In May 2005 my friend and I went to a property fair in London. We were persuaded that property prices were rising rapidly in Bulgaria when the MRI sales agent told us that property was expected to rise at a rate of 50% during the next year, and this would be a good investment as Bulgaria went towards joining the EU. We took our ‘free buying trip’ to Bulgaria to look at properties; I was considering purchasing one property.
On our arrival at Varna we were met by an agent who took us to our accommodation in Bourgas and the next day picked up and whisked around various properties in Sunny Beach. This agent gave us a lot of information regarding the purchase, financing, mortgage, letting, resale, and expected growth rates of properties in Sunny Beach.
She told us the following;
1. The mortgage would be a buy to let mortgage and that the rental income would cover the mortgage.
2. When the third payment had been made (70% of purchase price) we would have access to the property and that we would be able to rent it.
3. She assured us that the property would be easy to let and that they would take care of the letting.
4. The properties would be easy to sell.
5. She said that growth rates were 30%. – 50%
Of course we now know that all 5 selling points are not true and that everything that she told us was in fact a lie.
The agent persuaded me that a good investment strategy would be to purchase several properties for a very short term of about 6 months, and then sell these properties and take the capital appreciation to complete on one or two properties that I intended to keep for no longer than 2 years. What she did not tell me was that the capital appreciation would only be realised on the equity that you have in the property. Buying off plan and selling 6 months later would have in fact cost me money even if the growth rate had been 30% pa.
We were told that they would help us find an independent lawyer and taken to the Legal Independences's offices. I have since found that LI are far from Independent and that in fact they are very attached to MRI. It has also transpired that some of the so called Lawyers that work for this law firm are not lawyers. This relationship between the Real Estate Agent and the Law firm was crucial to the buying process, which demands that the purchaser make an immediate buying decision whilst on their viewing trip and gives them no room to bring in their own independent lawyer. This is the way that most property transactions have been conducted in Bulgaria for the past 5 years. We know now that it has left buyers very exposed and often with huge problems.
Unknowingly I agreed to purchase 5 properties off plan.
I went ahead with the purchases, Contracts were signed and payments made until 6 months later when I had run out of personal capital and needed to either sell some properties or raise finance for Panorama Fort Beach. This is when I started to run into problems, I found that I could not get a mortgage because there was no such thing as a ‘Buy to Let’ Mortgage in Bulgaria and there never had been. Concerned to protect my money I took an expensive unsecured personal loan to make the required payment (Which I am still paying) But, I had been assured that the properties would be easy to sell. NOT SO. All 5 properties were immediately put on the market. But not one has ever sold. I then went to the agent and told them of their agent’s misrepresentation at the time of purchase and told them I wanted the contracts cancelled and my money back.
Almost a year went by during which time there were many un-answered emails and desperate phone calls, some in the middle of the night because I was stressed and unable to sleep. Eventually I was told that the developer Fort Knox had agreed to cancel 4 of the 5 contracts. However, the developer wanted to transfer then funds into two new contracts for units in the HFGC Complex and that I was required to complete the purchase of the remaining one within one month with the outstanding amount of more than € 35,000 including all fees and costs.They were jsut trying to screw more money out of me.
Everyone knew that I could not increase my debt level, I told them and that I wasn’t happy with these new agreements. They told me that I would have to accept the agreement or loose all the money I had already paid into properties, a total of €144,000. They assured me that the HFGC properties would be easy to sell, and so I agreed and signed the New Contracts. I was not given any opportunity to query the contracts and have them looked at by an independent lawyer, or to visit Bulgaria and see what was being offered.
Everything hinged on selling the HFGC units so the money could be raised to complete on Panorama. There passed a period of about 3 months when I emailed or phoned the REA office at least once a week enquiring about the sale of the Golf units I was told such things as ‘We are pushing the sale of your properties, hopefully we will have good news for you soon’ Then, after 3 months of being fobbed off and given this standard line that they give everyone I was told ‘No-one will buy those units you have 80% equity in them already. Buyers can enter the market with only 10%’ Now, of course, a year later they have not sold, no one is interested in purchasing them they are at least 40% overvalued and there is no golf course. The contracts require me to pay another €8000 on completion.
I have been told that the Panorama contract has been cancelled and the unit sold to someone else. At this I wrote and asked for my money back, this has been refused. The terms of all my contracts state that if I fail to complete, the developer can keep ALL funds paid for the property even if there is only one Euro left to pay.
I have subsequently engaged an independent lawyer who has advised me that contracts written in this way which are totally in favour of the developer are illegal. I have paid the first lawyer a huge amount of money, 3500 Euro and they have done nothing to look after my interests. My new independent lawyer has repeatedly told me ‘** should never have allowed you to sign these contracts’ This relationship between the Real Estate Agent and the lawyer is illegal in any country.
I am still seeking to have all the contracts cancelled and to get my money back. The developer is now offering to transfer the funds into 2 more HFGC units.
Negotiations with the developer continue .........
UPDATE 22/08/2009
I met with the developers last week and they have agreed to consolidate all of my funds into 3 fully paid up and fully owned apartments with act 16.
I am now the owner of 3 fully paid up and completed units and looking to furnish or sell.
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