A large share of the homes on the market today still carry a mortgage. Lending has held up even as transactions fall: Registry Agency data for Q3 2026 show sales down 22.1% year on year, while newly registered mortgages are down just 0.7% (full breakdown in our market report).
An outstanding loan does not stop a sale. It does dictate the order in which money moves — and if that order is not agreed in advance, the deal stalls at the notary's desk. Here is how the mechanism works and how both sides stay protected.
Under Art. 173(1) of the Obligations and Contracts Act, a mortgage creditor may satisfy its claim with priority from the price of the mortgaged property, whoever owns it. A sale does not make the mortgage disappear — it passes to the buyer together with the property.
That is why no sensible buyer pays the full price to the seller while the mortgage is still on the property register. It shows up on the encumbrance certificate obtained before every transaction. The task is to make sure the sale proceeds pay off the loan first and the mortgage is then cancelled.
The rules are in Art. 179 of the Obligations and Contracts Act:
In practice the bank issues the notarised consent once it has received full repayment. The Registry Agency fee for cancellation is half the registration fee, i.e. 0.05% of the secured amount — the same fee we covered in our guide to refinancing a mortgage.
How quickly each bank issues its consent varies and is not fixed by law. Agree it with the bank in writing rather than taking it on trust.
Before a notary appointment is booked, the seller asks the bank for a written statement of the debt as at a specific date. It should show:
One rule with no exceptions: confirm the payoff account directly with the bank, never from an email or message. Swapped bank details in correspondence are a textbook fraud scenario in large-value transactions.
1. The buyer pays from own funds — through the notary's account. Under Art. 25a of the Notaries and Notarial Activity Act, the sum due under the transaction can be paid into a special bank account in the notary's name. The terms — when the money goes in, and when and to whom the notary pays it out — are set in a written agreement between the notary and the parties. The usual sequence: the buyer deposits the price; after the deed is signed and registered, the notary pays the bank the amount on the payoff statement and the balance to the seller. The law expressly bars enforcement against these funds for the notary's own debts. The fee for the service is agreed with the notary in advance.
2. The buyer pays with a mortgage loan. Two banks are now involved. The buyer's bank wants its mortgage to rank first; the seller's bank wants to be repaid before it consents to cancellation. Exactly how, and in what order, the new loan's funds are released depends on the buyer's bank's procedure. So this conversation belongs at loan approval stage, not the week before the notary.
3. The seller repays the loan before the sale. This is the cleanest option for the buyer — the property is already unencumbered at the notary. If the seller has no funds of their own and wants to repay using the buyer's deposit, the risk shifts to the buyer: their money goes to the seller's bank before ownership passes. Accept such a structure only with clear terms in the preliminary contract — a deadline for cancellation, the deposit paid directly to the bank against a receipt, and consequences for non-performance. Under Art. 93 of the Obligations and Contracts Act, a party that received an earnest-money deposit and then fails to perform owes it back twice over.
Under Art. 25(10) of the Notaries Act, payments in a property transaction totalling more than BGN 10,000 (€5,112.92 at the fixed conversion rate) must go through the notary's special account or a bank account at a bank chosen by the parties. The same threshold applies under the Limitation of Cash Payments Act. In the deed, the parties declare that the stated sum is the actual agreed payment (Art. 25(9)). "Part of it in cash, off the deed" is not an option — neither lawful nor safe.
The seller owes the buyer an unencumbered property, so the costs of repaying and cancelling the seller's own mortgage — any early-repayment compensation, notarisation of the bank's consent and the registry cancellation fee — normally fall to the seller. That is not automatic: write it into the preliminary contract, together with the payment structure and the deadline by which the mortgage must be cancelled.
A mortgage does not stop a sale; it sets its order: the bank is repaid first, the seller receives the balance, and the buyer receives an unencumbered property. The law supplies the tools — notarised consent to cancellation, the notary's special account, bank payments above the threshold. The risk lies not in the law but in loose details: a payoff figure for the wrong date, an unconfirmed account, a bank that was not told in time.
If you are selling a home with a loan still outstanding, or buying one that carries a mortgage — call us or come by the office. We will line up the payment structure with the bank and the notary before you sign anything.
Legal framework verified as at October 2026. Fees are indicative; individual banks' timelines and requirements are confirmed case by case.
