise be able to.
Another interesting amendment to PESA in 2010 was the new para. 3 in Article 35 (d) (“e” in the Bulgarian text). According to it, a sportsman or woman may now be represented by a range of other agents (including an attorney-at-law, parent or spouse) in negotiations over transfer rights, while previously such representation was only permitted to a registered specialist intermediary.
Given the large number of practising Bulgarian attorneys in particular, we fully expect this to have a liberating effect on the local transfer marketplace, as well as on some outbound transfers.
Follow-up edit: Capital has just published a Special Report on sports infrastructure and sports property development (in Bulgarian only).
Real Estate Projects
We have carried out significant legal advisory work for a group of Israeli investors owning more than fifteen big real estate projects in Bulgaria. We have provided complex legal advice related to the restructuring of the loan facilities of the local subsidiaries provided by an Austrian-based financial institution.
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