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Case Law · Interpretative Decision · Real Estate

Immovable Property Can Be Sold Under a General Power of Attorney, According to the New Interpretative Decision of Bulgaria’s Supreme Court of Cassation

No explicit power of attorney, containing details of the future transaction, including particular asset, subject-matter of the transaction, particular acquirer or the transaction price, is required when authorizing a third party to dispose of a property on one’s behalf, according to last week’s Interpretative Decision of the General Assembly of the Civil and Commercial Colleges of the Supreme Court of Cassation.

The decision is of particular interest in the light of the common practice amongst Notaries public in Bulgaria to require an obligatory explicit authorisation, containing all essential elements of the future deal, in all cases of transfer of immovable property carried out by a representative of the transferor.

According to the Supreme Court of Cassation, the current legislation does not establish any general requirements for the necessary content of the power of attorney, in view of the validity of both the authorisation itself and subsequent enactment transactions or actions.

Authorisation is always valid as long as it does not violate an explicit mandatory rule of law or undermine accepted principles of morality (art. 9 in connection to art. 44 of the Law on Obligations and Contracts). The transaction made on behalf of the authorising principal is also valid as long as it is concluded by the agent within their established representative authority – in the volume, expressed by the principal in the power of attorney (art. 39, para 1, in connection to art. 42, para 2, of the Law on Obligations and Contracts), as well as it is not executed to the detriment of the principal within the meaning of art. 40 of the Law on Obligations and Contracts.

If the power of attorney authorizes the agent to dispose of all property of the authorising principal through all kind of legal transactions, under conditions and to persons they find fit, there is no justification (except in the specific cases expressly provided for by law, such as, for example, the ones stated in the above paragraph) for the principal’s will to be restricted.

The decision also contains a ruling on the nullity of a contract entered into by an agent with no power of attorney, as well as of a contract whereby the representative of one party has negotiated with the other party to the detriment of the principal.

The interpretative decision can be read here (in Bulgarian language).

Notwithstanding the recent interpretative decision, the predictions are that most Notaries will continue to require detailed powers of attorney as due diligence and safeguard against fraud.

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Photo: Law books by Mr.TinDC, licenced under CC BY-NC-ND 2.0

About the author

Ana Lazarova

Ana Lazarova is an attorney at law, based in Sofia, Bulgaria, practicing mainly in the field of corporate and commercial law and intellectual property. She is a member of the Sofia Bar since 2007. Ana is also an industrial property representative before the Bulgarian Patent Office and European trademark and designs attorney. Read more

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