New provisions (in force from 01/07/2011) were incorporated in the Notaries and Notarial Business Act (NNBA).
According to the new paragraph 8 of Article 25, NNBA, when performing legal acts for the creation, transfer, amendment or termination of property rights in real estates for consideration, the parties are obliged to declare in the contract itself that the price specified in it is the agreed consideration. Pursuant to the new para. 9 of Article 25, NNBA, where the total consideration due under the contract exceeds BGN 10,000, any payment of that consideration must be effected either to a special bank account of the notary, or to a bank account chosen by the parties.
A new Article 25a, NNBA institutes such notary public-held accounts.
The terms on which payments by the parties are made to the special notary bank account and the deposits are then disbursed are set out in a written agreement between the notary and the parties to the contract.
Such accounts are protected from enforcement for obligations of the notary.
These new provisions correspond to recommendations of the European Commission to Member State governments to legislate for the prevention of money laundering through property transactions, as well as for tackling corruption and property fraud. The changes also prevent concealing the real consideration. In turn, this cures evasion of local taxes payable upon acquisition of real estates and improves the quality of market information.
Less obviously, the changes in the NNBA would help in proving the authenticity of effected payments, as well as the receipt of the agreed price by the party to the contract. This should reduce litigation, enhance the legal certainty of the property transactions and the legitimate expectations of the interested persons.
An ~€1M claim on behalf of real estate consultants
NBLO’s dispute resolution lawyers represented UK-based real estate consultants who had structured a € 40-million-worth commercial property project on the Bulgarian Black Sea coast. In breach of an applicable contractual obligation, the consultants had not been paid the agreed success fees for their services. The then director of the defaulting party had been tragically shot dead in the meantime.
Following a hotly contested first instance, with below-the-belt attempts by the other side (the least untypical perhaps being the claim that the contract had been a forgery and a trial-within-a-trial on the issue), our team succeeded in obtaining a judgment at first instance. The parties were then able to achieve a significant settlement.
The key skills we were able to bring to bear in providing a solution included searching for solutions across the problem domain; appropriately involving representatives of Bulgaria’s EU partner member-states to buttress judicial independence; and resourcefully dealing with heterodox approaches by our judicial opponents.
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