Getting a deposit back is one of the most common disputes when buying or renting property in Bulgaria. The buyer pays a few thousand euros "to take the property off the market", the deal falls through, and the question begins: does the seller keep the money, return it, or owe double? The answer depends on three things: what exactly you agreed (earnest money, an advance payment or a "holding deposit"), who failed to perform the contract, and whether the proper procedure for withdrawing from it was followed.
In this article we explain what earnest money (задатък) is under Art. 93 of the Obligations and Contracts Act (Закон за задълженията и договорите, ЗЗД), how it differs from an advance payment, when a deposit is lost, when it is returned in the same amount and when double, what to do about a "holding deposit" paid to an agency, and how to get your money back step by step. At the end you will find a short list of clauses that protect the buyer from the moment of signing.
Deposit, earnest money, advance and "holding deposit": what is the difference?
In everyday Bulgarian, the word "капаро" (deposit) is used for any sum paid before the final transaction. The law, however, does not recognise a "deposit" as such. It regulates earnest money (задатък) (Art. 93 of the Obligations and Contracts Act), and everything else is either part of the price (an advance) or a sum with some other basis agreed by the parties. That is why the first step in any dispute is to read the contract and see how the sum is described and regulated.
| Type of payment | What it is for | What happens if the deal falls through |
|---|---|---|
| Earnest money (задатък) | Proves that the contract was concluded and secures its performance | The non-defaulting party may keep it or claim double the amount (Art. 93(2) of the Obligations and Contracts Act) |
| Advance payment | Prepayment of part of the price | It is returned because its basis has fallen away (Art. 55(1) of the Obligations and Contracts Act); damages are claimed separately |
| "Holding deposit" („стоп капаро“) | Usually a sum paid to an agency or the seller to "reserve" the property for a short period | Depends entirely on the written agreement; without one there is often no basis for keeping the sum |
| Contractual penalty | Damages fixed in advance for non-performance | Owed by the defaulting party; the court may reduce it if it is excessive (Art. 92(2) of the Obligations and Contracts Act) |
From our practice: Most disputes arise when the receipt says only "I have received the sum of EUR … as a deposit for the apartment", without a word about what happens if the deal does not go ahead. The court then interprets the parties' intentions in the light of all the circumstances, and the outcome becomes hard to predict. One clear clause saves months of litigation.
What the law says about earnest money (Art. 93 of the Obligations and Contracts Act)
The statutory text is short, which is why it is worth knowing almost word for word:
- Earnest money serves as proof that the contract has been concluded and secures its performance (Art. 93(1) of the Obligations and Contracts Act).
- If the party that gave the earnest money fails to perform, the other party may withdraw from the contract and keep the earnest money.
- If the party that received the earnest money fails to perform, the other party, on withdrawing from the contract, may claim the earnest money in double (Art. 93(2) of the Obligations and Contracts Act).
- If the non-defaulting party prefers to demand performance of the contract, damages are determined under the general rules (Art. 93(3) of the Obligations and Contracts Act).
Two words in these provisions are key: "non-defaulting" and "withdrawal". The right to keep the earnest money or to receive it double belongs only to the party that has itself performed, or was ready to perform, its obligations. And the consequences arise when that party declares that it is withdrawing from the contract, not automatically when some deadline expires.
Earnest money under a preliminary contract for property
When buying a home, earnest money is almost always paid on signing the preliminary contract. Where the final contract must take the form of a notarial deed, the preliminary contract must be in writing and must contain agreement on the essential terms: the property, the price and the parties (Art. 19(1) and (2) of the Obligations and Contracts Act). An oral arrangement backed only by a receipt is not a preliminary contract within the meaning of the law, and it does not allow you to seek completion of the transaction through the courts.
So before you pay anything at all, carry out at least a basic legal due diligence check on the property before buying: the owner, encumbrances, co-owners and the seller's marital status.
When can the seller keep the deposit?
The seller may keep the earnest money where the buyer fails to perform their obligation for a reason for which they are responsible, while the seller is the non-defaulting party and withdraws from the contract. Typical examples from practice:
- the buyer does not turn up at the notary on the agreed day and gives no reasonable explanation;
- the buyer does not pay the balance of the price on time, while the seller has all the documents ready;
- the buyer simply "changes their mind" and finds a better deal.
However, the earnest money is not automatically lost if the buyer did not obtain the mortgage loan. It all depends on the contract: if the parties agreed that the transaction depends on a loan being granted within a set period, the bank's refusal may mean that the buyer is not at fault. If there is no such clause, the risk as a rule remains with the buyer. This is one of the most important clauses for anyone buying with a loan.
When can you get double the deposit?
The buyer may claim double the earnest money where the seller fails to perform the contract, while the buyer is not in default and withdraws from the contract. In practice this means you get back the sum you paid plus the same amount again. Examples:
- the seller sells the property to another buyer who offers a higher price;
- the seller refuses to appear before the notary or raises the price after signing;
- the seller concealed a mortgage, an attachment or a co-owner, so that the transaction cannot be completed on time;
- the seller does not provide the documents they undertook to provide (for example a tax assessment certificate or a title document).
