Real Estate Litigation 2026 Comparisons

A loan could be secured by a property, either by a mortgage over a property or a pledge over the commercial enterprise of a company owning a property. Mortgages and pledges grant the secured creditor priority over other creditors in the distribution of the price of the property.

When a loan is secured by a mortgage, the lender could enforce the security and recover the value of the property only upon a court order for payment or a court decision. Once they enter into force, a writ of execution for the payment is issued.

This writ of execution serves as a ground for commencement of an enforcement procedure before a private or state bailiff. The latter organises a public auction of the property and distributes the price paid between the creditors depending on their priorities.

If a loan is secured by pledge over the commercial enterprise of a company owner of a property, the creditor could choose between the judicial procedure described above or the non-judicial procedure before the Bulgarian Commercial Register. The procedure could be initiated with a registration of commencement of enforcement. This grants the creditor control over the assets and the activities of the debtor. The creditor is the one who appoints the manager of the company and decides whether to collect its debts through the activities of the company or through the sale of its properties. 

Pursuant to Bulgarian law, equity refers to shares in the capital of a company. Therefore, a pledge over equity implies a pledge over the company’s shares or stocks.

A pledge over the equity of the property owner provides the creditor guaranteed by that pledge with a privilege in the distribution of the value of that equity. The pledge does not impede the right of other creditors to foreclose the property or seize the same equity.

The procedure involves a court order for payment, a restraining order, or a decision establishing the liability of the debtor. On the basis of any of these acts, a lender could initiate an enforcement procedure before a private or state bailiff, who could seize the equity.

It should be noted that the rules on piercing the corporate veil are not as developed as in common law systems, so the seizure of equity in a company requires a debt between the lender and the equity owner.

Bulgarian law provides that foreclosures could be established only over immovable properties. Since the material interest in this case is higher, there are no non-judicial processes for establishing a foreclosure.

The possibility of selling a property part of a pledged commercial enterprise of a company does not involve foreclosures, and the non-judicial procedure could not be applied. 

The borrower could renegotiate the terms of payment with its creditor up until the public auction of the property. In cases where a court decision for the liability of the borrower is rendered, the court could order a rescheduling of the debt payments.

Once the enforcement procedure is initiated, the borrower could also pay the debt. They could also suspend the enforcement by paying 20% of the debt and being obliged before the bailiff to pay 10% of the debt every month until the debt is fully paid. The latter option does not apply in cases of mortgages. 

A lender is entitled to pursue the equity of the property owner and enforce their rights under the mortgage at the same time. There might be objections for excessive securities. There are no concerns regarding the right of redemption, since these rights are granted by the procedural code and the refusal of the bailiff to apply them could be appealed before a court.

A lender could pursue other claims against the borrower if there are grounds for them and they do not result in unjust enrichment. Lenders could also pursue affiliated entities as long as they provided corporate guarantees for the loan – ie, equity pledges, warranties, etc. 

The length of the foreclosure procedure depends on the grounds on which it was permitted. If the foreclosure is imposed as a restraining measure (provisional remedy), the procedure could take between two weeks and two months. If the foreclosure is established in enforcement procedures, the whole court proceedings for the debt shall be closed before the foreclosure is imposed on the property. This could take from several months to several years. There are no non-judicial foreclosures under Bulgarian law.

The amount of the deficiency is calculated on the basis of the whole debt together with the interest accrued, reduced by the part of the sale price distributed to the creditor after the public auction. Lenders could continue the enforcement procedure and use other assets of the debtor to collect their debt. 

The most common legal entities used for joint ventures related to real estate are limited liability companies and joint-stock companies. Recently, a new type of entity was introduced into Bulgarian legislation – the variable capital company. This could prove to be useful for real estate joint ventures.

Joint ventures and operating agreements usually structure co-operation and assign the roles between the partners – ie, who is the investor, who focuses on the development, etc.

Persons with ownership interests in a real estate joint venture are usually shareholders in an entity established for the joint venture. Their statutory duties include payment of their shares in the capital and participation in the company’s activities to the extent indicated in the corporate agreement. If they fail to perform their duties, they could be excluded as a shareholder in the capital of the joint venture entity.

Further duties could be negotiated in a shareholders’ agreement. The remedies against shareholders who fail to perform their duties could vary from penalties to loss of privileges, etc.

Bulgarian legislation does not provide clear rules in cases of joint venture management disputes; therefore, such situations should be set out thoroughly in the corporate documents or the shareholders’ agreement. Shareholders could file for a termination of the entity before the court if the disagreement could not be solved. 

This topic is not applicable.

The standard procedure for termination and liquidation of an entity applies to joint ventures, and there are no special considerations.

Although interest payments, shortfall and completion guarantees could be negotiated, they are not regulated under Bulgarian law as specific types of guarantees. Different types of financing could be used for real estate acquisitions and projects. The types of financing define the guarantees; the most common are mortgages and pledges.

When financing is provided to entities, lenders could request corporate guarantees – ie, pledges over equities or receivables, pledges over the commercial enterprise of a company, bank guarantees, etc. If the financing is provided to an individual acquiring property, lenders usually request a mortgage over the property together with a guarantor. 

Non-recourse carve-out guarantees are not regulated in Bulgaria.

Since there are no specific rules on enforcement or defending enforcement of completion guarantees, unconditional guarantees and absolute guarantees, the general rules for enforcement of guarantees apply. Guarantors are entitled to raise all objections of principal borrowers during court and enforcement proceedings. Guarantors are granted the right to object if lenders/creditors fail to file their claims against the borrower within six months as of the maturity date of the receivable. In this case, the guarantors’ liability is waived.

If the prescription for borrowers’ duties was terminated and renewed, this does not affect the duties of the guarantor. Any waiver of future rights, including objections under Bulgarian law, is deemed invalid.

An expedited procedure for a court payment order could be appropriate in a guarantee-enforcement context, as it provides a fast solution to undisputed obligations. There are no specific restrictions on lenders when enforcing different guarantees. The only limitation for lenders is the prohibition of unjust enrichment.

Arbitration is forbidden in cases where the real estate disputes concern rights in rem and possession of real estate. Therefore, it is not used in real estate transactions. However, arbitration clauses are common in commercial tenancies and joint venture agreements on development of real estate projects.

This topic is not applicable (see 6.1 Prevalence of Arbitration Clauses).

Mediation has only recently been introduced into real estate disputes, so is not very common.

The only provisional remedy available under Bulgarian law in the context of real estate disputes is the foreclosure of the property. All claims for rights in rem shall be registered with the Property Register. This registration has the effect of a provisional remedy as none of the sales or encumbrances over the property registered afterwards could affect the rights of the claimant. Foreclosures have the same effect.

In some cases, courts could order other provisional remedies – eg, order for suspension of public auction of a property – but the need for it should be well grounded. 

Claimants seeking provisional remedies have to submit a request for such with the court. The request should be well grounded, and there should be a proved need for provisional measures. If there is not enough evidence for the need, the court will require a deposit to be paid. 

Courts usually require deposits for provisional remedies. These deposits could be claimed if the provisional measure caused damages to the defendant.

This topic is not applicable.

This topic is not applicable.

Contractors could not place a lien on a property without obtaining a court order.

Typical trusts are not regulated in Bulgaria. However, REITs in Bulgaria are known and regulated as Special Investment Purpose Companies. Bulk purchases of real estate and their management could also be governed by general commercial, property and contract law. The Financial Supervision Commission enforces the regulations on these companies. 

This topic is not applicable.