How I got ripped off on my off-plan purchase

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How I got ripped off on my off-plan purchase

Postby Admin » Thu Oct 28, 2010 2:45 pm

How I got ripped off on my off-plan purchase and what is the solution for me.

Unfortunately for 2-3 years huge part of the local off-plan property market in Bulgaria has turned into problematic financial black hole where millions of Euro has disappeared via simple frauds, money-laundering procedures or other money-collecting schemes. Forced by the latest ended “successful investments” related to Platinum Developments, MRI, Mangle, Ready2Invest, Bulgarian Dreams, BG Realty, Ambasun, Interlink, etc. and other “reputable” foreign property agents or developers who have collected millions of Euro in foreign bank accounts from trustful buyers and later dissapeared, leaving the local developers to defend in courts, and namely because a lady in her online action groups pretends we’re not lawyers although she steals information from our website, here we will try to detail to you and to her the signs of dodgy off-pan property purchases bearing that soon we will have to translate this article also in Russian language (bearing the current goal of the local market and its direction).

I’ve signed for off-plan purchase and the developer pretends now they are experiencing issues. How do I know if it is straight purchase or they’ve robbed me?
First of all, read again through your signed private purchase contract in order to find out the legal connection with the Bulgarian Laws and Authorities. You should hold an original of preliminary contract in writing, signed and stamped namely by local Bulgarian company-seller (i.e. the developer) and not by foreign companies or agents. This is what a "straight purchase" means. Most of the contracts have been signed in the non-presence of the parties, after successful viewing trips, so it is important to establish whether the local developer has really signed and obliged to you, or the contract has been signed by anonymous individual and forwarded to you by the very helpful foreign property agent. The stamp by the local company on your contract proves they have obliged to you and later makes your lawyer’s life in court lot easier. The lack of stamp by the developer usually they’ve conned you. Of course the best option for you is to contact an independent Bulgarian property lawyer who will examine your contract for 100-200 Euro and will advise you accordingly. Spending couple hundred Euro on legal fees may save you a lot of headache on a later stage. Trusted and reputable Bulgarian solicitors know how to do their job, resp. how to protect your interest without losing all your money.
EXAMPLE: if you hold a preliminary contract signed with US company-seller or company-seller registered on Turks islands, or directly with the foreign “reputable” property agent, please do not expect to achieve refund via Bulgarian court. You should pull out because it is likely that you will get conned.
SIGNS: The 1st step in the money-collecting scheme in the form of money-laundering procedure, or other kind of fraud, is to exclude a local proper Bulgarian company (should be the seller) from signing and stamping your contract, so it will be impossible for you to claim their responsibility here in Bulgarian courts. Every good Bulgarian conveyancer will advise you that their instruments are:
- paying reservation deposits towards foreign “reputable property agent” instead directly to a local developer, who will later simply deny they have signed anything with you;
-not presenting to you prior signing the building and company documentation and updating you not directly, but only through “the reputable” agent,
-or offering a particular “very helpful” local Bulgarian solicitor to advise the buyer “for free” or “really cheap services” and represent them for signing the private purchase contract. Not to mention the fact that very often the lawyer is not even a lawyer at all - and namely graduated students who work for conveyance companies, so-called "solicitors" who have not even passed the lawyers exam, neither registered as members of the BAR, etc. You need to remember that only a member of the Lawyers' BAR has an insurance for damages caused to clients.
If you find yourself in this situation, contact independent law professional - a proper Bulgarian lawyer or a lawyer's firm to examine your documents and will advise you how to proceed - good Bulgarian lawyers can see and find legal instruments which usually are not visible for the buyer.

