Recently, news broke in the media about another failed “off-plan deal” in one of Sofia’s prestigious neighborhoods, where future property owners were left with nothing. The real estate market in Bulgaria is dynamic, and buying a home under construction (or “off-plan”) is becoming increasingly popular. Although these are not cases of classic fraud, more and more future owners are facing the same bitter experience: after years of waiting, the agreed-upon deal is annulled.
The main issue lies not in illegal actions, but in legally unfavorable clauses. Many preliminary contracts for the purchase of off-plan property are drafted in a way that primarily protects the builder’s interests. These contracts often contain conditions that allow for the annulment (termination) of the deal with minimal consequences for the seller. When market conditions change sharply—for example, due to high inflation or the so-called “economic hardship” (also known as Rebus sic stantibus or stoppanska neponosimost in Bulgarian law)—the builder can invoke these clauses and terminate the contract.
As a result, future owners receive their deposited amounts back, but without compensation for lost profits. Inflation over the years devalues the money, meaning they lose a significant portion of their initial investment. With that money, they can no longer afford the same property, as market prices have risen.
When looking for a new home, we usually rely on brokers, architects, and interior designers. These specialists are undoubtedly important, but we often overlook the most critical aspect: legal protection. The broker is motivated to close the deal to receive their commission, but they are not a legal expert and cannot foresee all the risks hidden within the contract.
To avoid such a situation, it is essential that the preliminary contract be carefully reviewed and approved by a lawyer. A lawyer will identify the risky clauses and propose changes that will guarantee the buyer’s rights.
When planning a property purchase, do not neglect the legal side of the transaction. The cost of good legal services is negligible compared to the huge potential losses you could incur. To be fully protected, always insist on clauses that clearly defend your interests, and never sign a contract before you are completely sure you understand every single point.
The Consulting House “Velinov and Partners” is at your disposal for assistance and consultation.
