The Supreme Court of Cassation of the Republic of Bulgaria (SCC) in its recent decision* answers two important questions related to the power of attorney, based on which a contract for sale of real estate was concluded:
- What is the meaning of the part of the power of attorney, which declares that the sale price was received by the seller before signing the contract for sale?
- Who should prove that what is reflected in the power of attorney, respectively in the notarial deed, is incorrect and with what means of evidence?
The facts, on which the dispute is based, are as follows:
A contract for purchase and sale of real estate has been concluded, objectified in a notary deed. The Buyer is a person who is at the same time a proxy of the Seller on the basis of a power of attorney with notarized signatures and content. In addition to the express agreement under which the Seller authorizes the Buyer to sell the apartment, including against the obligation to look after him and to provide alimony, the power of attorney includes a text, according to which the Seller declares that he has received the sale price up to the tax assessment of the property.
The Regional Court was seized by the Seller’s heir with claims for annulment of the authorization transaction and the contract concluded on its basis for the sale of the apartment, as well as for its termination, which were rejected. An appeal was filed with allegations of non-performance by the Buyer both in relation to his obligation to provide care and his obligation to pay the sale price.
The Appellate Court held that the Seller’s statement contained in the power of attorney that he had received the sale price up to the amount of the tax assessment for the property was without probative value. As the price is not indicated as an amount, it is not clear what was paid and what was received. In addition, the price is not determinable, as at the date of notarization of the power of attorney the tax assessment has not been issued. The court also accepted that the power of attorney did not stipulate powers for the Seller’s proxy to receive the price under the contract and to make a written statement about it (receipt). Therefore, his statement in the notary deed that he received the price was made without representative authority and has no probative value. As a result, the contract was terminated.
The SCC overturned the decision. Referring to its previous practice, the SCC accepted that the part of the contract containing a statement that the price was paid by the buyer, respectively received by the seller, is a statement of knowledge and in this part the contract has the character of a private document certifying a statement of knowledge with the nature of out-of-court recognition of the fact that the price was received from the seller. When the contract for sale is drawn up by a notarial deed, it can only serve as proof that the statements of payment, respectively to receive the price before the conclusion of the contract, are made by both parties to it, but not the fact that the payment was actually made because it was not made before the notary. In the event of a dispute, the burden of proof for establishing the payment is borne by the buyer, and this can be done by all means of evidence permitted by law. In this connection, he may also refer to the seller’s acknowledgment that the price has been paid. However, this confession does not in itself bind the court and it must assess it in the light of all the circumstances of the case. By agreement between the parties, a special document for the payment may be issued – a receipt. The receipt is a deliberately drawn up witness document that materializes the out-of-court confession of its author that he has received something from the person indicated in the receipt. The receipt itself can be drawn up as a separate document or included as a content in another document concerning the relations between the parties (ex. power of attorney). In the part in which it certifies the payment made, this document will have the meaning of a receipt.
In this case, the power of attorney has the character of a receipt in the part by which the Seller has declared that he has received from the Buyer an amount equal to the tax assessment of the property and serves as proof of payment. It is irrelevant that the exact amount of this estimate is not stated. The tax assessment is a known fact that is subject to verification at any time. There is no legal rule, according to which its amount is known from the moment of obtaining a tax assessment certificate. The fact that at the time of notarization of the power of attorney it has not yet been issued does not lead to the conclusion that the obligation to pay the sale price formulated in this way is indeterminable.
* Decision No 60221 from 19.01.2022 on civil case No 3270/2020, IV Civil Department