The preliminary contract and some current problems related with its regulation
In the new October issue of “Your Business” Magazine the Managing Partners of Toskov & Yordanov Law Firm are authors of an article that discusses current problems of the preliminary contract according to the enacted Bulgarian legislation, which are basically due to the fast development of the public and social relations of late years as well as to the fact that the provisions in the Law regulating such kind of legal relationship are well behind the times.
The article brings reader’s attention to the most popular type of preliminary contract, namely the one for sale and construction of a real estate.
As one of the fundamental problems is pointed out the lack of legal requirement for registering the signed preliminary contracts with the Land Registry or other public registry, which on its turn furthers fraudulent activity with real estates, by conclusion of several preliminary contracts for one and the same real estate.
Another serious problem concerns the unequal position of the parties under the preliminary contract for ‘off plan’ sale, due to the fact that according to the practice established on the Bulgarian real estate market, the buyer pays in advance a good part or all of the sale price before one to acquire the title over it, and in the same time the vendor remains owner of the real estate on sale.
The authors also pay attention to the problem related to the significance of a decision adopted by the collective body of the company – vendor, at the time the preliminary contract is signed, which basically is an unconditional prerequisite for the buyer to materialize one’s legal right to ask from the court to declare the preliminary contract as final one by virtue of law.
At last but not least, the article discusses a problem that concerns specifically the ‘off plan’ sales. The buyer under the preliminary contract is not entitled to participate actively in the construction process by signing the deeds and protocols within the construction, because of the fact that the buyer is not owner of the real estate, hence one doesn’t have the capacity of ‘investor’ by the meaning of the enacted construction legislation.
In conclusion the authors make some suggestions for discussion of eventual amendments in the legal regime of the preliminary contract in the light of the outlined problems.
21.10.2011
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