Advokatsko druzhestvo Andreev, Stoyanov & Tsekovain cooperation with Schoenherr Bulgaria

1 Real Estate Law

1.1 Please briefly describe the main laws that govern realestate in Bulgaria. Laws relating to leases of business premises should be listed in response to question 10.1.Those relating to zoning and environmental should belisted in response to question 11.1.

The main law governing real estate in Bulgaria is the Ownership Law. Certain aspects of real estate are also governed by other laws and regulations. The proceedings regarding registration in the Land Registry are governed by the Cadastre and Land Registry Law and the Regulation on Registration. Ownership and management of real estate owned by the state and the municipalities are governed by the State Ownership Law, the Municipality Ownership Law and the recently introduced Public Private Partnership Act.

1.2 What is the impact (if any) on real estate of local common law in Bulgaria?

Bulgaria is a civil law and not a common law jurisdiction.

1.3 Are international laws relevant to real estate in Bulgaria? Please ignore EU legislation enacted locally in EU countries.

International laws are not relevant to real estate law in Bulgaria.

2 Ownership

2.1 Are there legal restrictions on ownership of real estate by particular classes of persons (e.g. non-resident persons)?

Bulgarian citizens and legal entities, registered in Bulgaria, as wellas state and municipal authorities, can hold title of ownership andlimited property rights on real estate, located in Bulgaria. Foreign individuals and legal entities can acquire buildings or limited property rights on land, but not land in Bulgaria. Since a company, registered in Bulgaria, can acquire property, including land, without any limitation regardless of the origin of its shareholders (i.e., domestic or foreign), the restriction is not deemed significant. Also,there is a general exception for heirs of Bulgarian citizens, i.e., incase a foreign individual inherits land by operation of the law. If theheir is not an EU/EEA citizen, he must dispose of this land withinthree years. EU/EEA citizens and legal entities can only acquireagricultural land and forests if they have permanent residence inBulgaria and are registered as farmers (the EU/EEA citizens andentities will be able to purchase the latter as of 1 January 2014).

3 Real Estate Rights

3.1 What are the types of rights over land recognised in Bulgaria? Are any of them purely contractual between the parties?

The most important right over land is the right of ownership whereby the main limited property rights are the right to use(usufruct) and the right to construct. The right to use entitles its bearer to use the property and its income while the owner of the land keeps the bare ownership. The right to construct is granted by the owner of the land to another to build a certain building on the land and acquire the right of ownership on it. The rights over land can be acquired either pursuant to a contract or by inheritance. Certain rights may also derive from mandatory law provisions.

3.2 Are there any scenarios where the right to a real estate diverges from the right to a building constructed thereon?

The limited right to construct is an exception of the general principle of Bulgarian property law that the owner of the land is also the owner of everything built on it. The right to construct automatically transforms into right of ownership on the respective building after completion of the construction. If the building is demolished, the holder of the right to construct is entitled to rebuild it within five years(otherwise the right to construct expires). If the right to construct is granted for a limited period, after its expiration the owner of the land acquires the right of ownership on the building.

4 System of Registration

4.1 Is all land in Bulgaria required to be registered? What land (or rights) are unregistered?

A cadastral map and cadastral registers covering the whole territory of Bulgaria are being created in graphic and digital form. It is an ongoing process that started in 2001 and has not yet been finished.

4.2 Is there a state guarantee of title? What does it guarantee?

Pursuant to Article 17 of the Bulgarian Constitution, the right of ownership is guaranteed and protected by law whereby private property is inviolable. Private property may be expropriated for state or municipal needs only on the basis of a law, under the condition that such needs cannot be otherwise satisfied and only after a preceding and equivalent compensation.

4.3 What rights in land are compulsory registrable? What (if any) is the consequence of non-registration?

The right of ownership, the limited property rights, the mortgages, the easements, as well as the attachments, are all registrable. Registration is an indispensable requirement only for the effectiveness of mortgages and attachments. Registration of the right of ownership, limited property rights, and easements in the Land Registry has only a declaratory effect towards third parties. However, if certain real estate has been sold twice by the owner, the buyer who has registered the acquisition first in the Land Registry will prevail.

