Three lines of text
open up an entire apartment.
The Supreme Court of Cassation (ВКС) has ruled that a specific description is not necessary. The protection is not in the document but in the choice of person.
The proxy does not merely help. The proxy produces legal effects directly in someone else’s legal sphere: “The consequences of the legal acts performed by the representative arise directly for the person represented” (Art. 36(2) of the Obligations and Contracts Act, ЗЗД). And the scope of that authority is read from one document only, according to what the principal has declared (Art. 39 of the same Act).
Signature and content, at the same time
Under Art. 37 of the Obligations and Contracts Act, authorisation for a transaction in notarial form may be given in writing, with notarial certification of the signature and of the content, performed at the same time. These are two separate notarial acts at a single moment, and the difference has a consequence that almost nobody knows about.
When only the signature is certified, the notary does not keep the text. When both signature and content are certified, one copy stays with the notary, filed in a special book. Only the second option gives later proof of exactly what the power of attorney said on the day it was signed.
And one detail that surprises people: where there is no notary and no district court, the mayor certifies both the signature and the content of a power of attorney under Art. 37 of the Obligations and Contracts Act (Art. 83(1) of the Notaries and Notarial Activity Act, ЗННД). The mayor cannot certify signatures on documents subject to registration, but the power of attorney is expressly excluded from that restriction.
General wording
is enough.
Almost every publication online claims that a power of attorney must describe the property, the price and the buyer. The Supreme Court of Cassation has ruled the opposite, and in a binding interpretative decision at that.
“For an authorisation with the consequences under Art. 36(2) of the Obligations and Contracts Act for a valid disposal of the principal’s property, it is necessary and sufficient that the power of attorney expresses in general terms the principal’s will to empower the proxy to carry out disposals on the principal’s behalf. It is not necessary for the power of attorney to state the type of disposal, the specific types of transactions or acts of disposal, or their elements, particular property, price (value), etc., nor the person in whose favour the disposal is to be made.”
Interpretative Decision No 5/2014 of the General Assembly of the Civil and Commercial Chambers (ОСГТК) of the Supreme Court of Cassation, delivered on 12 December 2016, item 1
So three lines of text saying “I authorise X to dispose of my property” are legally sufficient for an apartment to be sold to whoever X decides, for whatever price X decides.
Four Supreme Court judges signed a dissenting opinion on exactly this question: in their view, a specific description would allow an assessment of whether what was done matched the principal’s will, and would keep abuse by “fraudulent” proxies to a minimum. A dissenting opinion, however, is not the law. The law is the operative part of the decision.
The key is cheaper than the door
Under the Tariff of Notarial Fees (Тарифа за нотариалните такси), certifying a signature on a document concerning rights to property costs BGN 10 per signature, and certifying the content BGN 10 for the first page. One power of attorney to sell, one page, one principal: about €10.23, or about €15.34 if the notary drafts it, plus VAT.
Outside the office or outside working hours a 25% surcharge applies, outside the town 50%, and where the two combine, double the amount. A power of attorney signed in a hospital room on a Saturday is not a free service, and that is exactly the situation in which such powers of attorney get signed.
From abroad the figures are officially in euro: certification of a signature by a Bulgarian consul is €15, of the content €30 for the first page, so €45 for a one-page power of attorney. A consular certification does not get an apostille, because it is not a foreign document; an apostille is needed only on the other route, with a foreign notary. The difference compared with a Bulgarian notary is about fourfold, and it comes from the tariff, not from a mark-up.
The ratio says it all. The document that opens up an apartment is certified as a document with no determined monetary interest. The notarial deed (нотариален акт) itself for a €100,000 property costs €565.49 including VAT. And since the notary is liable for damage “not exceeding the certified monetary interest” (Art. 73 of the Notaries and Notarial Activity Act), with a power of attorney that interest is zero. There is, however, no settled case law on how the courts apply this cap to powers of attorney specifically, so the conclusion is not a foregone one.
