Problems with Transfer of Property between Spouses with a Matrimonial Agreement

The new Family Code, taken effect as of valid from October 1, 2009, introduced for the first time in the Bulgarian legislation the institution of the matrimonial agreement as a tool to regulate relations between persons who are about to get or already are married.

The matrimonial agreement can include clauses regarding spouses’ rights on property acquired before or during the marriage, the contribution of each spouse to the payment of  family costs, child and spousal support and maintenance in a marriage or in the event of a divorce. Matrimonial agreements are executed in writing with notary attestation of the signatures.

Beside the above mentioned rights, matrimonial agreements allow spouses to transfer right of ownership or other real right over a property between themselves. A situation may arise where the said properties are situated in the areas of practice of different notaries. In such cases the spouses have the right to choose a notary in one of these areas, to perform the notary attestation in the given local office of the Registry Agency (the Agency).

Matrimonial agreements subject to entry in a court district different from the district where they (were)executed, are sent ex oficio by the Agency to the competent registry office. On the other hand, the provisions of the Notaries and Notary Practice Act and the Rules of Organization of the Agency which are in direct relation with, and reflect the changes in the new Family Code, take effect three months later than the code’s provisions. Accordingly there would be a relatively long period of time during which it remains unclear what provisions will govern recordings by the Agency and, therefore, what would be the legal force of property deals executed by a matrimonial agreement.

Another significant problem  in respect to the ex oficio recording of property transactions for a different region, even after the changes concerning recordings would have come in to force, is the longer technical period needed for that. Since the effects vis-à-vis third persons arise upon recording the changes in the property lot, such a technical delay creates legal insecurity and allows possible abuses regarding sale of property to various legal entities.

To the extent that the matrimonial agreement settles property relations between spouses or would-be spouses, it is presumable that when they have a matrimonial agreement, spouses can only transfer property between themselves. Interpreting of the law formally could end to the conclusion that the provisions apply to third parties as well. Because of the lack of legal experience in this area and the possible gratuity of transactions, the above lack of legal clarity allows disposition of the property beyond the scope provided for by the legislator.

Overall, the matrimonial agreement is a step towards liberalising the settlement of matrimonial relations. It should be noted, however, that an incompletely or unclearly regulated legal institution could pave the way for difficulties, connected to the interpretation of the regulations, as well as for onset of contradictory legal practice.

Hence, a future amendment to the code, which specifies whether the code’s provisions apply only to spouses or are legally relevant to third parties.