4.4 What rights in land are not required to be registered?

Rights of ownership acquired by way of inheritance or by prescription are not required to be registered explicitly in the name of the new owner. Leases for a term of more than one year may be registered, but it is not compulsory. Claims for rescission of agreements, transferring ownership or establishing limited property rights, claims for proclaiming such agreements null and void, or claims for declaring the transformation of a preliminary agreement into a final agreement by the court may also be entered in the Land Registry, but claimants are not obliged to do so.

4.5 Where there are both unregistered and registered land or rights is there a probationary period following first registration or are there perhaps different classes or qualities of title on first registration? Please give details. First registration means the occasion upon which unregistered land or rights are first registered in the registries.

No, there is no such probation period.

4.6 On a land sale, when is title (or ownership) transferred to the buyer?

A title is transferred to the buyer upon signing of the notary deed for sale by the notary in the general case. In case of a land sale of state or municipal land, the title of ownership is transferred to the buyer upon signing of the agreement (as in such case no notary deed is required).

4.7 Please briefly describe how some rights obtain priority over other rights. Do earlier rights defeat later rights?

Registration of a transfer of property rights in the Land Registry has only declaratory effect vis-a-vis third parties. However, unless the notary deed, by which the buyer acquires ownership, is registered, his right of ownership will not override subsequent rights of another who bought the same real estate from the same seller at a later date but registered his notary deed first. The ranking of the two rights in the real estate will depend on the moment of registration. Priority will be given to the notary deed which has been registered first.

5 The Registry / Registries

5.1 How many land registries operate in Bulgaria? If more than one please specify their differing rules and requirements.

There are two principal public records concerning the status of areal estate: the Cadastre Registry; and the Land Registry. The Cadastre Registry compiles data regarding the location, boundaries and area of the real estate within the territory of Bulgaria, as well as the right of ownership and other property rights over real estate for the regions with approved and effective cadastre maps. It records all buildings and other facilities in a holding, including above ground and underground linear utilities and facilities, perennial plantations, water courses and surfaces, natural resources, etc. As noted above in the answer to question 4.1, the Cadastre Registry does not include the entire territory of Bulgaria yet. The Land Registry compiles information about all registered title deeds or other documents wherein the right of ownership is attested or transferred, or any other rights to real estate that are being established, transferred, modified, or terminated, as well as about any mortgages and foreclosures.

5.2 Does the land registry issue a physical title document to the owners of registered real estate?

Upon registration of a title document in the Land Registry, the registered information (entry number, volume, batch, etc.) is noted on the document along with a stamp and a signature of the registration judge. No additional document is issued as evidence that the registration has been completed. The registration can be checked in the Land Registry either in the respective local offices of the Registry Agency or online at www.icadastre.bg.

5.3 Can any transaction relating to registered real estate be completed electronically? What documents need to be provided to the land registry for the registration of ownership right? Can information on ownership of registered real estate be accessed electronically?

Real estate transactions cannot be completed electronically in Bulgaria. The documents, subject to registration, should be filed in paper at the Land Registry office which is usually done by the notary who officiates the transfer. In the event of sale, the notary is obliged to file the notary deed at the Land Registry Office at the date of signing of the notary deed. The set of documents, required for registration of the right of ownership in the Land Registry, depends on the grounds for acquisition (e.g., in case of sale it usually includes a notary deed for sale, a tax appraisal, declarations regarding the civil status and lack of outstanding public taxes, as well as a receipt for the paid registration fee). Information on right of ownership of registered real estate can be accessed electronically through the on-line system of the Land Registry at www.icadastre.bg.

5.4 Can compensation be claimed from the registry/registries if it/they makes a mistake?

When there is a discrepancy between the public record and the certificates or duplicates issued by the Land Registry, the public record books prevail, but the Land Registry is liable for the in accuracy or the incompleteness.

