Purchase a Property in Georgia - Legal Guidance for Foreigners
Purchase a Property in GeorgiaUpdated on Thursday 22nd July 2021
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Foreigners can purchase a property in Georgia following the same regulations available for the local citizens. There is no distinction between local and foreign persons wanting to acquire a property here. Foreign businessmen can also purchase a property for commercial purposes and it is important to know that the procedure is carried through the Ministry of Finance and Economy. Investors who want to open a company in Georgia are advised to start the due diligence procedure and our team of Georgian lawyers can offer advice and assistance in this sense.
How to find a property to purchase in Georgia
Georgia is a small country with several developed cities that might be first on the list of those who want to buy properties. The capital, Tbilisi, Batumi and Kutaisi are among the best-known cities, however, it is recommended to also check on towns or suburban areas near large cities where the prices are lower. however, the living conditions are just as good.
Foreigners can either check in local papers or on the internet, however, they can also use the services of real estate agencies that can offer valuable information such as price ranges in a specific area and, in some cases, what to look for when interested in a zone or city. In some cases, these can also partially handle the sale-purchase contract.
Finding a property to purchase in Georgia is not difficult if you consider the following:
- you have already decided how much you are willing to pay;
- you have chosen the type of property you want;
- you know the are you want to move to.
These will narrow your searches and will speed up the acquisition procedure.
Our lawyers in Georgia can handle various legal aspects related to the purchase of real estate and can also represent you in various litigation case, if any.
Types of properties in Georgia
Foreigners can purchase a property for residential or commercial purposes without any types of restrictions. However, purchasing Georgian properties that are included in agricultural land is no longer available for foreigners, this regulation being applicable starting with May 2017. Persons who are interested in this matter must know that the definition of “agricultural land”, under the Georgian legislation, defines any type of property that is located outside the local towns.
Thus, purchasing a property in Georgia that is located in the countryside can become an issue, as this type of property is generally considered agricultural land; our team of Georgian lawyers can advise on the latest regulations that refer to the purchase of a local property.
Businessmen interested in opening a company in Georgia can purchase a property where they can develop businesses in the following sectors: tourism, construction, gambling, manufacturing or logistic services. Those who want to purchase a property in Georgia will need to file an application with the Ministry of Finance and Economy in which they will provide identification details (this is required for both natural persons and legal entities).
Legal entities purchasing properties in Georgia will need to provide information on the company, the company’s directors and the identification code of the business form; our lawyers in Georgia can provide more information on this matter and can assist foreigners with advice on the purchase procedure and the documents that need to be prepared.
How to verify a property to buy in Georgia
Once a person has found a property, the first step is to check if everything is in order with it. This is called real estate due diligence process through it the buyer can find out if there are any inconsistencies related to the documents or even the building. While for residential properties this is not one of the procedures a person considers at first, it is quite common when it comes to commercial real estate acquisitions that have high values and imply more extensive verifications.
Here are the most important aspects to verify and that can be found during the real estate verification process:
- updated information about previous ownership of the property;
- information about property rights of third parties, such as unresolved inheritance matters;
- information about debts and mortgages, if any;
- other information that can only be found with the Land Register.
Our law firm in Georgia can inquire with the Land Register on your behalf if you have found a property you want to buy.
You can also request technical and architectural real estate due diligence that are made by architects and construction specialists, if you need further reassurance that you have made the right decision.
What should a foreigner know when purchasing a Georgian property?
A foreigner who wants to open a company in Georgia or to relocate there can benefit from a set of legal rights, that are mostly the same as the ones that are offered to Georgian citizens. With regards to the purchase of a residential property, the purchase procedure implies the same steps that would be followed by locals. Foreigners are not required to provide additional documents, nor do they have to pay additional taxes. Some of the highlights of the purchase procedure available here are the following:
- the purchase procedure can be completed relatively fast, and this is also available for the registration of the new ownership;
- the purchase procedure does not require the payment of the stamp duty;
- the legal system in Georgia allows a standard registration procedure, which is generally concluded in a period of four days (with the payment of a fee);
- however a foreigner can request the express procedure, which can be completed in a single day, through the payment of a higher fee;
- foreigners can benefit from full ownership on their properties and this is also available in the case of commercial properties.
