Where exactly are the strings attached?
Buying an off-plan apartment may seem like the easiest way to invest in Bulgaria: no company set-up required, resort-style amenities that come as part of the package and so on. But once you become the owner of No.1 Paradise Towers, you will be expected to pay your way.
Maintenance contracts are an essential part of any off-plan development. You need to know that the standard of facilities you initially enjoy is going to continue, especially if you plan to make money from rentals. Any service contracts and charges should be given serious thought, at the buying stage. Don't let the euphoria of a brilliant view or money-making rentals distract you from the financial obligations associated with this type of investment.
There are two basic types of maintenance contract: one for resort apartments and the other for residential blocks. "With resort apartments, there is normally a fixed annual charge, sometimes paid in instalments, and often quoted as a cost per square metre of each apartment," explains Richard Slater, director of Varna-based Pride Property Management and Rentals. "The services included can vary widely but would usually include regular cleaning of communal areas, electricity and water usage in these areas, servicing of lifts, general maintenance and small repairs, security guards if present, and all costs related to the running of main facilities such as swimming pools."
Alternatively, the resort complex model may include a fixed amount for the upkeep of amenities, with utilities being calculated on actual consumption - normally a more economical method of payment for occasional users. While an all-inclusive maintenance charge might sound the simplest option (especially if you're based outside Bulgaria), it is also likely to be the more expensive, with developers often taking advantage of its revenue-making potential.
In residential set-ups, apartment owners usually organise the maintenance themselves with one representative assuming responsibility for the cleaning of hallways, lift maintenance and the handling of communal bills. "Sometimes they will estimate the communal bills and take a fixed amount monthly, otherwise when the bill comes the nominated person will split it and collect a share from each owner," explains Slater. "If there is a need to do larger repairs, the residents all have to agree to share the costs. Generally this system doesn't work very well because if one owner doesn't want to contribute to the cost of repainting or doing repairs, the other owners may all refuse to contribute too and in the end nothing gets done."
Knowledge is a great advantage in any contractual situation so research the area you are buying in to get an idea of average maintenance charges and ensure everything is outlined legally to protect your interests.
Maintenance charges can vary considerably from five leva per month in cities, to 1,000 euro per year for resort apartment blocks offering numerous facilities.
It's All in the Details
Veneta Atanasova of A&A Consult, Sofia
Whichever modus operandi you agree on with the seller, it should be comprehensively outlined in a maintenance contract. This should include contractual assurances that amenities such as a pool will be operational at the agreed times and that penalties, such as a reduction of fees, will be applied if they are not. However trivial a point it may seem, get it written into the contract to protect your interests further down the line. Any good contract should include a notice period - on both sides - enabling the parties to cancel or terminate the arrangement if they are unhappy. No developer should be allowed to raise prices at will; maintenance fees should only increase under certain circumstances such as to match inflation or to meet rising utility costs. If a developer attempts to raise prices, consult a lawyer.