CLIENT ALERT – BULGARIA: Public real estate is no longer exempt of the prescription rule

bulgaria

The Bulgarian Constitutional Court rules against the moratorium on acquisition by prescription of certain state and municipal urban real estate

For more than a decade acquisition by prescription of state and municipal real property in Bulgaria has been suspended with the pretext of protecting public interest. In March 2022, this exception of the property law was revoked, in part, due to a recent decision of the Bulgarian Constitutional Court that ruled against it as unproportionate and unjustified with respect to certain urban real estate of the state and municipalities.

When the new democratic Constitution of Bulgaria reintroduced private property in 1991, it set in motion the immense process restitution of the real estate expropriated by the socialist government in since 1945. Within the next decade, it became apparent that the restitution had advanced much slower than expected; there was imminent risk that enterprising citizens and entities could acquire by prescription neglected state and municipal property if they held them as their own long enough – the state and the municipality did not have the resources, nor the proper incentive, to properly monitor and manage the vast remaining real estate subject to restitution. Therefore, the Parliament acted to prevent this by introducing an exception to the prescription rule – for certain real estate, such as agricultural land and forests, it was added as a specific amendment in the law; for others, such as the urban real estate, the Parliament imposed a moratorium i.e., a temporary ban on acquisition by prescription of certain state and municipal property by private individuals or entities regardless of the period of unopposed possession.

The moratorium on acquisition by prescription of certain urban state and municipal property was introduced in 2006 and was intended to last for a short period of time i.e., it was a temporary measure aimed to provide the authorities with time to finalize the restitution of the remaining real estate. However, it was subsequently extended several times – once even with controversial retroactive effect, eventually spanning across sixteen years until the end of 2022. While the initial intention was legitimate, it soon became privilege devoid of substance and justification as the restitution advanced and eventually ended. For the last decade, the moratorium has become more and more controversial and burdensome, sparking numerous disputes in court. Finally, in February 2022 the Constitutional Court ruled against it as unproportionate and unjustified in violation of the Constitution of Bulgaria and revoked it, effective as of 8 March 2022.

The revocation is effective ex nunc and does not have retroactive effect, except for pending litigation, in which the court is to revise the proceedings and decide the case by ignoring the moratorium.  Now that the moratorium no longer shields the state and municipalities, they have the incentive to be proactive in managing their urban property. Because of the revocation, private individuals and entities that still hold as their own such urban state or municipal property, may claim acquisition by the prescription if they can prove a certain period of uninterrupted possession – they can add the period of possession before 2006 to the period that resumes to run after 8 March 2022.[1] The consequences are less straightforward for those who held the property for the required prescription period, but lost the possession of it or were evicted prior to the revocation – the Parliament is to settle the ensuing competing rights and claims by specific legislative act by June 2022.

[1] As a general rule, undisturbed possession of a real estate for a period of 10 years with the intent to own the property, results in acquisition by prescription.

Paris

Budapest

Bucarest Bucharest

Belgrade

Nous sommes un cabinet d’affaires spécialisé en fusions et acquisitions, en opérations immobilières et en droit des investissement étrangers en Europe centrale et orientale.

We are a French firm and we have been active in Paris as well as in Central and Eastern Europe for more than 20 years.

Inscrivez-vous à la newsletter Suscribe to our newsletter

Retour haut de page