Buying real estate in exchange for residency in Georgia
Georgia has aligned with other European countries that have created programs through which foreign citizens can acquire properties and obtain residency. However, Georgia’s program is much simpler. Foreigners can buy real estate with a minimum value of 100,000 USD in order to become eligible for residence permits with a validity of one year. However, there are also other requirements to be met, which is why we recommend you discuss with our lawyers in Georgia for having the entire picture of this immigration option.
What does the purchase procedure imply in Georgia?
During the procedure of purchasing a Georgian property, a foreigner should expect to go through a set of typical steps. The conclusion of the sale is done through a purchase contract, that is signed by the seller and the buyer. The next step is to make the first payment, as agreed in the purchase contract – in this case, the buyer will make the respective payment in the seller’s bank account, this being the most common way to conclude this transaction.
After this procedure is completed, the Public Service Hall, working under the Ministry of Justice in Georgia, will register the change of ownership for the respective property. When purchasing a real estate property from a local developer, the payment will be concluded in the national currency.
As we presented above, it is highly recommended to perform the due diligence procedure on a property prior to purchasing it, in order to verify if there are any hidden flaws and to see if the property itself matches with the information provided in the purchase documents.
Thus, persons who are interested in this matter can easily verify at the Georgian Public Registry relevant information on the property and its owner; matters such as debts, litigations, mortgages and any crucial information on the owner of the property can be obtained through an extract issued by the institution.
Still, foreigners must know that this document is issued in the Georgian language, but an official translation can be obtained on request. This service is available for foreigners, who have to pay a small fee (calculated for each page of the translated document, which generally has maximum six pages). The translated document will then have to be notarized at a public notary in Georgia, a procedure that also imposes the payment of a small fee.
Buying commercial real estate in Georgia
Foreign companies interested in expanding operations in Georgia can acquire industrial sites or commercial spaces for their activities.
They can also takeover companies and the premises and other properties these own, which is why the procedure of buying commercial real estate is more complex, takes longer to complete and must be subject to various formalities. The only restriction applicable to both foreign citizens and companies is related to the acquisition of agricultural land. This type of properties can be used under concession agreements for limited periods.
If you are in the process of buying commercial real estate from another company, you can rely on our Georgian lawyers for guidance through such complex procedures. Also, if the company is undergoing liquidation, you need to make additional verifications.
What are the characteristics of Georgian properties?
One of the things foreigners should expect when buying an apartment in Georgia is to purchase it as “white frame” property. A white frame real estate refers to a type of property that is sold with just the bare minimum, in the sense that one should expect an apartment to have the following: a metal door at the main entrance, the windows, the lighting system, electricity and water, internet and phone cables and the heating system.
This means that a typical apartment available for sale, which is bought from a developer, will be offered with bare concrete floors and walls. Most of the apartments are delivered as such, due to the characteristics of the local consumer market. Georgian citizens prefer to design their apartments or houses from scratch and the developers working on the local market respect this wish.
Still, since the Georgian property market is also opened to foreigners, who have different expectations when purchasing a property, developers also offer fully finished apartments. When purchasing a fully finished property, the minimum price per square meter increases by $150, as a general rule, but the price can increase depending on the types of materials used.
Register with the Ministry of Finance and Economy in Georgia
Foreigners who want are interested in the procedure of opening a company in Georgia will need to provide detailed information on their investments carried out on the respective purchased property. Our team of attorneys in Georgia can assist with further information on the investment legislation applicable in this country.
Steps to complete after buying a property in Georgia
If everything went smoothly and one managed to buy the desired property, he or she must proceed to the registration of the real estate with the Georgian Land Register. The procedure is simple and can be completed with the help of our lawyers.
With respect to the taxes and fees to consider, as well as profits that can be made by owning a property in Georgia, here are the main aspects one needs to know:
- if using the services of a real estate agency, the commission does not exceed 2% or 3% of the final price;
- the property tax is one of the lowest in Europe – 1%;
- property rentals the country’s capital city can yield a profit ranging between 12% and 18% per year.
They will need to give information on the business activity, the overall value of investments and also on the number of persons who will be employed in the company. Businessmen interested in further information on other legal aspects related to the purchase of a property are invited to address to our lawyers in Georgia.