What Is Immovable Property? Can I Buy Immovable Property In Georgia As A Non-Resident?
Immovable property includes a “plot of land with its subsoil minerals, the plants growing on the land, and buildings and other structures firmly attached to the land.”
Foreign citizens are allowed to acquire immovable property with the exception of agricultural land as outlined below. Furthermore, foreign citizens can acquire state property as well – with the exception of state-owned agricultural land plots.
What Is Agricultural Land? Can I Buy Agricultural Land In Georgia As A Non Citizen?
Agricultural land – “land area of either a pasture, a hayfield, arable land (including the land under perennial crops) or a homestead land category, which is used or may be used for agricultural purposes with or without buildings and structures on it.”
In most cases, non-citizens cannot purchase agricultural land. There are some limited workarounds, but they are quite complex. Also there are exceptions, such as when a foreign citizen inherits the land.
The most important practical consideration is that agricultural zoning may be applied to land in places you would not expect. Many areas in towns and villages, and even parts of Tbilisi (the capital of Georgia), are zoned agricultural. Getting the zoning changed can be a long and difficult process. Because of this, most foreigners choose to purchase non-agricultural land rather than to pursue rezoning.
Can I Get A Mortgage In Georgia As A Foreigner? What Mortgage Rates Are Available?
Commercial banks are able to set their own policies regarding mortgage loans for foreign citizens.
Both Bank of Georgia and TBC, among others, offer mortgage options to foreigners. Upon approval of your financial status, typical mortgages for foreigners require a high initial down payment (normally at least 40%) as well as a relatively short term (typically a maximum of 10 years) at an interest rate of ~6% and up. Note that most loans are taken in USD. For loans in the national currency (GEL), you can expect interest rates upwards of 12% per annum.
These numbers can vary, but the key takeaway is that while you might qualify for a mortgage, the conditions that foreigners receive are sometimes different from those for citizens of Georgia. Speak to your bank to find out what they can offer you.
If I Don’t Get A Mortgage, Am I Expected To Pay 100% Of The Cost Of The Purchase In One Lump Sum?
This is up to the seller and what you negotiate together.
If the property is being bought from a developer, they might offer payment by installments. Usually, a down-payment of 20-50% of the purchase price is required. Interest rates may or may not apply. The duration of the “loan” varies, but sometimes developers require the property to be fully paid for before construction is finalized. Usually, the buyer will be registered as a future owner of the property, and will be registered as the owner only after the price is fully paid.
If the property is being bought from a private individual, it can be difficult to find a seller that would agree to payment by installments. But the law does not prohibit such transactions and on your behalf, Delta Estate representatives will negotiate with the landlord over the price of the property and its installments.
Can I Buy Property In A Foreign Currency?
Georgian Lari (GEL) is the only legal tender on the territory of Georgia. This means that the payment should take place in GEL. Nevertheless, parties are entitled to determine that the price will be an equivalent of “X” USD/EUR/GBP (or other foreign currency), paid in GEL. However, purchasing in crypto is also legal, though very few developers/sellers offer it.
In such cases, an agreement on how the exchange rate will be calculated should be made. Usually, parties agree that the official exchange rate determined by the National Bank of Georgia on the date of payment will apply.
Please also note that real estate prices are usually advertised in USD.
How Do I Get The Funds To Georgia To Make The Purchase? What Problems Might I Encounter Getting Funds To Georgia?
You can open a personal bank account in Georgia using a foreign passport or Georgian ID card.
After opening a Georgian bank account, you can transfer the funds from a foreign bank account. Due to measures directed toward the prevention of money laundering and the financing of terrorism, a sizeable transfer might be frozen and you will need to provide relevant documentation to the bank to show the legitimacy of the funds in order for the transfer to be released.
Since it is difficult to predict when the transferred funds will arrive in a Georgian bank account, it is not always practical to transfer the funds from a foreign bank account directly to the seller’s Georgian bank account.
What Documentation/Permits Must I Provide In Order To Close A Sale?
To complete a purchase, the following is necessary:
- Identification document (passport or Georgian ID card; if using a foreign passport, a translated and notarized copy may be required).
- The real estate
To complete a purchase, the following is necessary:
- Identification document (passport or Georgian ID card; if using a foreign passport, a translated and notarized copy may be required).
- The real estate purchase agreement which is to be signed in the presence of the relevant authority or a notary.
- Payment of relevant administrative and notary fees.
- The relevant authorities are entitled to request additional information and/or documents.
