Purchasing property in Georgia requires careful planning and attention to legal procedures. It is important to check the status of the property, verify any encumbrances, and follow the proper steps to ensure a smooth transaction.
Checking the Property
Before paying any funds, it is essential to confirm that the property is free of legal obstacles. New extract confirms that the property is free of encumbrances and is required to legally register it under the new owner. If the cadastral code of the property is known, the property extract can be updated electronically in a simple and straightforward manner.
The legislative definition of a mortgage is as follows: “Immovable property may be used (encumbered) to satisfy a claim in such a way that the secured creditor is entitled, ahead of other creditors, to satisfy its claim from the realization of the property or its transfer into ownership (mortgage). A mortgage may also be used to secure a future or conditional claim, provided that at the time the mortgage is established, the claim can be determined.”
It is important to note that a mortgage is a transferable right and passes to all subsequent purchasers in the same form as it existed for the original owner. In other words, every new owner is liable to the creditor to the same extent and under the same terms as the original owner.
An updated property extract from the Public Registry should be obtained. This document provides information about the current owner, any mortgages, liens, or other encumbrances. Even if the extract shows no debts, it should be updated regularly because circumstances can change over time.
Additional checks include:
- Construction permit: Confirms the building was legally approved
- City Hall submission: Verifies whether the building has been commissioned. Final approval may still be pending.
- Land plot status: Ensures the land is agricultural or non-agricultural, which is especially important for foreign buyers.
Dealing with the Bank and Public Registry
If the property has a mortgage, obtaining a bank guarantee letter is critical. The letter confirms that once the mortgage is repaid, it will be released immediately.
Mortgage payments are made directly to the bank. With the bank guarantee, the mortgage is cleared quickly, and receipts confirm the transaction. It is important to note that escrow accounts are not used in Georgia.
The procedure generally works as follows:
- Any existing mortgage must be cleared at the bank beforehand. Funds for the mortgage repayment are deposited directly to the bank.
- Using an expedited procedure, the bank can release the mortgage within approximately 2-3 hours, providing receipts confirming that the funds have been withdrawn. After this, it is essential to obtain an updated property extract, and the client must wait for this new extract before proceeding with the official registration of the property under their name.
Once the updated property extract is ready, the purchase and sale agreement is submitted for registration at the Public Registry, where ownership is officially transferred. After the registration application is submitted, the remaining funds are transferred to the seller. It is recommended that the remaining funds be transferred to the seller, either by cash or bank transfer, only after the purchase and sale agreement has been officially registered. Any deposit previously paid is included in the total purchase price.
In some bank branches, where authorized representatives from the Public Registry are present, it is possible to submit the sale and purchase agreement directly to the Registry from the bank. In such cases, a separate visit to the Registry after the bank is not necessary. This means that, in one day, both the mortgage release and the official registration of the agreement can be completed at the bank. However, it should be noted that certain details may need to be handled individually, depending on the specific circumstances of each transaction.
Registration at the Public Registry
The Sale and Purchase Agreement is submitted to the Public Registry for official registration. Processing options include:
- 4 working days – 150 GEL
- 1 working day – 270 GEL
- Same-day service – 350 GEL
If an English version of the property extract is required, an additional fee of 26 GEL applies. After registration, the property is officially under the new owner’s name, and the updated extract confirms ownership.
Key Points
- Always check the legal and financial status of the property before making payments
- Mortgages must be cleared before signing the main agreement
- Updating the property extract ensures legal protection and confirms the property is free of debts
- A Deposit Agreement is optional and only needed if requested by the seller. It is recomennded that it be executed in written form and notarized by a notary
- Coordination with the bank and Public Registry is essential for a smooth and safe transaction.
In summary
Buying property in Georgia may seem complicated at first, but following these steps ensures the process is safe, transparent, and manageable. Proper planning, legal guidance, and careful checks make the experience straightforward and reliable. For high-quality legal services, feel free to reach out to our team.