What the day of the deal itself looks like: the notarial deal.
It exists.
And it has three holes.
The Notary Chamber (Нотариална камара) runs an information system under Art. 28b of the Notaries and Notarial Activity Act. The notary immediately enters into it an extract from the power of attorney, including a description of the rights, the conditions and the term, as well as extracts from the documents by which powers of attorney are revoked.
The first hole: only a power of attorney with the signature and the content certified at the same time goes in. A power of attorney with only the signature certified, fully sufficient for a preliminary contract, a lease and administrative steps, does not show up in the system.
The second: powers of attorney certified by a mayor under Art. 83 of the Notaries and Notarial Activity Act are not entered, because the ordinance places the obligation on the notary, and the mayor is not a notary.
The third: the notary is not required by law to check this system before a transaction. The notary’s mandatory check under Art. 25(3) of the Notaries and Notarial Activity Act is in a different database and verifies identity, not the validity of the power of attorney. A search in the system is possible only through the Notary Chamber or through a notary, which means someone has to ask for it.
There is no irrevocable power of attorney. And a torn-up one is not revoked.
The right to revoke cannot be taken away: the principal always has the right to revoke the authority, and any waiver of this right is void (Art. 38(2) of the Obligations and Contracts Act). A clause saying “this power of attorney is irrevocable”, of the kind found in loan schemes, is null and void.
Three things, however, nobody tells the owner. The revocation has to reach the proxy: a unilateral declaration of will takes effect on receipt, and a torn-up copy in a drawer is not a revocation.
The third party’s good faith is presumed. Under Art. 41(2) of the Obligations and Contracts Act, the termination cannot be invoked against third parties who dealt with the proxy in good faith. It is the owner who has to prove that the buyer knew, and proving what someone else knew is the hardest part of a lawsuit.
And death terminates the power of attorney automatically (Art. 41(1) of the Obligations and Contracts Act), without anyone noticing. The notary checks the identity of the proxy who appears, not whether the principal is alive. A power of attorney from 2019 looks perfectly in order on the table.
One and the same fact.
Three different losers.
“The deal was made with a power of attorney that was not in order” leads to four different outcomes, depending on what exactly was not in order.
A valid power of attorney, revoked, and a buyer in good faith (Art. 41(2) of the Obligations and Contracts Act): the owner loses. The transaction stands, and the owner is left with a money claim against a proxy who, in such schemes, is usually insolvent.
A void power of attorney, or no power of representation at all (Art. 42(2) of the Obligations and Contracts Act): the buyer loses, however much good faith they acted in.
Collusion to the principal’s detriment (Art. 40 of the Obligations and Contracts Act): the buyer loses, but only if the owner proves both elements.
A principal permanently unable to understand their own actions (Art. 31(1) of the Obligations and Contracts Act, Interpretative Decision No 5/2020): usually nobody. The contract is voidable, not void, the limitation period is three years and runs from the day it was concluded, and under Art. 31(2) of the Obligations and Contracts Act annulment cannot be sought after the person’s death, unless legal incapacitation (запрещение) was applied for during their lifetime. The window closes with death.
So the buyer in good faith is protected in exactly one of the four cases.
The text is one sentence. Proving it is almost impossible.
“If the representative and the person with whom he contracts collude to the detriment of the person represented, the contract has no effect for the person represented.” Interpretative Decision 5/2014 sets out the elements in two parts, and that is exactly where everything breaks.
The objective element requires the harm to be objective and not insignificant, and it is assessed as at the moment the contract was concluded. A later change in the market that makes the price unfavourable does not count.
The subjective element does not require an explicit conspiracy, but bad faith: both of them must know that the contract objectively harms the person represented. That bad faith, however, is not presumed; it has to be proven by the person represented. So the owner has to prove not that the price was low, but that the buyer was aware the price was low, and as at the day of the deal.
