1.           General characteristics:
In enforcement law the means of liquidating a debtor’s property is the
public sale. It is implemented and completed under the Civil Procedure Code by
a unilateral act of the enforcement agent, but there are also rules regarding
this type of special sales set forth in the Obligations and Contracts Act. At
the same time, other domains such as administrative law, contract law and civil
procedure law are affected.

2.           Prerequisites:

The
enforcement agent, after verifying in the documents that to date the property
is owned by the debtor, shall send an injunctive relief request to the Registry
Agency. After it is entered into the Register, the injunction shall restrict
the debtor’s right to dispose of (and sell) a particular real estate property.
Then the enforcement agent shall visit the property to carry out an inventory
check and verify the condition and the value thereof. The property evaluation shall
be made at current market prices as determined by the enforcement agent and/or
on the basis of conclusions made by an expert (expert in that particular domain).
In case of co-ownership, the whole ownership property shall be subject to
inventory description, but subject to sale shall be the debtor’s part at
proportional value (with the consent of co-owners the whole property may be
sold).

One
week after the evaluation is completed the enforcement agent shall set a date
for public sale, whereas the initial price shall be always 75 percent of the
evaluation. The announcement of an intended sale shall be posted on both
locations stipulated as mandatory under the Civil Procedure Code: in the office
of the enforcement agent, in the building of the district court as per property
whereabouts and within the property itself, as well as in any printed or
electronic publication posting such announcements because public sales are
public information and there is no law prohibiting any stakeholder to ensure,
on its own account, their public dissemination.

3.         Participants:

Property
sale is public because an unlimited number of persons are invited to take part
in it. Anyone wishing to participate, after being introduced into the
particular property, shall be required to pay a deposit (guarantee) of 10
percent of its original cost, to the account of the enforcement agent
performing the sale. The deposit, after completion of the sale, shall be
reimbursed upon request to each participant, with the exception of the announced
buyer.

Participation
as buyers, either directly or through a proxy, shall
not be allowed for any of the following persons: the debtor or a representative
thereof, the employees of the enforcement agent selling the real estate
property, and those who manage or maintain the property or any officials
involved in the sale. In addition, buyers may not be (unless they are owners of
the property) other judges, prosecutors, registration judges and
attorneys-at-law appearing on the claimant or defendant’s side regarding
controversial rights within the jurisdiction of their relevant Court or in the
office where they operate. A non-debtor’s spouse shall be eligible to participate.

4.         Public sale:

The procedure shall develop in two stages that take place within the
district court at the administrative whereabouts of the property. The first stage
is a sealed-bid auction for a period of one calendar month during which the
office of the court shall accept the sealed bids submitted by would-be buyers
of the property. If by the end of the first stage the debtor (or a non-debtor’s
spouse) repays in full the pending liability and the expenses of the
enforcement case, or an explicit request of the creditor in the case is
received, the public sale shall be suspended. Otherwise, the second stage of
the public auction is reached – an open-bid auction, held in the courthouse,
which shall begin on the morning of the next business day after the end of the
first stage.

Start to the auction shall be given after the opening and the
public announcement of all sealed bids received, and a prospective buyer (for
the time being) is considered to be the buyer submitting the highest bid
(whenever there are two or more identical bids a lot shall be drawn, if no
verbal bids are submitted). The enforcement agent shall address the buyers,
enabling them to make verbal bids with adjusted prices, higher by at least one
time the deposit amount announced so far. In the event that any of attending
bidders makes a verbal bid, the enforcement agent shall record and verify it in
the minutes signed by the bidder and shall allow other participants to make
subsequent, higher bids, once again not less than one time the deposit amount. After exhausting
all verbal proposals, the bidder quoting the highest price shall be entered as
buyer into the minutes of the sale and the auction shall be closed.

Within seven days of completion the announced buyer must submit
the bidding price, after deducting the deposit. Otherwise, he/she shall lose
the deposit (which will satisfy the creditors in the enforcement case) and the
enforcement agent shall invite the bidder offering the next highest price,
provided that the same has not received his deposit back. In the event that the
bidder agrees to be named buyer, it shall take another period of seven days to
pay the proposed sale price of the property. Otherwise he/she shall lose the
deposit and the next bidder shall be invited. The bidding performed in this way
shall continue until exhaustion of all bidders, whose price is not less than
the original price announced at the beginning of the sealed-bid auction.