5.5 Are there restrictions on public access to the register? Can a buyer obtain all the information he might reasonably need regarding encumbrances and other rights affecting real estate?

The Land Registry maintains books of public record. This way, a buyer can obtain all the information he might reasonably need regarding encumbrances and other rights affecting real estate. However, such registered information is still filed according to the respective titleholder, rather than by land holding. This hinders enquiries in the Land Registry, since it is necessary to check the previous owners of the particular property in order to verify the title and liens.

6 Real Estate Market

6.1 Which parties (in addition to the buyer and seller and the buyer's finance provider) would normally be involved in areal estate transaction in Bulgaria? Please briefly describe their roles and/or duties .

a) Selling and purchasing agents (or realtors)

Real estate brokers may be involved in a transaction; however, their participation is not mandatory. Their main role is to put a potential seller in contact with a potential buyer.

b) Lawyers

Lawyers may be involved, but not necessarily. It is rather common in Bulgaria to involve, in larger transactions, lawyers who will carryout due diligence, as well as ensure the preparation of legal documents.

c) Notaries

Property purchase agreements must be concluded in the form of a notary deed. Therefore, notaries are necessarily involved in the sereal estate transactions. Notaries hold a neutral position and are obliged to advise the parties also on the legal implications of theirtransactions.

6.2 How and on what basis are these persons remunerated?

a) Real Estate Brokers

The real estate broker's remuneration is usually contractually agreed upon commission, based on a certain percentage of the purchase price. In larger transactions, they might agree to a fixed fee.

b) Lawyers

The lawyer's remuneration will be agreed to as either a fixed fee(depending on the consideration) or an hourly rate.

c) Notaries

Notaries are remunerated according to a tariff pursuant to the law.Their fee for executing the notary deed depends on the purchaseprice but currently cannot exceed BGN 6,000 (ca. EUR 3,000), netof VAT.

6.3 How has the real estate market in Bulgaria recovered orreacted following the global credit crunch and worldwiderecession in 2008/2010? What were the most importantreal estate transactions in Bulgaria in the past year?Please include both local and international investors inyour answer.

The real estate market in Bulgaria is yet to recover from the impactof the global credit crunch. The positive trend is that the marketremains relatively stable and the deals in some sectors (i.e., lowpricedresidential real estate and big commercial chain properties)have picked up slightly from the low levels of 2009.

There were few important real estate transactions in Bulgaria in2012. The most significant real estate deal of 2012 is yet to be closed (according to the information available by 28 September2012) – the Europa Capital Fund is on its way to acquire Retail Park Sredetz, located behind the Central Train Station of Sofia, with one hypermarket in operation, another under construction and one more at the designing stage. The investor has entered the Bulgarian market recently with the acquisition of Retail Park Plovdiv andMall of Sofia. Another big residential and commercial building project, located in the heart of Sofia, San Stefano Plaza, has restarted after being suspended for a few years, as a result of its acquisition by a Swiss investor.

With regard to the privatisation of state property, it is worth mentioning the tender for the 40,000 s q.m. building of the former state print house Rodin a, the construction of which has been frozen for almost two decades – it has prime location near one of the main boulevards of Sofia and has been sold in June 2012 at the asking price of BGN 20 million to the only participant in the tender, a company of the owner of Publishing Poly graphic Complex Rodina AD.

6.4 Is there a trend in Bulgaria towards the investment in retirement homes / nursing homes due to the increased ageing of the population?

Considering the growing demand of retirement homes and the ageing population, the trend is to convert small hotels into retirement homes. At the moment there are 15 private facilities in Bulgaria charging approximately EUR 400 per month.

7 Liabilities of Buyers and Sellers in Real EstateTransactions

7.1 What (if any) are the minimum formalities for the sale and purchase of real estate?

a) Form requirement

A property purchase agreement must be concluded in the form of a notary deed. The exception is in case of acquisition of state or municipal land in which case a written agreement signed by the seller and the buyer is enough after completion of the respective administrative procedure authorising the transfer of the property.

b) Contents

The property purchase agreement must, at a minimum, include the parties, the purchased real estate and the price. Beyond that, the provisions of the statutory law do apply.

