Management and Maintenance Contracts for Investment Properties in Bulgaria

According to latest research works, Bulgaria’s ski resorts such as Bansko, Borovets and Pamporovo as well as some Black Sea resorts such as Sunny Beach and St. Vlas  are now amongst the most affordable in Europe and therefore very popular. Moreover, with the current economy situation and high inflation in whole Europe, the affordability of Bulgaria makes it extremely tempting for tourists. Furthermore, there are still undiscovered tourist and property investment destinations here such as Purshevitsa in the Vratsa Mountains (in the West-North Old Mountains Chain) as well as Berkovitsa and Belogradchik, which compare to areas such as Bansko and Borovets winter resorts, Black Sea resorts and the capital Sofia are still very cheap.

Most of the foreign investors who have already bought investment properties in Bulgaria expect to be able to let them out and receive a good annual return on their investment. There are also such investors who have merely purchased properties with the intention of selling them in a few years time and receive a profit on their investment capital. Nevertheless, owning a property in a foreign country has its downsides and could sometimes be a discouraging experience for buyers in case that they do not obtain a good legal advice and professional assistance.

Therefore, if you are looking to invest in a Bulgarian property you should obtain a legal advice before signing any preliminary agreement as this could save you a lot of trouble later.

On the other hand, if you have already bought an investment property in Bulgaria and you are looking to rent it, you can either let it out yourself or use a management company to do that for you. If you choose the second option, you must use an independent Bulgarian solicitor who will draft a comprehensive management contract and maintenance agreement for you, or will carefully check the clauses of the contracts proposed by your chosen management company.

There are two types of standard management contracts that are usually used by management companies and owners.

The first type is a management contract, under which terms, the management company acts as a tenant of the owner and sublets the property to third parties. In this case, the owners usually get a guaranteed rental income from the management company. On the other hand, any rental arrangements between the management company and third parties to whom the company sublet the property are not subject to the management contract in question.

The second type of standard management contract consist of such terms that require the management company to let the property out to third parties on behalf of the buyer in return for a percentage based commission on the received rental income. In such event the owners get as much income as it is received from renting of the property but less the agreed with the management company commission.

An important thing which the owners have to think about, is the maintenance of the property. A maintenance agreement can be either concluded with the management company or with a different company but in such case the terms of the maintenance contract has to interact with the terms of the management agreement