Monthly Highlights

  Right to land acquisition in Bulgaria by aliens – a prerequisite for our country’s EU membership

The rules valid for the European Union, should be valid for Bulgaria too
          Interview with Velislav Velichkov

Legal treatment of the option for acquisition of title over immovable property by foreigners in the european union members states


Right to land acquisition in Bulgaria by aliens – a prerequisite for our country’s EU membership

The removal of the prohibition on the acquisition of ownership over land by aliens and foreign legal entities is one of the six mandatory amendments to the Constitution that Bulgaria has to make in relation to EU membership and the ratification of the Treaty of Accession. This will make us party to the principles of United Europe, which we strive for, it will encourage land market development and will create more favorable conditions for attraction of more and more foreign investors.

The amendment to the organic law in this respect was discussed at the National Assembly Ad-Hoc Committee on Amendments to the Constitution. The representatives of all parliamentary groups united around a draft wording according to which aliens and foreign legal entities will be able to acquire ownership over land under terms and procedures set forth by statute or under international treaties ratified by the National Assembly.

A parliamentary committee was established last year to prepare the amendments to the organic law related to the future full membership of the Republic in Bulgaria in the European Union. In September 2003 the National Assembly adopted the first amendment to the Bulgarian Constitution related to the immunity, non-replacement and mandate of magistrates. The change of the status of magistrates was made in compliance with EU requirements and ensured the basis for real reforms in the judiciary.

The present Art. 22 of the Constitution, related to the issues of land, reads as follows:
“(1) No foreign physical person or foreign legal entity shall acquire ownership over land, except through legal inheritance. Ownership thus acquired shall be duly transferred.
(2) A foreign physical person or foreign legal entity is free to acquire user rights, building rights, and other real rights on terms established by law.”

The removal of the prohibition ensues from a commitment made by Bulgaria in the negotiations process with EU on Chapter 4 “Free movement of capital”, the chapter being provisionally closed in July 2001. In the negotiation position on Chapter 4 the country has made a commitment to amend Art. 22 of the Constitution with the purpose of removing the existing general prohibition on the acquisition of ownership over land by foreign physical persons or foreign legal entities from EU Member States and the States which are a party to the European Economic Area Agreement. This prohibition should be removed as incompatible with the principles of free movement of capital and equality of each EU Member State legal subjects set forth in Art. 56 of the Treaty establishing the European Community. The proposal this prohibition to be removed is based on the need for unification of national and foreign physical persons and legal entities regime in respect of the right of ownership over land, which is the practice in the ten newly acceded countries negotiations. It follows from this that the Bulgarian Constitution should not make any difference between national and foreign physical persons and legal entities.

The commitment for this amendment to the Constitution is as of the date of signing the Treaty of Accession of Bulgaria, i.e. year 2005.

In the Committee the discussions continue whether this prohibition should be removed only for EU Member States nationals and legal entities or for all foreigners, but there is not a united opinion on this issue yet.

The removal of the prohibition on the acquisition of ownership over agricultural and forest land by foreigners will come into force after the expiry of a 7-year transitional period, as from the date of Bulgaria’s full membership in EU – from 2007, i.e. from 2014. The period is provided for in the negotiation position of our country and aims at guaranteeing the alignment of market prices in Bulgaria with the European ones, as well as better protection of Bulgarian owners interests.

The market of land in Bulgaria is in the process of development; the price of land is times lower compared to land prices in EU Member States. Because of their lower income Bulgarian nationals do not have substantial possibilities to acquire ownership over land like EU nationals. Neither the cadastre, nor the property register are finished, which are a prerequisite for land market development. That is why the seven-year transitional period has been negotiated, which period will allow a real land market to be developed and ensure equal possibilities for acquisition by Bulgarian nationals too. Such a transitional period has also been negotiated by the other newly acceded East European countries. (See the Appendix).

Under the commitments made by our country in the negotiation process, as from the moment of accession in 2007 foreign physical persons and legal entities from EU Members States, wishing to reside in the country under the right of residence, will be able to buy land in Bulgaria for the needs of their business or the profession exercised by them – for first residence and for administrative purposes. In respect of self-employed farmers, residing permanently in the country and active in farming, no transitional period is provided either. The transitional period negotiated on the acquisition of land for secondary residence is 5 years from the date of accession.

The principle around which the Committee members have united is through amendment of the Constitution text to remove the general prohibition and after that all the details, terms and procedures related to ownership over land to be provided further by statute, which will be drafted based on the new constitutional provision. It is assumed that the restrictions may be related to national security, to ownership over land in the border regions, in nature and historic reserves.

The removal of the prohibition foreigners to buy Bulgarian land is an important condition both for the integration of our country in the European family and for attraction of more and more foreign investors. Extraordinary growth of foreign investment is being observed in Bulgaria in the last year, but the removal of the prohibition foreigners to acquire land in the country would win even more their confidence, would guarantee their security and good conditions for business development. As a full member of the European Union Bulgaria will have to respond to the universally accepted European rules and principles.

©SG 2003