Looking to buy property at a bailiff auction in Bulgaria? | BSLC Real Estate Attorneys

Buying a real estate property offered at a public auction in Bulgaria, especially when it is subject to a seizure (attachment) or other encumbrances, is a legally complex and practically risky process that requires serious preliminary due diligence and a professional legal approach. In recent years, attractive properties have increasingly appeared at public auctions conducted by private enforcement officers (ЧСИ), particularly in major cities such as Sofia (including districts like Lyulin, Mladost, Lozenets, Nadezhda, Vitosha and Ovcha Kupel), Burgas, Varna, and Plovdiv.

At first glance, these auctions seem like an opportunity to acquire property below market value. In reality, however, they often hide significant legal pitfalls:

• co-ownership with third parties
• pending court disputes
• invalid or contestable assignment decrees
• difficulties with taking possession of the property

⚠️ A very common scenario is one where the buyer successfully bids for a property burdened by a mortgage or attachment, only to later discover that part of the property is co-owned by a third party who was never involved in the enforcement proceedings. This typically leads to disputes, refusal to vacate the property voluntarily, and the need for court proceedings to protect the acquired rights.

Under Article 498(1) of the Bulgarian Civil Procedure Code (CPC), the buyer acquires the right to be put into possession only after presenting proof of paid transfer fees and registration of the assignment decree. However, this procedure does not automatically guarantee peaceful possession, particularly where third-party rights exist or where the property was acquired with encumbrances.

Even more importantly, public auction purchases are, by their legal nature, a derivative method of acquisition. This means that the buyer acquires only those rights that the debtor actually held at the moment the attachment was registered (Article 496(2) CPC in conjunction with Article 453 CPC). If the debtor did not have full ownership rights, the buyer cannot acquire more than that.

In this section, we will examine in detail:

• how the purchase of seized property from a private enforcement officer works
• which documents must be reviewed
• what fees apply
• whether bank financing is possible
• what co-ownership means in the context of public auctions
• and what legal risks arise in each of these scenarios

🏛️ BSLC provides full legal protection and assistance in the purchase of properties from private enforcement officers across Bulgaria. We review the legal status of the property, analyze registry entries, identify risks, and, where necessary, conduct negotiations or court proceedings to protect the acquired ownership. Our clients rely on us for security, transparency, and legally sound transactions — without unpleasant surprises after the acquisition.

How the sale of real estate at a public auction by a private enforcement officer works

The purchase of real estate from a private enforcement officer (ЧСИ), including through a public auction, is a multi-layered legal process with numerous specific rules and potential legal traps — especially when the property is seized, encumbered, or co-owned.

For the sale to be lawful, it must follow the procedure set out in Articles 474–506 of the Civil Procedure Code, including strict compliance with deadlines, bidding rules, issuance of the assignment decree, and registration in the Property Register.

A public auction is a form of forced sale, conducted to satisfy the claims of a creditor. The enforcement officer initiates the sale after:

• preparing a formal inventory
• commissioning a valuation
• announcing the auction publicly

🗓️ The auction period lasts one month, during which bidders submit sealed offers together with a deposit equal to 10% of the starting price (Articles 489–490 CPC). The winning bidder must pay the full price within 7 days of being declared the buyer (Article 492 CPC).

The assignment decree is the act by which ownership is transferred to the buyer. Once registered, it has a property-transferring effect (Article 496(1) CPC). However, this decree may be challenged within 7 days by:

• the debtor
• certain bidders
• or parties claiming affected rights

Moreover, even after the decree enters into force, ownership may still be contested through separate court claims, such as an action under Article 440 CPC by a third party claiming ownership independent of the debtor.

How a property is brought to public auction

A property can be brought to public auction only within properly initiated enforcement proceedings. Under Articles 428–429 CPC, enforcement begins upon the creditor’s request, supported by an enforceable title (such as a writ of execution).

Before auctioning the property, the enforcement officer verifies:

• ownership
• registration status
• existence of encumbrances

📌 The attachment (seizure) is mandatory for a public auction (Article 450 CPC). Once registered, any subsequent disposal of the property by the debtor becomes ineffective against the creditor and the future buyer (Article 453 CPC).

The process then includes:

• formal inventory of the property
• expert valuation by a licensed appraiser
• setting a starting price (not below tax valuation)
• public announcement of the auction

🧭 In BSLC’s practice, we frequently encounter auctions involving unclear ownership, incorrectly described properties, uninformed co-owners, or improperly announced sales. Each of these defects can later result in court challenges or even nullity of the auction — which is why legal review before bidding is crucial.