I have signed with Bulgarian company, but I’ve paid towards the property agent and they sent me receipts, is my investment secured?
Again take a look at your signed contract. The ways of paying for your off-plan purchase, together with the details of the developer’s own account must be stipulated precisely. If this is the case – well, you’ve got legal bases to pretend you’ve performed your obligations per the contract. If you’ve made your installments towards “the reputable foreign agent” in their foreign bank account, then you’re expecting from your lawyer to make miracles in getting these money back from the poor (namely) local developer. Of course foreign agents will issue receipts to you for all installments/figures they’ve successfully collected from you – but it is not evidence in Bulgarian court for pretending refund from the local developer. Bulgarian courts do not recognize foreign companies and their receipts. It would be evidence only in English court of Law if you sue the property agent. I know - but they’ve vanished already, or ceased business, or been liquidated. So I don’t have to explain to you why they have very easily issued, signed and presented via e-mail various receipts to you.
A good Bulgarian lawyer will advise you that when you’ve obliged towards Bulgarian company, and you’ve made installment to this company (no matter how), then this company should issue signed and stamped proper VAT-receipt for the money received. This VAT-receipt could prove in court that they’ve received your money - i.e. will entitle you to claim refund of these if the developer fail to perform their obligations per the contract.
- Lack of contracts between buyers and the foreign agents, but requesting payments to foreign property agents, against receipts from these agents only;
- Lack of receipts or any other signed and stamped documents by the Bulgarian company-seller. Here the Law requires payment directly to the developer who you are buying from, namely in their bank account in Bulgaria, and no exceptions on this, for straight purchase. Thieves and frauders know this pretty well and they do their best to request payment towards third parties into foreign bank accounts (pretending it saves bank charges), which is the “heart” of the money-laundering procedure. Somehow the buyer misses the fact that they have no proper contract (not a leaflet or reservation form) with “the reputable property agent”.
If you find yourself in this situation, contact independent Bulgarian lawyer, who will examine your documents and will advise you how to proceed - good Bulgarian lawyers can see and find legal instruments which usually are not visible for the buyer.

I am making my installments as instructed in the contract, but why the Bulgarian developer does not update me and only the agent (my solicitor) does? I’ve got e-mails to prove clearly that they’ve confirmed about receiving my installments…
The building process includes many legal activities for which the buyer should be updated. Thieves always try to avoid any direct contact between the buyer and the Bulgarian developer, if possible, or establish only e-mail correspondence with the unknwon “George, Sales team manager” or with the unknown “Nick Smith - purchase assistant” who behind their computer pretends to be representing the Bulgarian developer. Bear that EMAIL CORRESPONDENCE IS POOR PROOF IN LOCAL COURT. The developer and the agent know this very well so they are brave to confirm in e-mail letters to you everything – they have received the installments, they will complete in some deadlines, to cover your travel expenses on completion, etc. You’ll never be able to claim against these persons in local court to confirm their statements, as well they will never appear in local court to help you. At the end of the day you’ve not received via the post any official document directly by the Bulgarian developer, although you’ve agreed with your own signature in the contract that “The addresses of the parties for the needs of the current contract are…”. All the above ensures that the trustful buyer will stay calm and will not dig in to check if there are other buyers (usually hundreds) who have been misled to sign for purchasing in the same off-plan development, looking quite astonishing on 3D images and brochures. Only on 3D images and brochures, unfortunately.
SIGNS: Avoiding any direct postal correspondence between the buyer and the local developer; Updates been spread by the foreign agents in emails only; guidance via e-mails only by persons who have never presented to you their credentials to act on behalf of the local developer.
If you find yourself in this situation, contact independent law professional, who will examine your documents and will advise you how to proceed - good Bulgarian lawyers can see and find legal instruments which usually are not visible for the buyer.

“I’ve been asked to pay (the total price) but the complex is not completed yet, they’re behind the deadlines but they’re not responding to my emails any longer?”
You need to realize that as every fraud, these ones also have been planned to work without problems and for long term – they sign contracts and collect money, usually start to build something with 1/10 of it, not paying local taxes, and then sell again and build again, and so and so. And as every fraud these go to an end – in the current case forced by the financial crisis. A good Bulgarian lawyer should advise you how they rip you off:
1st step) The foreign agent collects your money, and then sends part of it to the Bulgarian developer or builder.
2nd step) Both of them spend all the money, considering it as good profit and expecting to build and complete from the buyers’ next installments and from new buyers.
3rd step) Surprise, surprise – here comes the worldwide financial crisis, the stream of new buyers and fresh cash stops (obviously they can not continue to sell off-plan developments for 1500 Euro per sq.m.) and this is the moment when they all decide to vanish, knowing they will not be able to complete and they’ve spent the money already for mansions and yachts, even more – previously mortgaged the whole project in favor of local Bulgarian bank in order to collect more cash without using the collected money.
Basically this is the moment when it all starts to smell really bad – for the straight frauds, everybody vanishes, leaving the buyer “piggin’ in the middle of nowhere”, as we say here in the Manchester region. For the smart frauds, the “reputable foreign agents” suddenly stops trading (note they’ve already collected your installments, together with the installments of 100 other buyers in your situation, for example); on the other hand suddenly the Bulgarian developer requests any outstanding payments directly to them (then why not from the beginning?), helpful representatives of the seller together with your local solicitor (previously offered by the seller) start long communication with you, basically not to tell you anything for a year-long correspondence, only with requests towards you to invest more, and to avoid confirming that they have robbed you.
This is also the moment where usually you start to dig in google for any other frauded investors and sometimes have been invited to join online “helpful actions groups”, hoping that suddenly there will come great help and somebody will complete the property and give you the keys without need for you to spend a penny more for protection of your own investment and interests. Trust me, if this could happen, we – the local lawyers, would work only in the form of our own online “action groups”, without the need of keeping working offices and going to practice in court room to protect our clients' interests.

