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Bulgarias Condominium Legislation Draft Flawed Expert

The draft bill of Bulgaria's Condominium Act is ineffective and has been written in such a way as to serve the interests of heat, electricity and water utility companies, professor Vladimir Petrov from the Civil Association against Corruption and Illegal Construction said, as quoted by Dnevnik daily.

According to Petrov, the draft law in its current form aimed to deprive properties from owners who do not pay their utility fees.

If the draft law is approved by the Government, the heat, water and electricity utility companies will sign a single contract with the whole building as a legal entity and not separate contracts with each individual. If some tenants do not pay their utility fees, the amount they owed would be distributed among the rest of the residents. The draft law provides for fining neighbours who do not accept decisions taken by the condominium association, to the tune of 500 to 5000 leva.

In most countries, condominium laws provide for the setting up of a residents association that would manage the condominium apartment building. People own their individual units in the apartment building, while the association owns the common areas. Usually, there is a condominium declaration, which creates a contractual agreement among the neighbours and sets out the rules and regulations for the particular property, including maintenance, cleaning and security, as well as the fees to be paid by the owners. Every subsequent buyer into that building has to accept and abide by the rules of the declaration before being allowed to buy into it.

If drafted properly, the Condominium Aaw is an excellent mechanism to help willing and able owners of multi-family properties to protect and increase the value of their real estate assets, Petrov said. This can be done with a combination of property and contractual laws that reflect the new needs of tenants in Bulgaria. That will set apart such developments, which are targeted at the high end of the market and will ensure the value of these buildings is maintained and even increased, but freedom of choice and enforceable mechanisms are considered the basis of an effective condominium regulation.

The Ministry of Regional Development prepared a first draft Condominium Law at the start of 2006, which did not reflect such accepted practices. The bill was revived in 2007, after a massive re-write, with disastrous results, Petrov said.

Setting up condominium associations should not be obligatory, but many owners will be forced to join such ventures, otherwise they won't be able to use government funding for insulation or energy efficiency. The Regional Development Ministry claimed that setting up a legal entity was the European Commission's requirement in order for the European Union to grant 1.2 billion euro for old apartment buildings repairs.