7.2 Is the seller under a duty of disclosure? What matters must be disclosed?

There is no legal duty of disclosure. Nevertheless, some notaries carry out a review preceding the sale in the Land Registry in order to check the legal title's validity and ascertain any registered encumbrances on the property.

7.3 Can the seller be liable to the buyer form is representation?

Yes, the seller can be liable to the buyer for misrepresentation.

7.4 Do sellers usually give contractual warranties to the buyer? What would be the scope of these? What is the function of warranties (e.g. to apportion risk, to give information)? Are warranties a substitute for the buyer carrying out his own diligence?

The main contractual warranties are related to: title; lack of encumbrances; eviction; lack of defects and regularity of the asset as regards construction; and city planning matters. In certain cases, such warranties may be diminished or waived altogether upon mutual agreement. The seller's warranties do not act as a substitute for the buyer's due diligence.

7.5 Does the seller warrant its ownership in any way? Please give details.

In this respect, please see the answers given to questions 7.2 and 7.4above.

7.6 What (if any) are the liabilities of the buyer (in addition to paying the sale price)?

The main obligation of the buyer is to pay the sale price. In the event that any lease agreement exists, its terms may be binding on the new owner (for details, see question 10.6 hereunder).

8 Finance and Banking

8.1 Please briefly describe any regulations concerning the lending of money to finance real estate. Are the rules different as between resident and non-resident persons and/or between individual persons and corporate entities?

Generally, the applicable regulations do not contain any limitations with respect to the lending of money between natural persons and legal entities, irrespective of the purpose of lending. On the other hand, the lending of money performed as a business activity is, as a rule and pursuant to the Law on Credit Institutions, limited to banks and other financial institutions.

The applicable regulations do not treat residents and non-residents differently, irrespective of whether they are natural persons or legal entities. In other words, non-resident borrowers must fulfil the same conditions as residents.

8.2 What are the main methods by which a real estate lender seeks to protect itself from default by the borrower?

The main method that lenders use to protect themselves is establishing a mortgage on the real estate. Thus, the secured claim against the borrower has priority in settlement before other claims relating to the same real estate. If there are two or more claims secured with a mortgage over the same real estate property, priority in settlement is granted to the claim that was first secured by the mortgage registered with the Land Registry.

8.3 What are the common proceedings for realisation of mortgaged properties? Are there any options for a mortgagee to realise a mortgaged property without involving court proceedings or the contribution of the mortgagor?

The common proceeding for realisation of mortgaged properties is regulated in the Civil Procedure Code. The mortgagee is entitled to summary proceedings compared to the general enforcement regime. The procedure is initiated upon request for immediate enforcement of the mortgagee to the court. The court will review the notary deed for the mortgage and issue an order for immediate enforcement and a writ of execution. Based on the writ of execution, an enforcement agent will arrange for a public sale of the mortgaged property. The proceeds of the public sale will be used to cover the receivable of the mortgagee. If a real estate is encumbered with several mortgages, the public sale will result in the release of all of them whereby the mortgagees will become creditors entitled to collect the proceeds of the public sale in the order of the priority of the respective mortgages. Under the Bulgarian law the mortgagee cannot realise the mortgaged property without involving court proceedings or without the contribution of the mortgagor.

8.4 What minimum formalities are required for real estate lending?

The buyer must provide the lender with proof of seller's ownership title registered with the competent office of the Land Registry and a preliminary contract with all material provisions (object, price).Of course, banks and other financial institutions require protection using the method described under question 8.2.

8.5 How is a real estate lender protected from claims against the borrower or the real estate asset by other creditors?

Please see the information given under question 8.2.