And three neighbouring traps. Contracting with oneself is prohibited without express consent (Art. 38(1) of the Obligations and Contracts Act), but the prohibition covers only the proxy personally and a person the proxy also represents: a sale to a brother, a spouse or the proxy’s own company does not fall under it. Sub-delegation can put the owner up against a third person they have never seen (Art. 43 of the Obligations and Contracts Act). And the money: a buyer who paid the proxy is in the clear, and the owner has to recover the sum from the proxy (Art. 75(2) of the Obligations and Contracts Act).
A loan of €511,
an apartment for €25,565.
An owner borrows BGN 1,000 from a non-bank lender. At the office she is given a loan agreement, a promissory note, a power of attorney to dispose of the property and blank preliminary contract forms to sign. The explanation: the power of attorney is “like a pledge”. Two years later she revokes it by notarial notice and even notifies the notary. The proxy sells her apartment to a related person for €25,565, against a tax assessment (данъчна оценка) of €40,257, that is, below the tax assessment. The buyer resells to third parties.
The court does not rule on the revocation. It holds that the act of authorisation itself is void because of the prohibition on agreeing in advance how the creditor will be satisfied (Art. 152 of the Obligations and Contracts Act). From there: there is no power of representation, the sale has no effect, the buyer acquired nothing and could transfer nothing. The ownership claim is upheld and the end buyers are ordered to hand over possession.
Judgment No 108 of 21 June 2017 of the Shumen District Court (Окръжен съд Шумен). ⚠️ First instance; whether it was upheld on appeal has not been checked, and the case is here as an illustration of the mechanics, not as a finally settled dispute.
The losers are two people who paid the full price to a seller who looked fully in order, two transactions after the scheme. What else gets checked in advance: checking the property and marital community property.
Frequently asked questions
Does the power of attorney have to describe the property, the price and the buyer?
Not by law. Interpretative Decision No 5/2014 of the General Assembly of the Civil and Commercial Chambers of the Supreme Court of Cassation, delivered on 12 December 2016, held that for a valid disposal it is necessary and sufficient for the power of attorney to express, in general terms, the principal’s will to grant the authority. It is not necessary to state the type of disposal, specific transactions, particular property, a price, or the person in whose favour the disposal is to be made. Four Supreme Court judges signed a dissenting opinion on exactly this question, but a dissenting opinion is not the law in force.
Is there such a thing as an irrevocable power of attorney?
No. Under Art. 38(2) of the Obligations and Contracts Act, the principal always has the right to revoke the authority, and any waiver of this right is void. A clause stating that the power of attorney is irrevocable, of the kind found in loan schemes, is null and void.
Is it enough to tear up the power of attorney to revoke it?
No. Revocation is a unilateral declaration of will and takes effect when the proxy receives it, so a torn-up copy in the principal’s hands means nothing. Separately, under Art. 41(2) of the Obligations and Contracts Act, the termination cannot be invoked against third parties who dealt with the proxy in good faith, and good faith is presumed: it is the owner who has to prove that the buyer knew.
Who loses the property when the power of attorney was not in order?
It depends on what exactly was not in order, and the answer is different in each of the four cases. With a revoked power of attorney and a buyer in good faith, the transaction stands and the owner loses. With a void power of attorney or no power of representation at all, the sale has no effect and the buyer loses, regardless of their good faith. With collusion to the principal’s detriment under Art. 40 of the Obligations and Contracts Act, the buyer loses, but only if the owner proves that both of them knew about the harm. So the buyer in good faith is protected in exactly one of the four cases.
One question before you pay
If there is a proxy on the other side, ask for a search in the Notary Chamber’s system. It can be done only through the Chamber or through a notary, it is not automatic, and nobody is obliged to do it for you. That is the difference between a document that looks in order and a document that is.
Send us the date of the power of attorney and exactly what it says. We come back with which acts it covers, which it does not, and which of the four outcomes puts you specifically at risk.
This material is not legal advice. A specific power of attorney should be checked by a lawyer for the specific transaction.
Comments
No comments yet, be the first.