Property by the sea. Schemes of «Bulgarian-style swindles», or how not to be taken for a fool

Fraud with the preliminary contract

It is all very simple. The buyer is offered a property at the construction stage. A preliminary contract is signed, in which the seller declares that the property under construction is legally clean and completely free of third-party claims. A meticulous buyer can verify this — everything is perfectly lawful, at the moment of signing the contract the property is completely clean.

But immediately after the signatures appear on the document, yet before the sale contract (notarial deed) is concluded, the seller can mortgage or sell the property. After that the developer disappears or simply changes its name and goes on deceiving new buyers.

It is important to remember that a preliminary contract with a developer company in essence gives buyers no rights whatsoever. Until you receive the notarial deed you are not the full-fledged owner of the property. For you to obtain this document, the building must be constructed and put into operation (acts 14, 15 and 16). And if the company goes bankrupt before handing the housing over to the buyer, then instead of holidays in your own apartment on the seashore you will have to litigate endlessly for your home.

Developers and agents

A simple scheme, profitable for agents and developers. It consists in the happy buyer transferring the money for the housing not to the seller, but to an intermediary, i.e. the real estate agent. All this is confirmed by notarised receipts and looks quite solid, all the more so as the seller-developer verbally confirms that everything is going according to plan and that this method of payment suits him.

The problems begin later, when the builder freezes the project and answers the indignant buyers’ questions by saying that he did not receive the money. The buyers set off to look for the agent. Sometimes they manage to find him, and then it turns out that the agent did indeed keep the money for himself, because the developer owed him a certain amount.

In most cases the buyer is left with nothing to do but pay the money to the developer again, so that he finally completes the construction. And avoiding this scam is simple — the money must be paid directly to the seller or to authorised persons, and it will do no harm to make a copy of the documents confirming such authority.

Fraud with the deposit

It may seem that buying resale property is safer. But that is not so. Here is a simple yet effective scheme often used by small real estate agencies and some sellers. The buyer is offered some particularly tempting property at a low price. So that such a lucky opportunity does not go to anyone else, a deposit must be paid for it — a kind of guarantee of the seriousness of the buyer’s intentions. Usually just one or two thousand euros is enough.

After that events can develop in different ways. The agency may simply disappear along with the money, and not every buyer will spend on the search a sum comparable to the lost deposit. Tiresome negotiations with the property seller may begin, dragging on for long months until the buyer himself loses patience and abandons his intentions, losing the deposit in the process. The seller may turn out to be an owner with limited rights, and this comes to light only after the first payment. Finally, the seller may substantially raise the price without refusing to sell the property. In all cases the buyer loses a comparatively small sum. Try not to deal with private agents or agencies that have no permanent office, website and good reviews.

More about resale property

The higher the property price stated in the contract, the higher the taxes the seller and the buyer have to pay. That is why property owners often propose stating a smaller sum in the contract than the actual one, and paying the remainder in cash. And so it happens, to the satisfaction of both parties.

And later the problems begin: for some reason the transaction is declared invalid. Everything is done strictly according to the law, and the buyer receives the sum stated in the notarial deed. As for the money paid in cash, no one remembers it, all the more so as this sum does not appear anywhere in the documents.

Conclusions

Scrupulous verification of all documents, clarification of every detail and involving independent notaries and lawyers is not pettiness, but entirely normal behaviour. There is no need to be shy about defending your interests while it is still possible.

Before buying you need to study all the particulars of the legislation so as not to land in trouble. It is better to spend more time studying the offers of various companies and agencies than to be left without housing and without money.

Our «Bulgarian Expert» team advises on property purchase matters and also accompanies transactions, ensuring their safety. If you wish to register the property in a company’s name, we carry out company registration in Bulgaria of all forms of ownership, as well as their accounting services.

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