The “Greenlife” schemes in real estate transactions expose buyers to risk

“Legislative changes are needed to close the loopholes that allow such schemes,” commented Yordan Yordanov.

In recent weeks, the media and social networks have revealed a troubling case: dozens of Bulgarian citizens have invested their savings in purchasing apartments in Sofia through the company “Greenlife-Property.” Many of them signed preliminary contracts in 2021 and 2022, paid significant advance amounts, and now find themselves without properties.

According to the affected parties, the company unilaterally terminated the contracts, transferring the apartments to a newly established joint-stock company, “Residia Group.” The buyers were not informed about this transfer and have no legal relations with the new owner.

How these schemes work and why it is important to have a company and lawyers behind you

Yordan Yordanov, CEO of the real estate agency Nov Dom 1, commented: “I call it a scheme, not a scam. The worst part is that political figures, who continue to operate on the Bulgarian political scene, as well as representatives of real estate agencies, are involved. This is a way of working for some builders, especially in Sofia – people give them their money, and in the end, they receive either minimal compensation or nothing at all, while the builder earns a huge margin.”

Yordanov also points out a specific mechanism: preliminary contracts include a clause that is legally void because it “contradicts good morals.”

“The consumer is placed in a situation of absolute inequality. If the economy worsens, the buyer has no right to withdraw and get their money back, while the builder can cancel the contract and keep everything,” he adds.

How does the builder block the buyers’ rights?

After signing such contracts, the next step follows – transferring the entire complex to another company or transferring the apartments to other unsuspecting buyers. According to Yordanov, this aims to complicate the protection of buyers and make it almost impossible to declare the contract final.

Even when winning a case, the risks do not end according to him: “The construction company accumulates huge debts to the National Revenue Agency and banks. The law does not allow notarized transfer of property if the company has even five leva of debt. The buyer may win the case, but the property goes to public auction. This turns into a ‘sweet revenge’ – the client loses both the money and the property, while the company actually benefits.“

How can the victims protect themselves?

Yordanov emphasizes that legal actions are possible but require experienced lawyers and a strategy. The victims can:

• to request declaration of the clauses as null and void, because they contradict the law and good morals;
• to file a claim for declaring the contract final and to impose liens on the property to block its sale to third parties;
• in case of proven fraud – to also initiate a criminal case.

“The key is not to panic and not to sign new contracts under pressure. Cases are lengthy and require documentation of every step, but good lawyers can dismantle the system that tries to deceive buyers,” he adds.

Yordanov warns that even with a court victory, the property may temporarily remain encumbered with obligations or be declared for public sale. “Therefore,” he says, “it is vital for clients to act systematically and with professional support.”

The harm to the market and the need for legislative changes

These practices do not only affect individual clients. “They undermine trust in the new construction market, shoot the prices of finished properties into the stratosphere, and scare away foreign investors,” Yordanov comments. “Legislative changes are needed to close the loopholes that allow such schemes.”

“Nov Dom 1” now includes in its contracts penalties of at least 30% for the seller if they unilaterally cancel the deal due to their own fault – a practice that Yordanov cites as an example of how the industry can set stricter standards on its own.