Bulgarian Dreams, one of the best-known companies selling property in Bulgaria, has gone out of business, leaving dozens of furious buyers who are trying to get their money back. The company was the subject of a BBC Watchdog report last month, in which owners complained that properties sold to them by Bulgarian Dreams had been handed over without being properly completed.
Days later, a message appeared on Bulgarian Dreams' website saying: "We regret to inform our customers that following the extraordinarily difficult economic conditions we have had to cease trading. All existing customers who have previously purchased property should refer directly to the development companies in Bulgaria, none of which are directly affected by our closure."
More than 80 Bulgarian Dreams' customers contacted Watchdog complaining about off-plan properties they had bought in Bulgaria which were not habitable, with power and water often not connected, and rubbish strewn around. Among the main developments involved are Windows to Paradise in the Black Sea resort of Balchik and Cedar Heights in the ski resort of Pamporovo.
A number of owners are reported to be looking into mounting a joint legal action to try to get their money back or obtain compensation; the International Law Partnership has held a meeting on the subject and is looking for owners who are prepared to share the costs of such an action.
So are there any lessons to be learned from the episode? Many buyers have purchased successfully in Bulgaria, and the main rule to follow is to always make sure that you employ a truly independent lawyer before committing yourself to purchase.
It is also worth checking whether any agent you deal with is a member of any trade associations. Bulgarian Dreams was a member of one of the main bodies for overseas property, the Association of International Property Professionals (AIPP) but it was expelled a year ago, in February 2008. The AIPP said that the company's conduct had fallen "way short" of the requirement in its Code of Conduct for members to "behave professionally in their relationships with their potential buyers".
Alexander Garrett is a freelance property writer who contributes regularly to The Observer and British Airways' Business Life.