The draft bill of Bulgaria’s Condominium Act is ineffective and has been written in such a way as to serve the interests of the heating, water and electricity utility companies, professor Vladimir Petrov from the Civil Association against Corruption and Illegal Construction said, as quoted by Dnevnik daily.

If the draft law is approved by the Government, the heating, water and electricity utility companies will sign a single contract with the building’s condominium association as a legal entity and not separate contracts with each individual homeowner. If the occupants of some apartments do not pay their utility fees, the amount they owed would be divided among the rest of the properties in the block. Under the law, any residents who did not accept the decisions taken by the condominium association could be fined between 500 and 5000 leva.

In most countries, condominium laws cover the setting up of a residents association that manages the whole building. Residents own their individual units, while the association owns the common areas. Usually, there is a condominium declaration, which creates a contractual agreement among the neighbours and sets out the rules and regulations for the particular property, including maintenance, cleaning and security, as well as any fees to be paid by the owners. Every subsequent buyer of property in the building has to accept and abide by the rules of the declaration before being allowed to buy a unit.

If drafted properly, the Condominium Act is an excellent mechanism that could help owners of multi-family properties protect and increase the value of their assets, Petrov said. This could be done with a combination of property and contractual laws that reflect the new needs of tenants in Bulgaria. Developments with condominium associations, likely to be those at the higher end of the market, would ensure the value of these buildings was maintained and even increased. However, freedom of choice and enforceable mechanisms are considered the basis of an effective condominium regulation.

The Ministry of Regional Development prepared a first draft of the Condominium Act at the start of 2006, however it did not reflect such accepted practices. The bill was revived in 2007, after a massive re-write, with disastrous results, Petrov said.

Establishing a condominium association should not be obligatory, but many homeowners will be forced to join such ventures, otherwise they will not be able to apply for government funding for insulation or energy efficiency. The Regional Development Ministry claimed that setting up such a legal entity was part of the European Commission’s requirements in order for the European Union to grant 1.2 billion euro for the repair of old apartment buildings.

When approached, Radostina Hristova, the spokesperson of Address Real Estate, Bulgaria’s largest estate agency, said the company would wait until the bill had been approved before making any comment.