9 Tax

9.1 Are transfers of real estate subject to a transfer tax? How much? Who is liable?

The transfer tax is collected locally, and thereby determined by the municipality council of each municipality, and ranges from 1.3% to2.6% of the consideration for the sale (the purchase price) or of the tax assessment of the real estate, whichever is higher. The tax is payable by the buyer. If the parties have agreed that the tax is to be paid by both, they are jointly and severally liable. If the parties have agreed that the tax is to be paid by the transferor, the transferee is a surety.

9.2 When is the transfer tax paid?

The transfer tax is to be paid at the time of execution of the transaction. The parties may agree that the transfer tax – as well as the notary and registration fees due under a real estate transaction –shall be paid in half or entirely by the seller.

9.3 Are transfers of real estate by individuals subject to income tax?

The income received by an individual as a result of a transfer (sale or exchange) of a real estate is subject to income tax – the taxable income is calculated as the difference between the transfer price and the price for acquisition of the real estate (e.g., in case of donation the latter will be deemed 0) minus 10%. A certain minimum of real estate transactions, though, are non-taxable – a transfer of (i) one residential property, acquired more than three years before the transfer, and (ii) up to two non-residential properties (agriculturall and and forests included) within the fiscal year, provided that they have been acquired not less than five years before the transfer.

9.4 Are transfers of real estate subject to VAT? How much? Who is liable? Are there any exemptions?

The transfer of the ownership title, as well as establishment or transfer of limited rights over land and lease of land, are exempt from VAT. This rule, however, is not valid in relation to: (i) transfer of ownership title concerning a regulated plot as set forth under the Spatial Development Law, with an exception for terrain adjacent to buildings which "are not new"; (ii) transfer of ownership title or other rights, as well as leasing of facilities, machines, equipment and buildings that are fixed to the land or built beneath its surface;(iii) transfer of ownership title or other rights, as well as leasing of campsites, caravan parks, holiday camps, parking lots and the like; and (iv) transfer of ownership title to terrain adjacent to new buildings, as well as establishment or transfer of other rights over such terrain. The establishment or transfer of the right to construct(except for construction works) is deemed an exempt transaction until the building permit is issued for the respective building. The transfer of buildings which are not new, their adjacent terrain as well as the establishment or transfer of limited rights over buildings which are not new (and their adjacent terrains) are exempt from VAT. The lease of a building for residential purposes to a natural person who is not a merchant is also exempt. The latter, however, does not apply for providing accommodation in hotels, motels, cottage villages, and holiday villages, rented rooms in family houses, etc.

The VAT tax is paid by the transferee to the transferor who, on its own account, pays it to the responsible tax authority (i.e., the seller must pay the VAT tax, although it is actually borne by the buyer).The VAT tax rate is 20% of the tax base. The tax base is the consideration (purchase price) of the transaction increased by the transfer tax, the notary fee and the registration fee.

9.5 What other tax or taxes (if any) are payable by the seller on the disposal of a property?

If the seller is a company, it is required to pay a corporate tax in relation to the received purchase price.

9.6 Is taxation different if ownership of a company (or other entity) owning real estate is transferred?

Taxation differs if a company (or other entity) that owns real estate is transferred instead of the real estate itself. In such a case, no VAT and transfer tax is due. The seller must still pay corporate tax orpersonal income tax, respectively, with regard to the purchase price.

10 Leases of Business Premises

10.1 Please briefly describe the main laws that regulate leases of business premises.

Commercial leases are regulated mainly by the Obligations and Contracts Law, as well as by certain provisions contained in the Commercial Law.

10.2 What types of business lease exist?

Generally, all business leases are subject to the same statutory provisions regarding commercial leases. A classification by type of business premises does not exist.