No special permit is required to make the purchase, as a non-citizen. Delta Estate legal specialists assist you in preparing the necessary legal documents for real estate transactions.
- which is to be signed in the presence of the relevant authority or a notary.
- Payment of relevant administrative and notary fees.
- The relevant authorities are entitled to request additional information and/or documents.
No special permit is required to make the purchase, as a non-citizen. Delta Estate legal specialists assist you in preparing the necessary legal documents for real estate transactions.
What Language Should The Contract Be In?
A purchase agreement should be drafted in Georgian. If a party to the agreement does not understand Georgian, the agreement must also be translated.
In many cases, a bilingual agreement may already have been created by the seller. If so, you have no guarantee that the seller has engaged a translator who is accurate. It is always possible that key terms in the English language version do not match the legally binding Georgian version. This can lead to significant problems once the agreement is signed.
As part of our legal processes, Delta Estate Company can check the accuracy of the translation so you have no surprises. We also identify clauses that should be of concern, so you can request revisions by the seller. Additionally, we can send our lawyers to negotiate revisions and any other part of the purchase process.
What If I Buy Property And There Is Something Seriously Wrong With It? Or Debts Owed? What Legal Recourse Do I Have Against The Seller?
First and foremost, try to prevent a dispute in the first place. It is best practice to be diligent and inspect the property thoroughly, as well as specify the description and condition of the property in the purchase agreement. This includes describing physical characteristics as well as the legal condition (mortgage, liens, third party claims, and other restrictions).
In case the transferred property does not correspond to the description and condition agreed under the agreement, the property will be labeled “non-conforming” (meaning there is material and/or legal defect). When the property is non-conforming, you are entitled to relief. Depending on the agreement, you can be entitled to:
- Request that the seller fixes the non-conformity within a reasonable time.
- Request payment of compensation for damages incurred by you as a result of such non-conformity (the amount that would be required to make the property conforming).
- Request the reduction of price (by the amount that would be required to make the property conforming).
- Request the termination of the agreement and restitution (i.e., return to the situation that was before the conclusion of the agreement).
Note that:
- The seller is prohibited from hiding material information about the condition of the property.
- The buyer cannot request relief for a defect that they were aware of.
- The dispute can be negotiated, mediated, arbitrated, or litigated.
If you purchase without due diligence being performed, you may not be aware of debts attached to the property. Do not expect the seller to necessarily disclose their debts. Upon transfer of title, these debts will be transferred to you whether you are aware of them or not. Our lawyers will check for potential debts, among many other things, during our due diligence process.
How Do I Get The Property Inspected To Make Sure It Is Safe?
Inspection as a step before purchasing real estate is not common in Georgia and there is no code of practice or accredited body governing real estate inspection. You can contract an independent expert who will accompany you and inspect the property. Depending on what you want to inspect, you will need an expert in architectural, construction, or electrical engineering.
What Legal Differences Are There From Buying Finished Property And Off-plan Property?
When you buy a finished property, you conclude a real estate purchase agreement, and you are registered as the owner of the property. When you buy an off-plan property, you conclude a pre-purchase agreement, since it is not possible to conclude a real estate purchase agreement on a property that does not yet exist.
Buying an off-plan property is associated with a higher risk, since the developer might not fulfill their obligations. This breach by the developer may be intentional (perhaps they never intended to start and/or finish the construction works) or unintentional (i.e., due to poor planning and/or other reasons, the developer went bankrupt or is unable to complete the construction).
In case a developer breaches their obligations, there is not much you as a buyer can do. Therefore, it is important that you find a trustworthy developer, with a good track record and reputation.
Can I Purchase Real Estate Remotely?
Yes, if you as a principal grant someone else the necessary powers under a Power of Attorney.
- If you are a foreign citizen who does not have a Georgian residence card, a Power of Attorney should be executed by a notary in Georgia. Alternatively, you as the principal are entitled to issue a Power of Attorney in a foreign country, legalize/apostille it in that country, and then send it to your trustee in Georgia, who will translate and notarize it in Georgia.
- If you are a Georgian citizen or a foreign citizen who has a Georgian residence card, a Power of Attorney can be executed by a notary in Georgia while you are physically present, or remotely from abroad. This can be done through a video call with the Georgian notary. Also, two witnesses (who will identify you) and a third person (who will sign on your behalf) will need to be present during the call. None of the three persons should have an interest in the execution of the Power of Attorney. The trustee, as well as the three persons present during the call, do not need to be Georgian citizens or have a Georgian residency card.