Real Estate Due Diligence in Georgia - Services for Foreign Citizens and Investors
Real Estate Due Diligence in GeorgiaUpdated on Monday 30th August 2021
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Real estate due diligence in Georgia refers to the procedures which have to be completed prior to purchasing a real estate property in this country. Foreign investors who want to open a company in Georgia should know that the procedure is also available for commercial properties, but it is necessary to know that due diligence is not an obligatory procedure under the local law, as it is only recommended to verify if the respective property is sold with no hidden liabilities. Our team of lawyers in Georgia can assist with advice on the procedure.
Due diligence guidelines in Georgia
When purchasing a commercial property, investors who are interested in opening a company in Georgia are highly advised to start the due diligence procedure, which is comprised of a set of steps that will verify various aspects related to the respective property. Thus, investors are advised to verify the legal background of the property and our lawyers in Georgia can offer assistance on the property’s main documents.
At the same time, investors can perform environmental due diligence, which will testify if the property respects the requirements established by the local legislation for environmental aspects. The procedure starts by visiting the respective location and it can include the participation of the seller, as well as of the real estate brokers. Investors are advised to be represented by attorneys in Georgia.
Real estate procedures that can be completed in Georgia
Buying real estate in Georgia implies several procedures, however, before starting the purchase process, prospecting the market for several properties to choose from is recommended. Once decided on the appropriate one, real estate due diligence is advisable.
There are several aspects such a verification can target, which is why real estate due diligence in Georgia can imply:
- the Land Registry verification which implies legal real estate due diligence;
- the technical or architectural real estate due diligence which covers the verification of the building by a construction specialist or an architect;
- the financial due diligence which implies covers the verification for encumbrances, such as mortgages or unpaid utility bills or other debts that imply obtaining rights over the respective property;
- zoning due diligence which can be requested who have purchased land they intend to build on.
Our law firm in Georgia can make inquiries with the Land Register, so that you make sure you have made the right decision, especially when considering that buying a home is long-term commitment that sometimes can include mortgages and ensuring a good quality of life.
There are several types of verification procedures that can be completed on a property before acquiring it, however, the ones presented above cover the most important aspects that can help you make an informed decision.
Aspects to consider when performing due diligence in Georgia
Foreign investors who are interested in the procedure of company registration in Georgia should verify a set of aspects when performing due diligence on a commercial property that will be used as a main business location, as follows:
- inspections carried out by the seller;
- surveys of the land/ property performed by the seller;
- insurance aspects;
- litigation cases on the property;
- environmental aspects;
- taxation matters related to the property;
- the property’s current bills;
- construction documents.
What information can be found with the Georgia Land Registry?
The first step when purchasing real estate in Georgia is signing a pre-sale agreement. However, our Georgian lawyers recommend property due diligence with the Land Register to be completed before signing this agreement.
Among the details that you can find with the Registry are:
- the legitimacy of the title deed and details about previous owners;
- if the property is under mortgage;
- if additional rights of third parties arise;
- if the property is rented or sublet.
We remind natural persons who move to Georgia that this type of verification is recommended when buying residential homes and apartments. For commercial properties, the research must be much thorough and extensive.
If you have any questions on real estate due diligence procedures, you can rely on our Georgian law firm.
Financial real estate verifications in Georgia
Financial real estate due diligence has several components among which the verification of:
- payment of bills;
- rental history.
Many people do not worry about these aspects, however, they are very important, especially when they can be found with the Land Register.
It is important to verify each of these aspects because of a few important reasons , among which the most common is that of persons who need to contract loans in order to buy the respective property. If it is subject to any debts, unpaid bills or even other banks that have foreclosed the property for lack of payment of the installments, then the buyer will find him or herself in the position of not being able to buy it. This is why, real estate due diligence can also imply verification with the tax authorities.
These are also aspects to consider by investors who want to acquire office buildings or other types of industrial sites which imply important transactions from a financial point of view.
If you need details on how to perform a responsible real estate verification in Georgia, you can rely on our lawyers who can signal various inconsistencies.
Our law firm in Georgia can offer tailored solutions to foreign citizens interested in buying properties and who want to have them verified prior to the purchase.
Tips on buying a property in Georgia as a foreigner
If you are a foreign citizen who has moved or plans on relocating to Georgia soon and you are in the process of searching for a property to buy, here a few tips that can help you make the right decision:
- check the prices of multiple properties in the area you are interested in;
- look for properties at the outskirts of cities or towns, if you are interested in paying a lower price;
- never forget to search the property with the Land Register.
As for statistics, according to some of the most recent ones:
- the Tbilisi real estate market registered a sharp decrease of 45.5% in the second quarter of 2020 because of the COVID-19 pandemic;
- in the spring of 2020, the price of new apartments in the capital city increased by 1.0%;
- during the same period, the price of old apartments also rose by 1.9%, mostly because they are better positioned;
- even so, prices were still lower by 5.4% compared to the same period of 2019.
Businessmen interested in further information on the real estate due diligence are invited to address to our lawyers in Georgia for a full assessment of the Georgian property.