Hidden Defects When Buying Property in Bulgaria — How to Protect Yourself

What you will learn in this article

• What constitutes a hidden defect versus an apparent defect
• The seller’s liability framework under ZZD Arts. 193–199
• Complaint periods and limitation periods
• Warranty periods for new construction under ZUT
• Step-by-step guide when you discover a defect
• Pre-purchase due diligence checklist
• When the seller knew about the defect — extended liability
• Cumulation of liabilities under ZZD and ZUT

What is a hidden defect

Legal doctrine and case law distinguish between two types of defects:

• Apparent defects — those discoverable upon ordinary inspection of the property (broken windows, damaged flooring, visible cracks).
• Hidden defects — those not discoverable upon ordinary inspection, which manifest over time (moisture behind wall coverings, waterproofing defects, structural problems, concealed leaks).

The key distinction is that hidden defects are not the result of improper use of the property by the buyer. They either existed before the purchase or manifested as a result of poor-quality construction.

Legal framework (ZZD Arts. 193–199)

Art. 193 ZZD — Seller’s liability

The seller is liable if the sold property has defects that substantially reduce its value or its fitness for ordinary or contractually intended use (Art. 193(1) ZZD).

Exceptions:

• The seller is not liable if the buyer knew of the defects at the time of concluding the contract (Art. 193(2) ZZD).
• If the seller knowingly concealed the defects, they owe compensation for all damages, not only direct ones (Art. 193(3) ZZD). This provision is critical — it extends liability in cases of bad faith.

Art. 195 ZZD — Buyer’s rights

Upon discovering hidden defects, the buyer may bring one of the following claims:

1. Claim for price reduction (actio quanti minoris) — the buyer retains the property but seeks a proportional reduction of the price paid, corresponding to the extent of the defect.
2. Claim for rescission of the contract (actio redhibitoria) — the buyer returns the property and seeks restitution of the entire price paid, together with the costs of the sale. This claim is admissible only for material defects.
3. Claim for rectification at the seller’s expense — the buyer rectifies the defects themselves and seeks reimbursement of the costs incurred from the seller.

Art. 197 ZZD — Time limits

The buyer must notify the seller of the discovered defect immediately upon its detection. Claims under Art. 195 ZZD are time-barred within:

• One year — for the sale of immovable property (Art. 197(1) ZZD).
• Three years — if the seller knowingly concealed the defect (seller in bad faith).

Time limits run from delivery of the property (not from the date of the notarial deed, if delivery occurs on a different date).

Important: The parties may agree on a longer or shorter period (Art. 197, final sentence, ZZD), but clauses entirely releasing the seller from liability are void if the seller knew of the defects.

Time limits — Complaint vs limitation

Warranty periods for new construction

Where the problems relate to new construction, the buyer may invoke the builder’s warranty liability under Art. 163(3) of the Spatial Planning Act (ZUT). Minimum warranty periods are set by Ordinance No 2 of 31 July 2003 (Art. 20(4)).

Important: Warranty periods run from the commissioning of the building (Use Permit / Act 16), not from the date of purchase. The parties may agree on longer, but not shorter, periods.

Who may bring a claim under Art. 163(3) ZUT

Not only the original developer client, but also any subsequent owner of the unit is entitled to bring a claim against the builder for compensation for defects manifesting within the warranty periods. The builder’s liability covers the cost of materials and labour necessary to rectify the defects.

What to do when you discover a defect — step by step

Step 1: Document the defect

• Take detailed photographs and video recordings of every problem observed.
• If necessary, engage an expert witness or structural engineer for a technical assessment.
• Preserve all documents, receipts and correspondence.

Step 2: Notify the seller/builder immediately

Arts. 193 and 197 ZZD require immediate notification. Send a written notice (with return receipt or notarial notice) describing:

• What defects you have identified.
• When they manifested.
• What the consequences are (inability to use, need for repairs).
• What you are requesting — rectification, price reduction or rescission.

Step 3: Request rectification or compensation

Give the seller/builder a reasonable period to respond. If they refuse or fail to act:

Step 4: Bring court proceedings

File a claim before the competent district or regional court (depending on the value of the claim — up to EUR 12,500 district court; above EUR 12,500 regional court). The critical point is not to miss the deadlines under Art. 197 ZZD.

Pre-purchase due diligence checklist

Before purchasing, you can minimise risks:

• Visit the property in person — do not buy based on photographs alone. Visit in different weather conditions (after rain, in cold weather).
• Engage an independent structural engineer — to inspect the structure, installations and waterproofing.
• Check the construction documents — building permit, Act 15, Act 16 (Use Permit).
• Request information about the builder — who is the construction company, are there complaints from other buyers.
• Check for encumbrances — certificate from the Registration Service.
• Review the preliminary contract — include clauses on liability for hidden defects.
• Request a warranty card — for new construction, document the warranty periods.
• Prepare a detailed handover protocol — describing the condition of the property with photographs at the time of delivery.

When the seller knew about the defect (Art. 193(3) ZZD)

If the seller knowingly concealed the defect, the consequences are significantly more severe:

1. Extended complaint period — 3 years instead of 1 year.
2. Full compensation — the seller owes compensation for all damages, including lost profits (not only direct costs of rectification).
3. Easier burden of proof — in such cases, courts generally accept that a professional seller (builder, developer) is presumed to have known about the defects.

How to prove the seller’s knowledge

Knowledge may be proved by all means of evidence:

• Prior complaints from other buyers in the same building.
• Correspondence between the seller and the builder.
• Expert opinions that the defect was visible upon professional inspection.
• Minutes of acceptance committees.

Cumulation of liabilities

According to Interpretive Decision No 88/28.02.1984 of the General Assembly of the Civil Division of the Supreme Court, liability under Art. 195 ZZD and warranty liability under Art. 163(3) ZUT cannot be cumulated. The buyer must choose one of the two regimes but cannot obtain double compensation. It is advisable to analyse which regime is more advantageous:

• Warranty liability under ZUT has longer periods (10 years for structural works) and does not require proof of the builder’s knowledge.
• Liability under Art. 195 ZZD allows rescission of the entire contract in cases of material defects.

Frequently asked questions