Call for Comments: Revision of the Property Registry Fees and Charging Process Initiative

AmCham Bulgaria would like to call membership for comments of the proposed by “Djingov, Gouginski, Kyuchukov, and Velichkov” Law Firm initiative for improving the regime applicable to registration costs charged by the Bulgarian Real Estate Registry on transfers of real estate, mortgages, leases and other transactions. We believe that this improvement is needed for the sake of improving the business environment in Bulgaria.

Executive Summary

This proposal aims to improve the regime applicable to registration costs charged by the Bulgarian Real Estate Registry on transfers of real estate, mortgages, leases and other transactions. This is a long overdue, and overlooked by the state, revision which is important for businesses in wide range of industry sectors where business operations involve owning, leasing or collateralizing of real estate assets.

The proposal detailed below will be a simple and technically easy revision of the respective legal framework with the potential to make a significant positive impact on the operation of the Bulgarian Real Estate Registry (the “Property Registry”).

Please, send us your feedback to [email protected] till June 30th, 2021.

Download the full proposal

Overview And Proposal Summary

1. Project Background and Description

The operations of Property Registry and the legal framework which governs its operations are outdated and remain substantially unreformed; lagging behind other registries, such as the Cadaster Registry with the Geodesy, Cartography and Cadastre Agency, the Commercial Registry with the Registry Agency and others. The primary service of the Property Registry is registration of transactions, claims, security charges and other deeds, and legal documents related to real estate assets.  This service is provided by registry officials (i.e. the registry judges) in 113 regional Property Registry offices. The lack of reform of the legal framework, processes and methodology of performing this service has become a problem for business transactions involving real estate assets for the following key reasons:

  • the absence of a clear legal framework and guidelines for the registration service.
  • the absence of pre-registration review and correction process for (i) providing additional documents which might be required by a registry judge for registering the filed deed; (ii) mitigating any deficiencies in a filing application and supporting documents; or (iii) providing supporting documents or legal arguments for satisfaction of the registration requirements under the legal framework and guidelines;
  • the process of correction of incorrect refusal for registration is through a court appeal only
  • the existing registration fees tariff, which determines the registration fees as a percentage (0,1% or 0,05%) of the price/monetary value recorded in the deed/document filed for registration (the “Percentage Fee”). Such fee rate is in practice limited only by the transaction value which in many business projects can be a significant and unjustified cost; 
  • the process of payment of registration fees, which requires the registration fee to be paid upfront before filing and is not partially reimbursed when a registry judge issues an order for refusing the requested registration.

All of the problems affecting the operations of the Property Registry (above are just some of them) can be identified and labelled. Nonetheless, past changes aimed at improving the legal framework related to registration process have not achieved the desired result, especially those of the primary service of the registry – registration of real estate related deeds and other legal documents. Based on the bulk of issues through the years evidence of a systemic problem with the operation of the Property Registry. Thus, it requires organizational and methodical changes to improve its work. Such reform does require a lot of resources – human and financial. In the beginning of the millennium the “Cadaster and Property Registry” Project was started with the support of the World Bank, although the Property Registry was not reformed. Also, there were other projects for improvement of the operation of the Property Registry and services provided by it, which were financed through EU programs. As a result, we don’t see any positive impact on the primary service of the Property Registry and there is no material improvement.

The purpose of the proposed project is to focus on and gather support for addressing the specific issues of determination and payment of the state registration fee, rather than proposing a full scope reform for alleviating systemic problems.

2. Project Scope

The document sets out a proposal for the following project, which could be titled “Property Registry Tariff Update” (the “Project”). The proposed project is about exploring the possibilities for and achieving the amendment of the legal framework regarding:

  • the determination of the registration fees on the basis of the transaction price, secured amount, or rent for the entire lease duration, etc.;
  • the process and time of payment of the registration fee; and
  • the pre-registration review of filed applications and formal communication of correction of deficiencies of the application for registration.

The following regulations will be impacted by the Project:

  • Tariff on the State Fees Collected by the Registry Agency (in Bulgarian: Тарифа за държавните такси, събирани от Агенцията по вписванията), in particular Section I – Fees, collected for actions and services under the Rules of Registration (in Bulgarian: Раздел I – Такси, събирани за действия и услуги по Правилника за вписванията);
  • Rules of Registration (in Bulgarian: Правилник за вписванията).

The scope of the proposed Project does not include a substantial revision of the legal framework, which governs the Property Registry operations, but rather aims to achieve a specific change, which is expected to gather broader understanding and support within the industry and, hopefully, be supported by the government.

3. Relevant Parties

The Project affects the following institutions, whose support is critical for any revision of the legal framework related to the operations of the Property Registry:

  • the Ministry of Justice and the Registry Agency;
  • the Council of Ministers.

Other affected organizations that are invited to join the initiative are:

  • The Bulgarian Industrial Association; the Bulgarian Chamber of Commerce and Industry; the Association of Banks in Bulgaria;
  • Bilateral business associations such as: Advantage Austria; AmCham Bulgaria; British Bulgarian Business Association; German-Bulgarian Industry and Commerce Chamber, etc.;
  • Others, such as: the Notary Chamber of the Republic of Bulgaria; the Bulgarian Supreme Bar Association; the Association of Commercial Building Owners in Bulgaria; the Bulgarian Association of Retail Centers; and others.

Download the full proposal