It is very common for a person to make improvements to a property that he does not own. But how should the relationship between the improver and the property owner be settled? In this post, we will reveal the main rules that govern the legal regime of improvements in foreign real estate.
A basic principle in modern Bulgarian law is that of unjust enrichment. The performance of improvements by one person on another's property results in a transfer of property. Depending on the situation in which these improvements occur, the compensation for the improver is different.
IMPORTANT TERMS RELATED TO IMPROVEMENT CASES
For the purposes of this post, we will clarify some commonly used legal terms:
Improvements
Improvements are labor, funds, and materials that have been done to the property that increase its value. An example of improvements are replacing windows, laying flooring, renovating a bathroom and others.
Expenses
Expenses are different from improvements – they are the expenses you incur in relation to the property. Estimates of improvements and costs often differ. The amount by which the value of a property increases is not equal to the costs incurred on it.
Possessor
A possessor is a person who exercises de facto authority over the thing, but is not its owner. The owner demonstrates a psychological attitude towards the object, treating it as his own.
Bona fide owner
The possessor is in good faith when he possesses the thing on a legal basis capable of making it the owner, without knowing that the grantor is not the owner or that the form prescribed by law has been defective. It is sufficient that good faith existed when the legal basis arose. Good faith is assumed until proven otherwise.
Unscrupulous owner
Possesses the thing on a basis that is not fit to make him the owner, and possesses on a basis that is fit to make him the owner, but knows that his grantor is not the owner or that the prescribed form has been defective.
Holder
A holder is a person who exercises de facto authority over someone else's property based on a contractual legal relationship with the owner - for example, a lease.
Tolerable actions
In Decision No. 483 of 11.12.2012 of the Supreme Court of Appeals case No. 493/2012,, the question of what constitutes tolerable actions was considered. It is accepted that these are de facto states in which actions are performed against a thing, without arising from a contract with the owner or possessor, but are performed with their consent as tolerable, for example, resting on close friendship or other personal relations. Tolerable actions are precisely actions, not de facto power, and therefore must be distinguished from holding, and therefore also from possession, which is why they cannot serve as a basis for acquiring possession. These actions also differ from holding in that the holding is exercised by virtue of agreement with the owner (the holder of the real right) or possessor, i.e. by virtue of a contract, therefore the possession of the thing is the right of the holder against the person who grants the possession and is liable for it. Because the holding rests on a contract with the person transferring the holding to the power, it is by definition legitimate. A unilateral statement by the owner or possessor is sufficient for the suspension of the tolerated actions.
Various scenarios in which improvements can be made to someone else's property
Having clarified the essence of the basic concepts, it is time to look at the most common cases in which a person makes improvements to someone else's property.
When the property is transferred on the basis of a preliminary contract
A specific form of possession is that which is based on a preliminary contract of sale, where the possessor is initially in bad faith because he knows that he has not yet acquired the property, but is confident that he will acquire it because the counterparty under the preliminary contract, she undertook to transfer it to him. Regardless of the fact that he is in bad faith, the owner who has acquired the actual power over the thing under a prior contract enjoys the rights of a bona fide owner. According to Art. Art. 72 of the Law on Property, the bona fide owner may claim for the improvements he has made, the amount by which the value of the thing has increased as a result of these improvements. This increase is determined on the day of the judgment. He may ask to be paid the necessary expenses he has incurred in preserving the thing. Until the improvements and expenses are paid, he has the right to retain the item.
When the property is leased by the improver
According to a concluded rental agreement, the tenant holds and uses the property on the basis of a rental relationship. On this basis there is the quality of property holder. He does not own them, does not control them in the sense of Art. 68 of the Property law, and not a bona fide owner within the meaning of Art. 72 of the Property law, nor an unscrupulous owner. This means that the relations between the parties in connection with the contract should be regulated in accordance with the agreements reached in it, and in the absence of agreements - according to the rules for conducting foreign business without a power of attorney or unjust enrichment. In this sense is also the mandatory judicial practice - Interpretative Decision No. 85 of 02.12.1968 of the Supreme Court case No. 149/68.
According to Art. 61 of the Law on obligations and contracts if the work was undertaken appropriately and was well managed in another's interest, the interested party is obliged to fulfill the obligations entered into on his behalf, to compensate the manager of the work for the personal obligations that he assumed, and to return to him the necessary and useful expenses together with interest from the day they are spent. If the work was also undertaken in his own interest, the interested party is liable only to the extent of his enrichment. If someone has undertaken someone else's work against the will of the person concerned, the latter is liable under the rules for unjust enrichment.
When the property is held by the improver
The owner of someone else's property can be in good faith or in bad faith. Both the owner in good faith and the owner in bad faith have the right to claim for the expenses incurred by them in another's property. The bona fide owner, in terms of his claim for costs, is equal to the owner who received de facto authority over the property on the basis of a preliminary contract (Art. 70, Para. 3 of the Civil Code).
Both the bona fide and the unscrupulous owner are liable for the incurred necessary expenses. Necessary expenses are those related to the preservation of the thing, which do not lead to an increase in its value.
Where the property is conveyed by the owner based on a close relationship with the improver
The person who has made improvements to someone else's property without being bound by a contract with the owner of the property, when he is not the owner and is not the holder, cannot benefit from the provisions of Art. 72 and 74 of the Law on Property. His relations with the owner for the improvements made shall be regulated in accordance with the rules for carrying out another's work without a power of attorney, respectively with the rules for unjust enrichment, and for the extraction of the object - in accordance with Art. 93 of the Law on Property.
When the improvements are made in jointly owned property
The co-owner who has made improvements to the co-owned property with the consent of the other co-owners cannot benefit from the provisions of Art. 71, Art. 72 and Art. 74 of the law on property.
His relations with the other co-owners are governed by the rule of Art. 93 and Art. 30, para. 3 of the Law on Property, and for the necessary expenses for the preservation of the property and the improvements - from the rule of Art. 30, para. 3 of the Law on Property and those for conducting someone else's business without a power of attorney.
In conclusion
Usually in life, cases are not "cleaned" of details and complex legal and factual relationships. In this regard, it is necessary to contact an experienced lawyer to assist you in protecting your rights and legal interests when making improvements to someone else's property.