10.3 What are the typical provisions for leases of business premises in Bulgaria regarding: (a) length of term;(b) rent increases; (c) tenant's right to sell or sub-lease; (d)insurance; (e) (i) change of control of the tenant; and (ii)transfer of lease as a result of a corporate restructuring(e.g. merger); and (f) repairs?

a) Length of term

Bulgarian law does not contain specific provisions with regard to business leases except for a provision regarding the lease term. The maximum period for a fixed term for non-commercial lease is ten years. When the lease is a commercial transaction (i.e., a transaction concluded by a merchant and related to his occupation),it may be concluded for a period longer than ten years, whereby a lease of business premises is usually executed for an initial fixed term with certain extension options for the tenant.

b) Rent increases

There is usually a foreign currency clause and/or provisions to increase the rent according to inflation.

c) Tenant's right to sell or sub-lease

A lease agreement cannot be assigned or otherwise transferred by the tenant under Bulgarian law without the consent of the landlord. The parties may agree on a third person to replace the tenant as a party to an existing lease agreement. The consent of the landlord may not be given in advance if the new tenant has not yet been specified. Subletting of part of the property is permitted by law, unless otherwise stipulated in the lease agreement.

d) Insurance

Usually the tenant is obliged to insure the leased business premises on its own account.

e) (i) Change of control of the tenant

In the absence of any change of control clause, the lease remains with the tenant as the legal identity does not change.

e) (ii) Transfer of lease as a result of a corporate restructuring (e.g., merger)

If the new entity arising under the corporate restructuring is the legal successor of the tenant, the lease agreement remains with the new entity.

f) Repairs

The tenant is responsible for minor repairs related to damage and wear and tear caused by conventional use. The costs of all other repairs (other than those where the tenant is at fault) are borne by the landlord.

10.4 What taxes are payable on rent either by the landlord or tenant of a business lease?

The landlord usually pays a property tax. The tenant usually pays:(i) VAT on the rent (if the property is owned by a company registered under the VAT Law); and (ii) a waste disposal fee. The tax for the registration of the lease contract in the Land Registry (if the contract is for a term longer than one year and the parties want to register it) is usually divided equally between the parties.

10.5 In what circumstances are business leases usually terminated (e.g. at expiry, on default, by either party etc.)? Are there any special provisions allowing a tenant to extend or renew the lease or for either party to be compensated by the other for any reason on termination?

Business leases usually expire at the end of their term, or are terminated due to default or by mutual agreement. Generally, the business leases include explicitly extension options. Absent any specific agreement for the extension of the lease term, the general rule is that if (i) the tenant remains on the property after expiration of the lease term, and (ii) the landlord does not object, then the lease is deemed extended as a lease without a fixed duration. The statutory law provides that leases without a fixed duration may be terminated by either party by one month's advance notice.

10.6 Does the landlord and/or the tenant of a business lease cease to be liable for their respective obligations under the lease once they have sold their interest? Can they be responsible after the sale in respect of pre-sale non compliance?

In the event that property is transferred, a pre-existing lease agreement shall be binding on the new owner only if the lease contains a notary certified date. In such a case, the agreement shall remain effective for the term envisaged, but not longer than one year. A lease agreement will be binding on a new owner for the fulltermen visaged (even if longer than one year) if it contains notary certified signatures and has been registered with the Land Registry. Otherwise, the new owner is entitled to terminate a pre-existing lease agreement by providing one month's notice. The original landlord will owe compensation to the tenant if the latter is deprived of his right to use the property before the end of the lease term as are sult of transfer of the property. The tenant may not sell or otherwise transfer its rights entirely under a lease agreement without the consent of the landlord.

10.7 Green leases seek to impose obligations on landlords and tenants designed to promote greater sustainable use of buildings and in the reduction of the "environmental footprint" of a building. Please briefly describe any "green obligations" commonly found in leases stating whether these are clearly defined, enforceable legal obligations or something not amounting to enforceable legal obligations(for example a spirational objectives).

Pursuant to the Energy Efficiency Law, the landlord is required to provide the tenant with the energy passport or the energy certificate of the leased premises (the latter indicate the energy consumption of the premises and define the energy efficiency category of the building). This obligation, as well as with all "green" obligations, are generally deemed to be optional instead of mandatory with regard to lease agreements.

11 Public Law Permits and Obligations

11.1 What are the main laws which govern zoning and related matters concerning the use and occupation of land? Please briefly describe them and include environmental laws.

