The Apartment Sold Twice and the Third-Party Mortgage
On 12 March, Dimitar sells apartment 14 in Varna to Krasimir by a notarial deed of sale, and Krasimir is entered in the Property Register on 20 March. Unknown to Krasimir, on 15 March Dimitar had already signed a second notarial deed selling the same apartment to Nikolay, who paid in full but did not register until 2 April. On 25 March Nikolay, believing himself owner, granted a mortgage over the apartment to a bank, which registered the mortgage on 28 March. Krasimir now discovers the mortgage and demands its deletion. Nikolay sues for ownership, arguing he paid first and holds a notarial deed. The apartment is worth 180,000 BGN; Nikolay paid 170,000 BGN and Krasimir 150,000 BGN.
1. Who owns the apartment as between Krasimir and Nikolay, and what is the effect of the registration dates?
Read the worked answer
Under the Bulgarian model of transfer by notarial deed plus registration, the decisive factor between competing acquirers from the same transferor is registration in the Property Register. Krasimir registered on 20 March, before Nikolay registered on 2 April. Nikolay's earlier payment and his notarial deed do not defeat Krasimir's registered right. Therefore Krasimir is the owner and Nikolay acquires only a claim against Dimitar.
Nikolay's remedy is contractual: he may claim restitution of the 170,000 BGN and damages from Dimitar for breach and for fraud, and may join Dimitar as third party in any litigation. The notary who certified the second deed should have checked the register before certification; the failure to do so exposes that notary to disciplinary and civil liability, though it does not change ownership.
2. Can the bank's mortgage survive against Krasimir, and how should the notary handling the deletion request proceed?
Read the worked answer
A mortgage granted by a non-owner is generally ineffective against the true owner, because no one can transfer more rights than he holds. Nikolay was not yet registered when he granted the mortgage on 25 March, and Krasimir had already registered on 20 March. The bank registered on 28 March, after Krasimir's entry, so the bank cannot rely on the register as against him. The mortgage should therefore be deleted as against Krasimir, while the bank retains a claim against Nikolay under its loan and security documentation.
Procedure: the notary should verify the chain of title and the register entries, prepare the application for deletion or a notarial declaration where the bank cooperates, and if the bank refuses, advise Krasimir to bring a claim for declaration that the mortgage does not bind him, seeking cancellation of the entry. The notary must not certify a deed of disposal by Krasimir until the encumbrance is cleared or the dispute resolved.