Preliminary Contract for Real Estate in Bulgaria — What to Include and How to Make It Final (2026)

What is a preliminary contract

The preliminary contract for the sale and purchase of real estate is governed by Art. 19 of the Obligations and Contracts Act (OCA). It is a bilateral agreement whereby the parties undertake to conclude a final contract in the future — in this case, a notarial deed for the transfer of ownership of immovable property.

A fundamental characteristic of the preliminary contract is that it does not transfer ownership. It only gives rise to obligational (contractual) rights and obligations between the parties. Ownership passes only upon the registration of the final notarial deed in the Property Register.

The law requires mandatory written form for a preliminary contract concerning real estate — without it, the contract is null and void. It is important to note that simple written form is sufficient: notarisation of signatures or a notarial deed is not required at this stage. In practice, however, notarisation of signatures is recommended as it facilitates proving the authenticity of the contract in the event of a dispute.

The preliminary contract must contain all essential terms of the final contract — i.e. it must be sufficiently detailed so that, if necessary, the court can declare it final.

Mandatory content

To be valid and suitable for potential court declaration as final, the preliminary contract must include the following elements:

• Parties — full names, personal identification numbers (EGN for Bulgarian citizens or Personal Number of a Foreigner for non-nationals), permanent addresses. For legal entities — company name, Unified Identification Code (UIC), registered seat, and legal representative.
• Property description — exact address, built-up and/or gross floor area, cadastral identifier from the cadastral map, intended use (residential, commercial, agricultural land), boundaries or adjacent properties. The description must be sufficiently specific to avoid ambiguity.
• Price and currency — the exact sale price, stated in Bulgarian lev (BGN) or euro (EUR) at a fixed exchange rate. When stated in a foreign currency, it is advisable to specify the date of the exchange rate or a fixed rate.
• Deadline for the final contract — the date by which the parties undertake to execute the notarial deed. The typical period is between 1 and 3 months.
• Payment terms — amount of earnest money (deposit), deadlines and method of payment for the balance. For amounts equal to or exceeding EUR 5,113 (BGN 10,000), payments must be made by bank transfer under the Law on Restriction of Cash Payments (LRCP).
• Obligations of the parties — the seller's obligation to deliver the property free of encumbrances, to prepare the necessary documents, and to appear before the notary; the buyer's obligation to pay the price within the agreed deadlines.
• Penalties and termination conditions — the amount of penalty clauses for non-performance, grounds for unilateral termination of the contract, and consequences of termination.

The more detailed the preliminary contract is, the better both parties' interests are protected and the easier it will be to have it declared final by the court if necessary.

Earnest money (deposit) — Art. 93 OCA

Earnest money (known as “kaparo” or “zadatak” in Bulgarian) is a sum of money that the buyer pays to the seller upon the conclusion of the preliminary contract. Its legal regime is governed by Art. 93 of the OCA and it serves two principal functions:

• Evidentiary function — it serves as confirmation that the contract has been concluded and the parties have reached agreement on all essential terms.
• Security function — it guarantees the performance of obligations and provides a sanction in case of non-performance.

The typical amount of earnest money in Bulgarian practice is 10 % of the sale price, although the parties are free to agree on a different amount.

Consequences of non-performance

• If the buyer is at fault — the seller is entitled to retain the earnest money and withdraw from the contract.
• If the seller is at fault — the buyer may demand the return of the earnest money in double the amount.

The non-defaulting party has the right to choose: to accept the earnest money (or double the amount, respectively) or to claim actual damages suffered, if they exceed the amount of the earnest money. The two options are mutually exclusive — they cannot be cumulated.

Payment of earnest money

For amounts equal to or exceeding EUR 5,113 (BGN 10,000), payment must be made by bank transfer. Violation of this requirement constitutes an administrative offence under the LRCP.

“Stop deposit” (reservation deposit)

In practice, a so-called “stop deposit” (reservation deposit) is also used — a smaller sum, typically between EUR 500 and EUR 1,000, which the buyer pays to reserve the property before signing the full preliminary contract. The stop deposit is usually documented by a separate receipt or short agreement and is deducted from the earnest money under the preliminary contract. The conditions for its return must be clearly defined.

Court declaration as final — Art. 19(3) OCA

One of the most important safeguards provided by the preliminary contract is the right of the performing party to request the court to declare the contract final if the other party refuses to execute the notarial deed.

The claim under Art. 19(3) of the OCA is filed with the district court at the location of the property. The court examines whether the preliminary contract contains all essential terms of the final contract and whether the claimant has fulfilled their obligations (or is ready to do so).

Interpretive Decision No. 4/2020 of the Supreme Court of Cassation (09.05.2023)

With Interpretive Decision No. 4/2020 of 09.05.2023, the Supreme Court of Cassation (SCC) adopted an extremely important position for practice: the court may declare the preliminary contract final even when the buyer has not paid the full purchase price.

Under Art. 362(1) of the Civil Procedure Code (CPC), the court judgment in such a case is conditional — it enters into force if the buyer pays the outstanding amount within a two-week period from the date the judgment becomes enforceable. If the buyer fails to pay within this period, the judgment is annulled by operation of law.