Spatial development, design process, and construction are regulated in the Spatial Development Law. The main acts governing the environmental issues are the Law on Protection of Environment, the Biodiversity Law and the Protection of Agricultural Lands Law. The regulation is supplemented by a number of ordinances.

11.2 Can the state force land owners to sell land to it? If so please briefly describe including price mechanism.

Please see the information given under question 4.2.

11.3 Which bodies control land/building use and/or occupation and environmental regulation? How do buyers obtain reliable information on these matters?

Building permits are issued by the Chief Architect of the municipality where the construction is planned. If the building permit is related to a site that concerns multiple municipalities or isof a national importance, the permit will be issued by the Regional Governor or the Minister of Regional Development and Public Works, respectively. Use permits are issued by the Regional Directorates of National Construction Control. Environmental matters are controlled by the Regional Health Inspectorates, as well as the Regional Inspectorates of Environment and Waters. Buyers may obtain reliable information on these matters online and may make inquiries with the competent local administrative bodies/departments.

11.4 What main permits or licences are required for buildingworks and/or the use of real estate?

When building works are planned, it is necessary to obtain a "design visa". Thus, the respective municipality provides initial information on the building requirements of the zoning plan. The design visa actually represents a copy of the zoning plan regarding the particular real estate on which construction is planned. Prior to the construction of a new building, it is also necessary to obtain a building permit. The law provides an exhaustive list of exceptions where a building permit is not required. In all other cases, construction work may not be carried out prior to obtaining an effective permit. In order to issue the building permit, the municipality must first approve the investment designs of the construction project which thereafter become an integral part of the building permit. After the completion of a construction project, a special state acceptance committee is formed in order to verify whether the new building complies with the building permit, as well as all legal and technical requirements. On the basis of the committee's protocol, a permit to use will be issued. The permit to use certifies the operational fitness of the new building.

11.5 Are building/use permits and licences commonly obtained in Bulgaria? Can implied permission be obtained in anyway (e.g. by long use)?

Please see the information given under question 11.4. No implied permission can be obtained.

11.6 What is the appropriate cost of building/use permits and the time involved in obtaining them?

For building permits issued by the Minister of Regional Development and Public Works or by a Regional Governor, the price varies from BGN 250 (ca. EUR 125) to BGN 1,500 (ca. EUR750). Otherwise, each municipality determines the price of the building permits. In Sofia, the price varies from BGN 5 (ca. EUR2.50) to BGN 14 (ca. EUR 7) per sq.m unfolded built-up area, depending on the zone in which construction is planned. When the Sofia Municipality issues a building permit for linear infrastructure, then the price amounts to 0.3% of the site's value. The price of the use permit depends on the type of construction and its classification. It may reach a maximum of BGN 12,000 (ca. EUR6,000). The building permit should be issued within seven days as of the date of filing the request upon condition that the architectural designs have been already approved. The issuing of the use permit depends on the category of the construction. Generally, it takes approximately 32 business days provided that the construction is completed in compliance with all requirements.

11.7 Are there any regulations on the protection of historic monuments in Bulgaria? If any, when and how are the ylikely to affect the transfer of rights in real estate?

The protection of historic monuments in Bulgaria is regulated by the Law on Cultural Heritage Protection. If a historic monument or another piece of cultural heritage is located on a real estate, the latter will be granted the status of immovable cultural value and registered in the National Register of Immovable Cultural Values. The status is then noted in the Land Registry and the Cadastre. This results in certain obligations for the owners of such real estate e.g., to maintain the buildings according to the instructions of the competent authorities (usually the regional inspectorate on protection of cultural heritage), to obtain approval of any change of zoning of the real estate or investment designs for reconstruction of the buildings on it, or to provide public access to the property. In case the building registered as immovable cultural value collapses, the owner is obliged to rebuild it in its initial appearance at his own expense within the period designated by the Minister of Culture.

11.8 How can e.g. a potential buyer obtain reliable information on contamination and pollution of real estate? Is there a public register of contaminated land in Bulgaria?

