The lease agreement according to Bulgarian law

General information

With the conclusion of a rental/lease agreement according to Bulgarian law, the lessor obligates himself to provide a property to the lessee for temporary use, and the lessee undertakes to pay him a certain price.

The rules regarding lease agreements are enshrined in the law of obligations and contracts, in Articles 228 to 239. Earlier, the rules regarding agricultural lease contracts were also stipulated within this chapter of the law. Today, they are replaced by the newest legal act – the Agricultural lease contract act. There are several formal differences between the two types of contract:

 - agricultural lease contracts are formal contracts; a written form with notarial certification are required; these contracts must be recorded in the respective register;

 - the minimum time of a lease is 4 agricultural years, there is no maximum limit to leases;

 - agricultural lease contracts are partially classified as contracts intuitu personae: the sublease requires the lessor’s consent and in case of justified emergency, the lessor may unilaterally cancel the contract with the end of the current year.

Lease of property

The lease agreement concerning property is an informal contractual agreement under the law of obligations. It may have movable and immovable property as subject.

Unless otherwise agreed, the lessor is bound to hand over the property in a state which is appropriate to the use it has been leased for and maintain this state for the duration of the contract. If the leased object was not handed over in a proper condition, the lessee may claim its repair or a proportionate reduction in lease price, or may cancel the contract of lease. In all cases he is entitled to claim damages.

The lessor shall not be liable for the defects of the leased property which the lessee either knew of or could easily detect if he had paid normal attention upon conclusion of the contract, except if the defects are dangerous to either his health or the health of the members of his household.

Term of lease

According to Bulgarian law, the lease agreement may not be signed for a period longer than 10 years, unless it is a commercial transaction.

Persons who are capable only of activities of simple management shall not conclude contracts of lease for a period longer than three years.

If the contract is made for a longer period it has validity for only ten years, or three years, respectively.

Maintenance and repair

The lessor is obligated to hand over the leased object in a state suitable for the contractually agreed use and to maintain this state during the lease time. Aside, he must repair of all damages if they are not faultily caused by the lessee and do not result from the normal usage.If the lessee makes the repair himself with due diligence he is entitled to deduct the cost of the repair from the rent.

Regarding damages that have been caused by third parties, the lessee must notify the lessor without delay so the latter may undertake the respective actions and raise claims.

When returning the rental object, the lessee owes compensation for damages that arose due to the usage of the object unless he can prove that he is not responsible for them. Further, he owes a compensation for damages that have been caused by persons living with him or sublessees. It shall be presumed that the property has been accepted in a good state unless otherwise proved.

Transfer for use to third parties

According to Article 234 of the law of obligations and contracts, unless otherwise agreed, the lessee may sublease parts of the leased property without the lessor's consent. But even in this case he is not discharged from his obligations under the contract of lease, neither is the lessor. In other words, this means that a sublease of the entire rental object is illegal without the lessor’s consent.

End of the lease relationship

The lease agreement may be terminated on several grounds. The first group encompass the general civil law termination grounds: upon mutual consent of the contracting parties; termination due to a contractual breach by one of the parties; due to objective impossibility of performance, etc. Aside of these grounds, the law provides specific grounds which apply particularly for the lease agreement.

Article 236 of the law of obligations and contracts provides the expiration of the term as ground for the termination of timely limited rental relationships. Besides, this Article provides for tacit prolongation of the lease relationship: “If after the expiration of the term of the lease the use of the property continues with the knowledge of and without objection on the part of the lessor, the contract shall be deemed extended for an indefinite term.”

Unlimited lease agreements may be terminated by each of the parties to it may withdraw from it by means of a one month's notice to the other party. However, if the lease is a daily one, a one day's notice shall be sufficient.

In case of transfer of the ownership rights over the leased immovable property, the lease contract remains valid with respect to the transferee only if it has been registered in the Property Register. To guarantee the lessor’s rights as well, the law provides for fixed time periods in which the rental agreement is binding for the transferee. A contract of lease concluded before the transfer of the property which has a verifiable date shall be binding upon the transferee for the term stated therein, but not for longer than one year from the date of transfer. If it does not contain a verifiable date and the lessee is in possession of the property, the contract shall be binding upon the transferee as a contract of lease for an indefinite term. The lessor shall be liable for compensation to the lessee if the latter is deprived of the use of the leased property prior to the expiration of the term of the lease, this deprivation being due to the transfer of the property.