5.         New public sale:

In the event that any of the subsequently invited bidders fails to
submit the price in due time, the lender (creditor) in the enforcement case,
within one week of completion of the sale, may require rescheduling of the
public sale, which may be adjourned no earlier than one month after the end of
completed auction and at a price equal to 80 percent of the original cost
(which was 75 percent of the property evaluation). If no buyer is announced under
the new sale and within one week of closing it the creditor (lender) fails to
ask for a new evaluation of the property and the implementation of a new
procedure, then at the request of the enforcement agent the property shall be
exempt from execution and the injunction thereupon shall be revoked (cancelled).

The same rules regarding the new sale shall be valid for cases where
no would-be buyers appear at the first auction or no sealed bids are submitted.

6.         Procurement (acquisition) of property:

Once the bidder named buyer submits the full amount in due time,
the enforcement agent shall prepare a decree to award the property. Unless it
is appealed by the debtor or other participating bidder within one week, the
decree shall become effective and the buyer shall actually acquire the debtor’s
estate rights on the property, all mortgages shall be paid off as well as the
estate rights established after the first mortgage on the property. The rules
concerning the liability for any hidden defects of the property under the Obligations
and Contracts Act shall not apply to public sales. Appeal grounds under the
Civil Procedure Code may be identified as shortcomings in the sale announcement
or regarding the procedure itself, an award to a bidder offering a price below
the original price or a non-eligible bidder, an unpaid deposit, a failure to
meet the appeal deadline, etc. If the court revokes the awarding decree, a new public
sale shall take place or the bidder with the highest offer (depending on the
apparent flaw or defect) shall be invited.

An effective decree can be challenged in court by a claim only in
two situations: if there was a non-eligible bidder who participated in the sale
(it is not valid for cases where another bidder was invited during the sale
procedure), or if the buyer had failed to pay the full amount of the proposed
price (at the latest before the court decision to revoke the decree becomes
effective).

After the decree becomes effective, it shall be registered at the
Registry Agency and any fees payable by the buyer in the sale shall total up to
5.6 percent of the proposed price: for the enforcement agent – 1.5 percent for
the award (not more than BGN 3600, exclusive VAT), and 1 percent – for the introduction
into possession to the property, payable at the municipality (different amount
in different municipalities) – up to 3 percent, and for the Registry Agency –
0.1 percent for decree registration. The decree, being effective and
registered, and fees paid in full are the prerequisites for introducing the
buyer into possession of the property.

7.         Introduction into possession of the buyer:

The enforcement
agent shall schedule a day and a time for the introduction into possession and shall
notify the parties. If the debtor does not leave it voluntarily, he/she shall be
removed forcibly. If the property is found to be dwelled by a third party who refuses
to leave it voluntarily and fails to provide evidence that he/she had gained
possession of the property before filing the writ of execution case, he/she
shall be removed forcibly. In the event that the third party provides the
enforcement agent convincing evidence of his/her estate rights on the property,
the introduction into possession shall be postponed for three days during which
the third party must submit an application to the District Court to stop the introduction
into possession, which, if upheld by the court, shall grant a one-week period for
the third party to file a countersuit. If this countersuit is upheld and it is found,
for example, that the debtor was the owner of the property sold, then the buyer
shall be removed from it and shall be entitled to receive all amounts paid thereby
to the creditor, the enforcement agent, the Municipality and the Registry
Agency (the Court shall issue a writ of execution on behalf of the buyer against
the creditor if the price has been paid in full). In this case, the sale would
be negligible under the Obligations and Contracts Act, and therefore each party
must reimburse to the other party everything received from it.

If the request to stop the introduction into possession by the
third person is not upheld by the court or the statutory one-week period for
submitting a claim is missed, the enforcement agent at the request of the
creditor shall cancel the stop of introduction into possession and shall
introduce the buyer into possession. If the removed debtor or any third party
willfully regains possession, the same shall bear criminal responsible and shall
be removed again by the enforcement agent.