The information on the contamination and pollution on the territory of Bulgaria is regularly updated by the Ministry of Environment and Waters and published in the reports of the National System for Environmental Monitoring maintained pursuant to the Law on Protection of Environment. The information is publicly available on the website of the Executive Environment Agency. With regard o existing contamination of specific real estate, though, a separate study is required as the publicly available information allows one to identify contamination in the area but it is not detailed enough to confirm contamination of specific real estate.

11.9 In what circumstances (if any) is environmental clean up ever mandatory?

A person or legal entity that has caused contamination of the soil is obliged to clean it at his expense according to the Law on Protection of Environment. Furthermore, environmental clean-up is mandatory if prescribed by the competent authorities.

11.10 Please briefly outline any regulatory requirements for the assessment and management of the energy performance of buildings in Bulgaria.

According to the Energy Efficiency Law, any energy consumer can be assessed for its energy efficiency. The purpose of the assessment is to determine possible ways for decreasing the energy expenses and to propose measures for increasing the energy efficiency. Producers of goods and services whose buildings have annual energy consumption equal or over 3,000 MWh are subject to mandatory assessment of their energy efficiency. They must start implementing the measures prescribed in the assessment within two years. Each investment project for the construction of a new building, for reconstruction, thorough renovation/repair or refurbishment of an existing building, must comply with the requirements for energy efficiency provided for in the law. Any building can be certified for its energy efficiency. Such certificate is issued only after the execution of a detailed energy efficiency assessment and ascertains the actual consumption of energy, the energy characteristics of the building and their conformity with law. Both the assessment and the certification process may be executed only by individuals or legal persons registered in a public register maintained by the Agency on Energy Efficiency.

12 Climate Change

12.1 Please briefly explain the nature and extent of any regulatory measures for reducing carbon dioxide emissions (including any mandatory emissions trading scheme).

All plants/installations performing a major carbon dioxide-emitting activity which falls within the scope of Schedule 1 to the Directive2003/87/EC (e.g., energy activities, metal processing, mineral industry, cellulose, and paper production) must obtain a permit for greenhouse gas emissions by the Executive Director of the Executive Environmental Agency. The allowances for carbon dioxide emissions are allocated to the holders of the permit on a national level every year until the end of 2012. The latter are required to report on the use of the respective allowances, whereas the report must be verified by a certified auditor. For the period 2013-2020 the allowances for carbon dioxide emissions will be allocated by the European Commission according to the harmonised rules for the European Union. As of 2010, the operators of aviation means of transportation are included in the allowance scheme whereas they receive 85% of the required quota for free, while the remaining 15%are to be acquired through tender which is done according to the Regulation 1031/2010/EC and Directive 2003/87/EO. The National Green Investments Scheme, introduced with the amendment of the law in 2010, which is to be financed mainly from the allowances tenders and is intended to encourage "green investments" in general, is yet to become operative.

12.2 Are there any national greenhouse gas emissions reduction targets?

Pursuant to the Decision No 406/2009/EC for reduction of green house emission, Bulgaria is entitled to increase its green house gas emissions by up to 20% by 2020, compared to the level in 2005.From 2011 the suppliers of liquid fuels for the transport are required to decrease gradually the emission of greenhouse gases for the lifecycle of liquid fuels compared to a certain base level calculated pursuant to a methodology introduced by the European Commission, whereby by 2020 the gross decrease should amount to6%.

12.3 Are there any other regulatory measures (not already mentioned) which aim to improve the sustainability of both newly constructed and existing buildings?

The new Energy from Renewable Sources Law enacted in May2011 introduces an obligation for the local authorities to ensure that, from 1 January 2012, the implementation of renewable energy installation will be considered in case of construction or renovation of buildings designated for public services. This provision will apply also to all other buildings after 31 December 2014. The requirements are in line with the transposition of Directive2009/28/EC on the promotion of use of energy from renewable sources.

This article appeared in the 2013 edition of The International Comparative Legal Guide to: Real Estate; published by Global Legal Group Ltd, London. www.iclg.co.uk.

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