Deposit, earnest money and advance payment are not the same
Under Bulgarian law, the legal effect of the paid amount depends on what the parties agreed in writing. A payment described as earnest money may have different consequences from a simple advance payment.
When can the deposit be returned?
The contract should state what happens if the seller cannot provide clean documents, if an encumbrance appears, if a mortgage cannot be removed, or if the buyer lawfully refuses to proceed because agreed conditions are not met.
The safest approach is to connect the deposit rules to objective document checks, not to vague wording such as “the buyer changed their mind”.
What should be in the preliminary contract?
- full identification of the property according to current documents;
- price, payment schedule and notary deadline;
- seller's duty to provide specific documents;
- rules for encumbrances and third-party claims;
- clear consequences for default by either party.
Risky clauses
Be careful with clauses that make the deposit non-refundable before document checks are complete, or clauses that give one party unlimited time to provide missing documents.