If you do not want to withdraw but want to keep the property, the law offers another route: a claim to have the preliminary contract declared final under Art. 19(3) of the Obligations and Contracts Act. The earnest money is then counted towards the price, and damages for the delay are claimed under the general rules. We explain how these proceedings work and why it is important to register the statement of claim in our article on having a preliminary contract declared final.
When is the deposit returned in the same amount?
There are cases in which neither party can keep the earnest money or claim double, and the sum is simply returned as paid, usually on the basis of Art. 55(1) of the Obligations and Contracts Act (received without a basis or on a basis that has fallen away):
- The parties terminate the contract by mutual agreement. Unless the agreement provides otherwise, what was paid is returned.
- The contract cannot be performed for a reason for which no one is responsible, for example the property is affected by expropriation or the building has been damaged by a natural disaster.
- Both parties are in default. Case law holds that only the non-defaulting party has the right under Art. 93(2) of the Obligations and Contracts Act; if neither has performed, neither can rely on the earnest money.
- The contract is void, for example the written form required by law for a preliminary contract was not observed (Art. 19(1) of the Obligations and Contracts Act). The earnest money clause then falls away together with the contract.
- The sum is an advance, not earnest money. An advance is part of the price and must be returned if the deal falls through; any damages are claimed separately and must be proved.
The "holding deposit" with a real estate agency
A "holding deposit" („стоп капаро“) is a term from practice, not from the law. It is usually a sum of anywhere from a few hundred to a few thousand euros that the buyer pays to the agency or the seller so that the property is taken off the market for a short period while checks are carried out and the preliminary contract is prepared.
What happens to this sum depends solely on the written agreement. Pay attention to the following:
- Who receives the money: the seller or the agency. If the agency holds it, check whether it is acting as the seller's agent and whether it passes the money on to the seller.
- What happens if the checks reveal a problem: a mortgage, an attachment, a dispute between heirs, unlawful construction. It is sensible to have it in writing that the sum is then returned in full.
- The period: for how many days the property is "reserved", and what happens if the seller sells it to someone else in the meantime.
- One-sided clauses. If the buyer is a consumer and the other party is acting as a trader, a clause allowing the trader to keep the sum if the consumer withdraws, without providing for compensation of the same amount if the trader fails to perform, is unfair (Art. 143(2)(4) of the Consumer Protection Act). Unfair terms are void unless they were individually negotiated (Art. 146 of the Consumer Protection Act).
From our practice: Never pay a "holding deposit" without a document stating who receives the sum, for which property, for what period and on what terms it is refunded. A broker's verbal assurance that "you will get your money back if anything goes wrong" is difficult to prove afterwards.
How to get your deposit back: step by step
- Gather the documents. The preliminary contract, the receipt or bank statement for the payment, correspondence with the seller and the agency (emails, messages), notarial notices, certificates from the Property Register.
- Establish who is in default. Check what deadlines and obligations each party has. Send a written reminder if the deadline has not yet passed.
- Send a written notice of withdrawal from the contract. If the seller fails to perform, send a statement that you are withdrawing from the contract under Art. 93(2) of the Obligations and Contracts Act and claim double the earnest money within a set period. Send it in a way that proves receipt: a notarial notice, registered mail with acknowledgement of receipt, or a courier with an inventory of contents.
- Propose an amicable settlement. The seller often prefers to return the sum rather than risk a lawsuit for double the amount, plus costs and interest.
- Apply for an order for payment or file a statement of claim. For a money claim up to the value within the jurisdiction of the district court, you can use order-for-payment proceedings (Art. 410 of the Civil Procedure Code), which are faster if the debtor does not object. If the claim is disputed, ordinary claim proceedings follow. We describe the path from a demand letter to the bailiff in detail in our article on how to collect an unpaid debt.
- Enforcement. Once you have a writ of execution, collection is carried out through a private or state enforcement agent (bailiff).
Deadlines and costs
| Question | Answer | Legal basis |
|---|---|---|
| Limitation period for recovering earnest money or an advance | 5 years | Art. 110 of the Obligations and Contracts Act |
| Right to terminate a contract | 5 years | Art. 87(5) of the Obligations and Contracts Act |
| Court fee on the claim | 4% of the amount claimed, minimum EUR 25.56 | Tariff of State Fees under the Civil Procedure Code |
| Cash payment | Sums of BGN 10,000 (≈ EUR 5,112.92) or more may only be paid by bank transfer | Art. 3(1) of the Limitation of Cash Payments Act |
The limitation period runs from the moment the claim becomes due, for example from the withdrawal from the contract. Do not let it expire: evidence and witnesses lose value over time.
How not to lose your deposit: clauses that protect you
Most deposit disputes can be prevented at the moment of signing. These are the clauses we check most often:
- Clear naming. Does it say "earnest money under Art. 93 of the Obligations and Contracts Act", or "advance", "part of the price"? This determines the consequences.
- Clear deadlines. A date or deadline for concluding the final contract, for paying the balance and for providing the documents.
