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Delayed construction: when can you claim a penalty or rescind the agreement?

Delayed construction in Bulgaria: review deadlines, the responsible party, penalties, rescission and the effect of a proposed extension.

Kalchev Law FirmA law firm publication
2 min readPublished: Legal review pending

The essentials

  • Identify the missed obligation and the party responsible.
  • Contractual penalties and damages have different requirements.
  • A deadline extension must also be reviewed for its effect on existing claims.

The promised date for your new apartment has passed, and the answer is another few months. Before accepting an extension or withholding payment, establish what was due: completion of works, a construction-stage document, commissioning, transfer of title or delivery of possession.

These events may be linked in one agreement, but they are not interchangeable. Photographs of an almost finished building do not demonstrate performance of every obligation.

Identify the contracting party

The project's trading name, the building contractor and the company that signed your agreement may be different. Establish who undertook the particular obligation. Correspondence with showroom staff can be useful evidence but may not replace proper notice to the contractual counterparty.

Collect the agreement, specifications, payment schedule and amendments. Check whether the deadline is a fixed date or depends on another event, and whether it has already been changed.

Assess explanations for the delay

Weather, administrative procedures or increased material costs do not automatically remove liability. The clauses, actual obstacle and its connection to non-performance require examination. Article 81 of the Obligations and Contracts Act states that lack of funds alone does not release the debtor from liability.

Your own performance also matters. An unpaid instalment may affect the assessment. Conversely, withholding reciprocal performance has its own requirements and should not be based on a generic online recommendation.

Penalties, damages or an exit

Check which breach triggers a contractual penalty, when it starts, whether it is capped and any conditions for liability. Article 92 permits an agreed penalty without proof of the loss itself, but the contractual basis and breach still need to be established.

Other losses, such as additional rent, raise questions about causation, evidence and applicable limits. Paying rent does not automatically mean that every payment will be recoverable.

Rescission also requires assessment. Article 87 generally envisages an appropriate period for performance with a warning, subject to exceptions. Where rights in the property have already been transferred, judicial rescission may be required. Rules for an ordinary preliminary agreement should not be applied mechanically to a completed property transfer.

Before signing an extension

Read whether the new date comes with a release of penalties, an acknowledgement of performance or a statement that no claims remain. Expressly address accrued rights.

Preserve payment records, written promises, dated photographs and evidence of expenses attributed to the delay. A contractual right to repayment does not guarantee that the debtor has money to repay.

Practical guidance

What to do, step by step

01 / 05

Identify the exact overdue obligation

A general statement that the development is late is not enough; the agreement may contain different deadlines for different stages.

  • Distinguish completion of works, construction-stage documents, commissioning, transfer of title and handover.
  • Check which deadline is fixed, which depends on another event and whether it has been amended.
  • Identify the company that actually undertook the particular obligation.
02 / 05

Assess the reason for delay and your own performance

General references to weather, administration or prices do not automatically determine liability.

  • Compare the specific obstacle with the contractual clauses and the actual delay period.
  • Check whether you have paid the instalments and performed other reciprocal obligations when due.
  • Do not mechanically stop payments without assessing the conditions for withholding reciprocal performance.
03 / 05

Calculate penalties and other losses separately

Contractual penalties and damages are not identical and should not simply be added together.

  • Check which breach triggers the penalty, when it begins and whether it is capped.
  • For other losses such as additional rent, collect evidence of amount and causation.
  • Check whether the agreement limits or coordinates the different remedies.
04 / 05

Review any amendment before accepting a new date

An extension may also alter rights that have already accrued.

  • Look for releases of penalties, acknowledgements of performance or full-settlement wording.
  • State expressly which accrued rights remain preserved.
  • Do not sign a new deadline merely on an oral assurance about how the amendment will be interpreted.
05 / 05

If considering rescission, check the requirements

Leaving the transaction requires a separate legal assessment based on the stage reached and the contract.

  • Assess whether an additional period and warning are required and whether an exception applies.
  • Distinguish a preliminary agreement from a case where property rights have already been transferred.
  • Preserve agreements, payments, correspondence and evidence of expenses and delay.

Review a construction delay

Discuss your circumstances with a lawyer. Leave a phone number or email, or call us directly.

This article is for general information only. It does not constitute or replace individual legal advice.