What happens after the auction is completed

Once the assignment decree enters into force, the buyer has the right to be put into possession, even if the property is occupied by third parties. Under Article 498(2) CPC, eviction can be carried out against anyone in actual possession, with their only defense being a separate ownership claim.

However, buyers must clearly understand which encumbrances are extinguished and which remain:

• ❌ attachments and later mortgages are extinguished
• ⚠️ rights of use, servitudes, and certain lease agreements may remain

For example, a lease registered before the first mortgage remains enforceable against the buyer, potentially preventing immediate use of the property.

Co-owned properties present additional risks. If only ideal shares are auctioned, the buyer becomes a co-owner, not the sole owner — often leading to partition lawsuits or prolonged disputes.

🏗️ BSLC assists not only with legal analysis and representation before enforcement officers, but also with post-acquisition steps, including:

• possession procedures
• negotiations with occupants
• ownership claims
• cadastral corrections
• coordination with banks for financing

Key risks when buying property at public auction

The most fundamental risk is that the buyer cannot acquire more rights than the debtor had. If the debtor was not the true owner at the time of the attachment, the buyer may acquire nothing — even if the auction was formally correct.

Additional risks include:

• enforceable long-term leases
• procedural defects in the auction
• ownership claims by third parties
• inaccurate cadastral data

⚖️ BSLC mitigates these risks through full legal due diligence before bidding, not after.

Who can challenge the assignment decree

Under Article 435(3) CPC, the right to challenge the assignment decree is strictly limited and includes:

• the debtor
• bidders who paid a deposit
• the creditor, if they participated as a bidder

‼️ Third parties claiming ownership cannot challenge the decree directly. Their protection lies in a separate claim under Article 440 CPC.

Importantly, the assignment decree cannot be revoked under the general rules for reopening court decisions, as it is not a judicial ruling but an act of the enforcement officer.

Can auction property be bought with a bank loan? Can foreigners buy?

Bank financing

Yes, property bought at auction can be financed with a mortgage loan, but banks impose stricter conditions. Typically:

• the buyer pays the 10% deposit personally
• loan approval must be arranged in advance
• funds must be released quickly after winning

Some banks offer special auction financing products, but legal coordination is essential.

Foreign buyers

• EU and EEA citizens may freely acquire property in Bulgaria
• Non-EU citizens may buy buildings and apartments freely
• Land acquisition by non-EU citizens usually requires a Bulgarian company

📌 Final note
Buying property from a private enforcement officer is not simply “winning the highest bid”. It is a complex legal process where a single overlooked detail can cost tens of thousands of euros and months of litigation. This is why we always advise: consult before bidding, not after.

Specifics of buying real estate sold from the insolvency estate of a company in Bulgaria

The purchase of real estate offered for sale as part of the insolvency estate of a commercial company in Bulgaria follows a legal regime that differs fundamentally from public auctions conducted under the Civil Procedure Code (CPC). While both procedures involve public bidding, the insolvency framework under the Commerce Act (CA) introduces additional actors, stricter judicial oversight, and specific legal consequences that every potential buyer must clearly understand in advance.

Under Article 717a of the Bulgarian Commerce Act, the liquidation of the debtor’s assets in insolvency proceedings is carried out through a public auction organized by the insolvency trustee (syndic). Unlike enforcement proceedings under the CPC, where the sale is conducted by a private or state enforcement officer, here the syndic plays the central operational role, while the court overseeing the insolvency issues the assignment decree pursuant to Article 717z CA.

❗ Key practical point
Participation in the auction alone does not transfer ownership. The buyer acquires ownership only after a court-issued assignment decree enters into force. This decree has the legal effect of a notarized deed, but the method of acquisition remains derivative — meaning the buyer can acquire only those rights that the insolvent debtor actually held. If the debtor was not the owner, the buyer cannot become one either.

Legal framework of attachments and the role of the trustee

In insolvency proceedings, attachments and prohibitions over the debtor’s assets arise automatically by operation of law upon the opening of the insolvency case, pursuant to Article 717 CA. These measures are reflected in the Property Register and restrict any disposal of assets outside the insolvency process.

Once the court issues a decision declaring insolvency under Article 711 CA, the syndic is required to prepare a liquidation plan within one month following the creditors’ meeting under Article 677(1)(8) CA. At this meeting, creditors decide on the method, sequence, and conditions under which the assets will be sold.

💡 Practical example
If you are interested in purchasing property sold within insolvency proceedings, your first steps should include verifying whether the property is subject to mortgages, long-term leases, or prior encumbrances, followed by monitoring whether the syndic has duly prepared and published a liquidation plan and sale announcement in compliance with Article 717a CA. These announcements are published in the Commercial Register, ensuring public access and transparency.