- Loan condition. If you are buying with a mortgage loan: a clause stating that if the bank refuses within a set period, the earnest money is returned in the same amount.
- Clean-title condition. An obligation on the seller to have the mortgage deleted out of the sale price or before the transaction, and the consequences if this does not happen.
- Who holds the money and how. Payment by bank transfer, with a payment reference that matches the contract. For larger sums, payment into a special account (for example with the notary under Art. 25a of the Notaries and Notarial Practice Act) or a bank letter of credit.
- The condition of the property: what stays in it and in what state it is handed over. For more on the fees and checks at the transaction itself, see our article on the notarial deed: fees and what the notary checks.
- Signatures of all owners. If the property is matrimonial community property or inherited, the preliminary contract must be signed by all owners (or by an attorney-in-fact with an express power of attorney). If one of the heirs lives outside Bulgaria, see how an heir abroad can take part in the transaction without travelling.
If you are buying a home under construction, the risks are different: there the earnest money is often larger, and the deadlines depend on the developer. See what to check when buying off-plan property.
Deposits when renting a home
The deposit question is not only for buyers. When renting, the tenant often pays a "deposit" („капаро“) to secure the home before signing the contract, and a security deposit on signing. These are different sums with different functions: the earnest money secures the conclusion and performance of the contract, while the security deposit covers damage and unpaid bills on termination. We explain what the contract should say about the security deposit in our article on the key clauses in a lease agreement.
For help with buying, selling and renting property, speak to a real estate lawyer.
Property purchase costs Notary fee, local tax and registration fee based on the property price.Frequently Asked Questions (FAQ)
Are a "deposit" and earnest money the same thing?
In everyday language, usually yes. The law regulates only earnest money (Art. 93 of the Obligations and Contracts Act). Whether a particular sum is earnest money or an advance depends on what was agreed, which is why it is important for the contract to state this expressly.
Can I get my deposit back if I simply changed my mind?
As a rule, no, if the sum is earnest money and the seller is not in default: they may withdraw from the contract and keep it. If the sum was agreed as an advance, it must be returned, but the seller may claim proven damages. Before you withdraw, carry out a legal due diligence check on the property: sometimes it reveals a problem that shifts the fault to the seller.
When does the seller owe me double the deposit?
When they fail to perform the contract for a reason for which they are responsible, while you are not in default and withdraw from the contract (Art. 93(2) of the Obligations and Contracts Act). A typical example is selling the property to another buyer. The double amount includes the sum you paid.
Do I lose the deposit if the bank refuses me a loan?
It depends on the contract. If it was agreed that the transaction depends on a loan being granted within a set period, the bank's refusal usually does not put you at fault. Without such a clause, the risk as a rule is yours.
What is a "holding deposit" and is it refundable?
It is a sum paid to "reserve" the property for a short time, usually to an agency or the seller. Whether it is refunded depends on the written agreement. A one-sided clause in the trader's favour in a contract with a consumer may be unfair and void (Art. 143 and 146 of the Consumer Protection Act).
Does the withdrawal from the contract have to be in writing?
The law does not lay down a specific form for withdrawal under Art. 93(2) of the Obligations and Contracts Act, but it is strongly advisable to make it in writing and to be able to prove when the other party received it. A notarial notice is the safest option.
Can I claim both completion of the transaction and double the earnest money?
Not at the same time. Either you withdraw from the contract and claim double the earnest money, or you insist on performance, in which case you can bring a claim under Art. 19(3) of the Obligations and Contracts Act. For more, see our article on having a preliminary contract declared final.
How long do I have to claim my deposit back?
The general limitation period is 5 years (Art. 110 of the Obligations and Contracts Act) and runs from the date the claim becomes due. In practice it is sensible to act straight away, while the evidence is still available.
How do I get my deposit back if the seller will not pay?
Send a written demand and, if it is refused, apply for an order for payment or file a statement of claim. The steps are described in our article on unpaid debts: from demand letter to bailiff.
Can the deposit be paid in cash?
Yes, if the sum is below BGN 10,000 (≈ EUR 5,112.92). At or above that amount, payment must be made by bank transfer (Art. 3 of the Limitation of Cash Payments Act). A bank transfer is also the best evidence. We explain how the balance of the price is paid at the notary in our article on the notarial deed: fees and checks.
What happens to the deposit when renting a home?
The logic is the same: if it is earnest money, the non-defaulting party may keep it or claim double. Do not confuse it with the security deposit. See the key clauses in a lease agreement.
How can we help you?
A deposit dispute is almost always decided by two things: what exactly the preliminary contract or receipt says, and who breached the agreement first. That is why the best time to consult a lawyer is before you pay, not after the deal falls through. If the dispute has already arisen, a prompt and properly drafted demand often leads to the money being returned without a lawsuit.
Mechkova & Dimitrova Law Firm will review the contract and documents before payment, draft clear earnest money clauses and represent you if you need to recover the sum through the courts. The information in this article is general and does not replace advice on your specific case. Contact us to have your contract reviewed.