The practical significance of this interpretive decision is enormous: it allows the good-faith buyer to obtain protection even before making full payment, provided they are ready to do so within the period set by the court.

Consequences of the judgment

• The court judgment replaces the notarial deed and has the same legal effect.
• The judgment is registered in the Property Register under the property's file — ownership passes to the buyer precisely from the moment of registration.
• The applicable notarial fees and acquisition tax are determined by the court in the judgment.

Registration of the preliminary contract

The preliminary contract for the sale and purchase of property itself is not subject to registration in the Property Register. This means that the preliminary contract is not opposable to third parties on its own — if the seller sells the property to another person who registers their notarial deed, the buyer under the preliminary contract cannot assert their rights against such person.

There is, however, an important protective mechanism: the statement of claim under Art. 19(3) of the OCA can and should be registered in the Property Register pursuant to Art. 114(1)(b) of the Ownership Act (OA).

Significance of registering the statement of claim

• Opposability — from the moment of registration, all subsequent acquirers of the property (buyers, mortgage creditors) are deemed to be aware of the pending dispute. If the court upholds the claim, the judgment is opposable to all persons who acquired rights after the registration of the statement of claim.
• Priority of registration — the claimant's rights are deemed to have arisen from the date of registration of the statement of claim, not from the date of the court judgment. This is of key importance in competition with other claimants.
• Practical recommendation — whenever filing a claim under Art. 19(3) OCA, the immediate registration of the statement of claim is absolutely essential for full protection of the claimant's rights.

Due diligence before signing

Before signing a preliminary contract, the buyer (or their lawyer) must carry out a thorough examination of the property and its legal status. Here are the key steps:

1. Ownership verification — search of the Property Register at the Registry Agency to establish the actual owner. Tracing the chain of transfers at least 10 years back to establish undisputed ownership.
2. Encumbrances check — search for registered mortgages, seizures, injunctions, statements of claim, and other encumbrances on the property. The existence of an encumbrance is not always an obstacle to the transaction, but it must be expressly reflected in the contract and resolved before or at the execution of the final deed.
3. Cadastral status — verification in the cadastral map and cadastral registers (Geodesy, Cartography and Cadastre Agency) that the property is correctly mapped, that the area and boundaries correspond to reality, and that the cadastral identifier is current.
4. Zoning plan (Detailed Development Plan) — enquiry with the municipality regarding the applicable detailed development plan, the intended use of the property, and the permissible construction parameters. Particularly important when purchasing land for construction.
5. Tax status — certificate from the municipality confirming that there are no outstanding local taxes and fees for the property. Without this document, the notary cannot execute the transaction.
6. For new construction — verification of the construction stage: Act 14 (completed rough construction), Act 15 (determination of fitness), Act 16 / Use Permit (commissioning). Verification of the building permit, approved designs, and compliance with actual construction.
7. Marital property — if the property is marital community property, the express consent of the spouse is required under Art. 24 of the Family Code (FC). Without it, the disposition is voidable. Verification of the seller's marital status through a certificate of marital status.

Risks and practical clauses

Key risks

• Double sale — the seller may conclude preliminary contracts with multiple buyers for the same property. Since the preliminary contract is not registered, there is no publicity. Protection is achieved through prompt conclusion of the final contract or registration of a statement of claim.
• Encumbrance after the preliminary contract — the seller may create a mortgage or allow an injunction on the property between the signing of the preliminary and final contracts. Including a prohibition on disposal in the preliminary contract is advisable, but it has only obligational effect (it does not bind third parties).
• Construction defects — when purchasing new construction or a renovated property, hidden defects may be discovered that were not visible during the inspection. Including a warranty clause and an inspection protocol is essential.
• Ownership issues — incomplete chain of ownership, disputes among heirs, illegal construction, or discrepancies between the cadastre and reality. These issues can block the final transaction.

Practical clauses to include

• Delay penalty — a daily or weekly penalty for delay in concluding the final contract by either party (typically 0.05–0.1 % per day of the price).
• Conditions precedent — clauses making the conclusion of the final contract conditional on the occurrence of certain circumstances — for example, approval of a mortgage loan by the buyer's bank.
• Inspection protocol — a detailed inventory of the property's condition at the time of signing the preliminary contract, signed by both parties. For furnished properties — a full inventory of furniture and equipment included in the price.
• Representation at the notarial deed — a clause governing the possibility of authorising a third party to sign the final contract (notarised power of attorney).
• Cost allocation — clear determination of who bears the notarial fees, the local acquisition tax (typically between 0.1 % and 3 % depending on the municipality), the Property Register registration fee, and legal fees.
• Handover of possession — a specific date and procedure for the handover of keys and actual possession of the property, usually tied to the final payment. A handover protocol is drawn up with meter readings (electricity, water, gas).

The typical period between the signing of the preliminary and the final contract is 1–3 months, depending on the complexity of the transaction and the need for mortgage financing.

Frequently asked questions