How the insolvency auction is conducted

The auction procedure under insolvency law is notably different from enforcement auctions under the CPC.

Under Article 717a(1) CA, the starting price is determined by a licensed valuation expert and cannot be lower than the tax value or the insured value, if higher. Unlike CPC auctions, which last 30 days, insolvency auctions are conducted on a single designated day, at a place and time specified by the syndic.

Bids are submitted in sealed envelopes until the deadline stated in the announcement. After the deadline, the envelopes are opened publicly, and the highest offer is declared the winner pursuant to Article 717v CA. If two or more bids are equal, an oral auction is conducted immediately between those bidders, reinforcing the competitive and transparent nature of the process.

🔍 From a practical standpoint, a prospective buyer must not only track all published announcements (municipality premises, debtor’s address, Commercial Register, and the Ministry of Economy bulletin), but must also ensure strict compliance with the bidding requirements, including proof of payment of the deposit, typically set at 10% of the starting price.

Following the auction, the syndic prepares a protocol and notifies the insolvency court, which then issues the assignment decree under Article 717z CA. This decree must be registered in the Property Register under Article 4 of the Registration Rules.

‼️ Critical risk
If the buyer fails to pay the full price within 14 days (Article 717d CA), the deposit is forfeited and a new auction is scheduled. This risk alone underscores the importance of financial readiness and prior legal planning.

Once the assignment decree enters into force, ownership transfers to the buyer under Article 717z(4) CA. At this point, registration of ownership becomes possible, but the buyer still acquires only the rights the debtor lawfully held — again, a derivative acquisition.

Legal risks when buying insolvency estate property

When purchasing property sold as part of insolvency proceedings, the most critical task for any buyer is a comprehensive analysis of third-party rights that may still be enforceable against the new owner, as well as scrutiny of transactions carried out by the debtor before or after the opening of insolvency.

According to Article 717z(5) CA, third-party rights cannot be asserted against the buyer if they could not be asserted against the insolvency creditors themselves. In practical terms, this means that rights created in violation of insolvency rules — for example, unregistered rights or transactions voidable under Article 646 CA — are unenforceable against the buyer.

📌 Example
If the debtor leased the property after insolvency proceedings were opened, without court or syndic approval, such a lease is void with respect to creditors under Article 646(2)(1) CA and does not bind the buyer.

However, buyers must also be aware of a significant procedural distinction: unlike CPC enforcement sales, where possession may be obtained through an enforcement officer, possession in insolvency cases is not automatic. If former occupants resist, the buyer may need to seek judicial protection through an ownership claim under Article 109 of the Ownership Act.

‼️ Real-world risk
Debtors frequently attempt to obstruct sales by creating fictitious leases or usage rights. This makes thorough registry and corporate record checks in both the Property Register and Commercial Register absolutely essential before bidding.

Distribution of proceeds and creditor priority

The distribution of proceeds from the sale is governed by Article 722 et seq. CA and is of particular importance when the buyer is also a secured creditor.

Expenses related to insolvency — including liquidation costs, syndic remuneration, expert fees, registration fees, and court costs — are satisfied first, followed by secured and unsecured creditors in statutory order.

The syndic prepares a distribution schedule, which is published in the Commercial Register under Article 727 CA, triggering a 14-day objection period under Article 728 CA.

💬 For ordinary buyers, it is important to note that only creditors and the debtor may challenge the distribution. A buyer may object only if they participate as a secured creditor and their entitlement is incorrectly calculated.

Once approved by the court under Article 729 CA, the distribution schedule becomes enforceable and binding.

📌 Example
A mortgage-secured creditor who purchases the property may be satisfied from the sale price according to the mortgage’s registration rank. Any unpaid balance becomes an unsecured claim.

Can the assignment decree be appealed in insolvency proceedings?

Yes — but only under strictly limited conditions.

Under Article 717z(3) CA, the assignment decree may be appealed by:

• the debtor
• the declared buyer, if procedural violations occurred
• other bidders, if equal treatment was breached

⚠️ Unlike CPC enforcement proceedings, creditors cannot appeal the assignment decree. Their protection lies exclusively in objections to the distribution schedule, ensuring procedural efficiency and preventing obstruction of liquidation.

Appeals must be filed within 7 days of publication in the Commercial Register and are reviewed by the insolvency court. If the decree is annulled, a new auction is held under Article 717j CA, with a starting price set at 80% of the last valuation.