Foreigners and foreign legal entities may lease an agricultural land in Bulgaria.
A farm lease agreement binds the lessor to convey to the lessee the agreed assets for and the lessee to pay the agreed lease payments.
A deed contract as well as an agreement for its amendment or termination can be concluded with an owner, a co-owner of agricultural land whose ownership is more than 50 percent of the ideal parts of a co-owned property, or with a person authorised by an owner or co-owners who own, together with such person, more than 50 percent of the ideal parts of the co-owned property. The authorisation shall be made by an explicit notarised power of attorney.
According to the Bulgarian law, the lease of agricultural land in Bulgaria is legally valid only if the contract is concluded in writing with notary certified signatures of the parties. As well, the lease deed must be registered with the Property Register and in the local Agriculture Municipal Office.
The minimal term for agricultural land leasing is 5 agricultural years.
An ‘agricultural year‘ is the period of time from October 1 of the current year until October 1 of the following year.
There is no restriction regarding the maximum term of the lease of agricultural land in Bulgaria.
The lease property, as well as the agricultural equipment, are handed over with an inventory signed by the parties while entering into the contract. An inventory shall also be made while handing back the lease property and the agricultural equipment on terminating the deed. The inventory cannot be disputed by the contract parties.
While template land lease agreements are widely available, it is advisable to seek legal advice from a lawyer to tailor the contract to the needs of both the
lessor and the lessee.
The lease agreement includes details of:
- Term of the lease
- Rent payment and payment procedure
- Rent review clause
- Details of the land use
- Insurance and taxes
- Right to sublease
- Termination of the lease
The rental price vary in Bulgaria. There is no minimum or maximum lease price.
Pursuant to Bulgarian law in order to determine the rental price the contracting parties must take into account:
- the market value of land rent;
- the rent value, including annual depreciation and interest on the capital invested in the leased property and agricultural equipment.
As well, the parties may specify how the rent will be calculated. It is also recommended to include in the contract the right to review the rent in the future, especially in long-term leases. The revision of the rental price may depend on the changes in the inflation index, changes in the rental market prices, etc.
The rent can be paid in monetary form and/or by agricultural products.
The lease instalment is payable on the first working day following the end of the agricultural year. If the rent is due at shorter periods it shall be payable on the first working day upon expiry of the agreed period.
The lessee pays all ordinary rates and taxes related to the asset use whereas the lessor pays the rates and taxes ensuing from holding the title on the asset. Unless agreed otherwise, the lessee insures all buildings, equipment and animals as received under the inventory as well as any other asset introduced into the leasehold estate and the harvested crops.
The lessor may terminate the deed for a delay in rent payment for more than three months. Where payments are agreed to be made at periods shorter than one agricultural year, deed termination shall only be admissible for a delay of at least two consecutive instalments.
Termination of a lease deed covering a period of more than 10 years or providing a lifelong lease term, shall be carried out through the court.
A lease deed for an indefinite period may be terminated unilaterally by any of the parties by a prior written notice upon expiry of the fourth year. The notice shall be valid for a period of two agricultural years. It shall be forwarded at the latest by the end of the agricultural year, preceding the beginning of the term of the two agricultural years.
In case of termination of the contract the lessee shall return the property. He owes compensation for the damages caused during the use of the property, except if he proves that it is due to reasons he is not liable for. He also owes compensation for the damages caused by members of his family or by his sub-lessees.