SIGNS: The foreign property agent has suddenly stopped trading/existing; the local developer does not respond to your correspondence, or in case you still have to make installments, then they start blaming the agent, local banks, the crisis for the delay in completion – and this is only to collect your outstanding installments from you, to delay things further and to avoid you seeking refund (you may not know this, but the seller proceeds the same other 100 buyers in your position, who on the other hand could put the company down in a week time with eventual 100 claims for refund, if they really knew what is happening).
If you find yourself in this situation, contact independent law professional, who will examine your documents and will advise you how to proceed - good Bulgaian lawyers can see and find legal instruments which usually are not visible for the buyer.

“I don’t have my deeds, but am I right that I own the apartment because I’ve signed for it and I’ve paid for it towards the agent or the developer, although they seem to have vanished already?”
Here’s the greatest misleading – remember that if you have signed preliminary contract only (please read its title once again), no matter if you have paid 100% of the price (doesn’t matter to who) yet you have NO ownership rights for this apartment. Preliminary contracts only consist of one obligation – on a later stage the parties to sign ownership contract (the Title Deed). And before signing of Title Deed, you can not rely that they won’t harm your buyers’ rights – neither the developer nor third parties.
SCARS: The total purchase price has been paid but they all stay quiet;
If you find yourself in this situation, contact independent law professional, who will examine your documents and will advise you how to proceed - good Bulgarian lawyers can see and find legal instruments which usually are not visible for the buyer.

“Here they form online action group, they say they’ll organize paid seminars and will ask the EU Authorities to help, should I rely on this and wait to see what happens or should I contact a local law professional to take my case and help me?”
Most of the buyers, who have been misled to forward money to third parties in foreign bank accounts, think that if specially designated by the action group lawyer appears and answers a question for them, this will refund their money the very next day with magic stick, without asking themselves why especially this lawyer has been chosen and why they have to pay to participate in a seminar, where to be informed about the lawyer's fees (instead of writing couple e-mails to local lawyers). Another soap bubble is the rumor spread within the online group that respected public authorities may come to dig in Bulgaria in their own mess and will refund their investments just like that. At least this is what most anonymous owners of online action groups advise people. Although the whole fraud is covered with civil relations and lots of international individuals – everybody is playing their role to reach stealing your money. European authorities do not deal with costumer issues in local countries – this is why when contacted on the matter, they kindly advise you to contact the related local Authority for protection of costumers. Who will only tell you that you do not have a valid contract with local company, or that you obviously have not forwarded any money to the local developer so they can not help you. Thieves know this very well which turns us at the beginning of the article. So far the European Authorities have not refunded money to a single frauded buyer, no matter what some online action groups may try to convince you.
• Also you may also read our article - in order to clear your view.
“I already own the apartment, but I don't have the Bulstat card and number, and moreover nobody has notified me about the rate of the annual property taxes - I wonder why?”
Nobody has notified you because it is likely that you have bought a newly completed apartment which does not have Act 16 (A certificate for exploitation); in then there is no mentioning of Act 16 at the end of your Title Deed, where all the related to the purchase documentation should have been precisely detailed; so the apartment has not been declared at the local Tax Authorities (annual taxes due only after Act 16). Well, per the provision of the Law you are simply not legally entitled to use the apartment. Some will say, whatever. Well, one thing you need to bear before signing a TItle Deed for apt. without Act 16 - the next buyer may be better informed than you, so they or their lawyer may ask you about Act 16, when you decide to re-sell. In other words - in the situation of the current lcoal property market, overloaded with cheap newly built apartments, owning an apartment without Act 16 is similar to owning nothing - simply because nobody wil lever buy it from you. Refer to our section to get more information.

Bulgariandeals Team

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