Preliminary agreement for buying property in Bulgaria: complete guide

The preliminary agreement is an arrangement between buyer and seller that binds both parties to complete the final property transaction under terms agreed in advance. It is signed before the notarial transaction and is usually when the buyer pays a deposit. Because it fixes the price and terms, it is the buyer's most important protection, but only when drafted correctly. This guide covers the essential clauses, how the deposit works, and what to check before signing.

What a preliminary agreement is and when it is signed

The preliminary agreement, also known as a preliminary sale and purchase agreement, does not transfer ownership. It obliges the parties to execute the final agreement as a notarial deed within a specified period. It is signed once the buyer has chosen the specific property but time is needed to:

• arrange financing through a mortgage;
• check the documents and encumbrances;
• prepare the necessary certificates;
• vacate the property of tenants or belongings.

Signing it locks in the price and terms so the seller cannot sell the property to another buyer at a higher price, while the buyer gains certainty that the transaction will proceed.

Essential elements and clauses

To fulfil its purpose, the preliminary agreement should contain:

• Precise details of the parties - full names, national identification numbers, and addresses; for a company, its Commercial Register details.
• Detailed property description - address, area, boundaries, cadastral identifier, floor, and the corresponding share of the common areas.
• Price and payment method - total amount, size of the deposit, and schedule for the remaining payment, including mortgage arrangements.
• Deadline for the final agreement - a specific date or event.
• Allocation of transaction costs - notarial fees, local tax, and registration fee.
• Seller's declarations - confirmation that the property belongs to the seller and is free from encumbrances, mortgages, and attachments.
• Consequences of default - what happens if either party withdraws.

The more specific the clauses, the lower the risk of a dispute. Review the ownership documents carefully before signing. Some of these checks are also covered in how to buy a flat without costly mistakes.

Deposit as earnest money: what happens if a party withdraws

The deposit, when expressly agreed as earnest money, is the amount the buyer pays when signing the preliminary agreement, usually around 10% of the price. It has two functions: it demonstrates serious intent and serves as compensation if a party withdraws. Under the rules for earnest money:

• If the buyer withdraws without a valid ground, the buyer loses the deposit.
• If the seller withdraws, the seller owes the buyer twice the deposit.

This gives both parties a strong incentive to complete the transaction. The agreement should expressly state that the sum is earnest money and specify when it is returned without a penalty, for example if the buyer does not receive loan approval under an agreed financing clause.

How to protect yourself: checks before signing

Before signing the preliminary agreement and paying a deposit, complete these checks:

• Ownership - do the seller's details match the notarial deed?
• Encumbrances - is there a mortgage, attachment, or registered claim? Obtain a Property Register search.
• Cadastre - do the area and identifier match the cadastral plan?
• Liabilities - are property tax and waste fees paid, and can a tax valuation be obtained? See property tax valuation.
• Real market price - are you overpaying? Compare current properties for sale in Sofia and read how to determine market price.

If any check raises a concern, it is better to delay than to pay a deposit on an uncertain transaction.

From preliminary agreement to final notarial deed

The final transaction is completed before a notary through a notarial deed, which transfers ownership and is entered in the Property Register. At this stage, the balance of the price is paid, often through a bank when a mortgage is involved, along with the notarial fees, local tax, and registration fee. The notary checks the documents again and verifies the parties' identities.

If the seller refuses to attend the notarial transaction after signing the preliminary agreement, the buyer may ask a court to declare the transaction final. A well-drafted preliminary agreement is therefore an effective remedy, not merely a formality.

Common mistakes and questions

Can a property be bought without a preliminary agreement? Yes, but you lose its protection and assume greater risk, especially with deferred payment or a mortgage.

Is the deposit refundable? It depends on the clauses. It is returned for a valid agreed reason, such as a financing clause, but not when the buyer withdraws without cause.

Must the preliminary agreement be notarised? No, but notarising the signatures and/or registration strengthens the protection.

What is the most common mistake? Rushing to pay a deposit before checking ownership and encumbrances.

When you are ready for the next step, browse current properties for sale in Sofia or ask a real estate agency to prepare and review the documents.