What is Act 16 for Bulgarian properties?

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What is Act 16 for Bulgarian properties?

Postby Admin » Thu Jan 06, 2011 1:52 pm

What is Act 16?

The Act 16 for constructions in Bulgaria, or in other words – the Permission for use, also has been called with many similar names – Certificate for Exploiation, Habitable Permit, Permission for operation or habitation, etc. The meaning of all phrases leads to a document, which per the provisions of the Bulgarian Laws certifies the official approval by the government or by the local municiaplity (in the related situations) for operating the finished construction (the property), once it has been completed, and once the elements of the local infrastructure and supplies have been connected/fitted to the building.
Basically Act 16 is the last step of the building process. It follows Act 15. You could read, hear or be told many explanations or assurements why Act 16 is needed or not needed, but here you will find point of view in simple words to tell you why you need to check this matter if you are buying an apartment or house, or villa or other type of construction in Bulgaria.
What the Bulgarian Property and Building Laws provises:
The Bulgarian Property and Building Law establishes different categories of constructions, and it provises that each category building should be entered into exploitation. This is why the legal bases of the Act 16 occur in the Structure of Territory Act and in the suppoting legislation, where it has been detailed that after completion of the building works and after performance of the testings on the building (where needed), the developer registers before the Auhtority, which initially has issued the Bulding Permission, the entering of the building into Exploitation, where the developer has to present documentation for reaching this document (actually, lots of documents). It has been said that the buildings from the first categories have to be entered into exploitation by the National Bulding Control Bureau via Permission for Usage.
- On the other hand, it has been purely stated that it is forbidden to use in any way (habit, rent out, manage, etc.) a property which has not been entered into exploitation. It means that despite what options developers can provide to you for using the property, without Act 16 it is just illegal (also dangerous) to use the built property.
- Also the Law provises that it is forbiden to use a property against its legal form of exploitation (stipulated in the Act 16), or against the conditions for entering it into exploiation. In simple words, this means that if you have bought a property, entered into exploitaiton to be “Studio”, or if you own a basement, then you are not allowed to use it as office, or apartment for living. The same converts for the other types of properties.
- It has been said that when the National Building Control Bureau finds such illegal usage or othe shortcomings/defects of the procedure or within the building, then they can issue orders for forbidding the usage of the property and they have the legal right to order to the suppliers immediately to cancel supplying the building with electricity, water, etc.
Please refer to a professional Bulgarian lawyer to advise you, investigate the conditions of the purchase, etc.
Why Act 16 concerns me and my purchase?
Many local developers who undertake the obligations to construct and sell real estate properties (mostly situated in local residential and holiday complexes) do not realize how important is to obtain Act 16 and not to leave the building only with Act 15. As most of them use subconstractors for performance of the building works, and as for most of them the sooner they receive the total purchase price, the better, it has become dodgy practice for constructing and transfering ownership of apartments on Act 15 only (which is internal document, not related to the local Authoritites and certifying only completion of building works), where they “forget” the obtaining of Act 16 for the complex, or due to their lack of involvment on ealrier stages, delay its issuance. You bet the only party which covers all the negatives of such situation is only the trustful owner who thinks that once they have signed their Title Deed and once water and electricity have been fitted to their apartment, everything is ok. But it is not.
Here we will detail the negatives of a property without Act 16, resp. what issues should be avoided / removed:
- If your developer has completed the whole building or complex some time ago but they have not obtained the Permission for usage (former Act 16) up to the present moment, then you are still legally allowed to use your property;
- You need to remember that the official owner of the unit or the building becomes the obliged party to apply for Act 16, and not the previous legal owner. If you already legally own the property via Title Deed, then you officially become the ONLY OBLIGED PARTY which has to apply from now on about obtaining Act 16 at the local Authorities, resp. with signing of the Title Deed you have actually released the developer/seller for their obligation to apply and obtain Act 16 – although they may have signed Act 15. So once they have transferred all apartments in the building (resp. collected all their money from the apartment buyers), it is posible for them not to have any interest in obtaining Act 16. So securing their obligation to obtain the Permission for usage should be done initially.
- If you are single apartment owner in a complex, then it is likely that you can not obtain The permission for usage only on your own – simply because you do not hold in your possession the huge pack with building documentation related to the building process and previously signed. Local Authorities are very strict and you can not rely that they will supply you with documents (like the internal buildign protocols like Act 14 and Act 15) that only the builder/the developer usually holds in their possession. The local Authorities may only provise that these to be signed again, which will lead you to huge expenses.
- Even if water and electricity have been already fitted, these are payable ONLY on higher determinated rates valid for construction business and usually payable commonly for the whole building. This means that without Permission for usage you are not able legally to open water independent batch or electricty batch for your apartment only and it is very likely that you will release the hands of the party which pays your water and electricity bills, to charge you higher amounts if they intend to do it.
- When you decide to re-sell, it is very likely that the next buyer or their lawyer will ask about the Certificate for Exploitation (Act 16) (or at least to present to them the receipts for paid water or electricity) where they will find out that the property has not been entered legally into exploitation (of course if they have not already searched in internet for news about this complex).
Please refer to a professional Bulgarian lawyer to advise you, investigate the conditions of the purchase, etc.
Why do I need to use a solicitor and how they can protect my investment?
Simply you need a law professional - a Bulgarian attorney to find a way to enter your building into operation, or to cancel your purchase contract if this is still possible option. Basically where there is no Act 16 for building or holiday/residentail complex, a professional Bulgarian lawyer should be capable to manage performance of two alternative procedures:
- Out-of-court instruments: These include negotiating with the initial developer/seller (if still existing), or collecting of the needed documents and applying for Act 16 at the Authorities on behalf of the owners; cancelation and termination of purchase contracts on the base of lack of Act 16.
- Court procedures: These are related to previously cancelled preliminary purchase contracts, and also to actual termination of final contracts/Title Deeds and seeking/pursuing refund.

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