Transfer of Property Act at Georgia
In Georgia, the transfer of property, particularly real estate (immovable property), is governed by the Civil Code of Georgia and related legislation, as Georgia follows a civil law system. The transfer process is formalized through written contracts, notarization, and registration in the Public Registry.
Key Legal Framework for Property Transfer in Georgia:
Civil Code of Georgia:
The Civil Code of Georgia, specifically Title VI, deals with the transfer of property. It outlines the procedures for the sale, donation, and exchange of property. It also establishes the general requirements for contracts and property transactions.
Article 1100 of the Civil Code stipulates that for the transfer of immovable property to be effective, the contract must be in writing.
Law on Public Registry:
The Public Registry Law governs the registration of rights related to immovable property in Georgia. According to Georgian law, property rights are not considered valid unless they are registered in the National Agency of Public Registry (NAPR).
The Public Registry is the official record of property ownership and encumbrances in Georgia. Registration in the Public Registry is essential for the legal recognition of the new owner.
Notarization:
Many property transactions in Georgia require notarization. This includes the sale of real estate, which must be notarized by a public notary to be legally effective.
The notary verifies the identities of the parties and ensures the legality of the agreement before it can be registered in the Public Registry.
State Duties and Taxes:
There are state duties (fees) and property taxes associated with the transfer of real property in Georgia. These may include stamp duties and registration fees for the transaction.
The property transfer tax is generally 1% of the purchase price, and there are additional fees for registration with the Public Registry.
Steps in Property Transfer in Georgia:
1. Agreement Between the Buyer and Seller:
The transfer of property begins with an agreement between the buyer and seller. This agreement must be in writing and typically outlines:
The description of the property being sold.
The purchase price and payment terms.
Any special conditions of the sale (e.g., repairs, contingencies).
2. Due Diligence:
Before finalizing the transaction, the buyer should conduct due diligence to ensure that the property is free of encumbrances (such as mortgages or legal disputes). This includes verifying the title of the property in the Public Registry.
A buyer should also ensure the seller is legally authorized to sell the property.
3. Notarization of the Sale Agreement:
The contract for the transfer of immovable property must be notarized. The public notary will verify that the transaction is legal, that the parties understand the contract, and that the agreement complies with Georgian law.
The notarial deed serves as proof of the property transfer.
4. Payment of the Purchase Price:
The buyer typically pays the purchase price, either through a bank transfer or in another agreed-upon form. A deposit may be paid upfront, with the remainder paid upon completion of the transaction.
5. Registration of the Property Transfer:
After notarization, the sale contract must be registered in the Public Registry to complete the transfer of ownership.
The buyer or their legal representative must submit the notarized deed and other necessary documentation to the National Agency of Public Registry (NAPR).
The Public Registry will verify the submitted documents and record the transfer of property. This is the point at which the buyer is officially recognized as the owner.
6. Payment of Fees and Taxes:
The buyer is typically responsible for paying the registration fees and property transfer taxes. These are calculated as a percentage of the purchase price or the market value of the property, whichever is higher.
There may also be administrative fees associated with the notarization and registration process.
7. Completion of the Transfer:
Once the property is registered in the Public Registry, the buyer becomes the legal owner of the property, and the transaction is considered complete.
The Public Registry issues an updated entry in the property’s record, reflecting the new owner’s name.
Special Considerations for Foreign Buyers:
Foreign nationals are allowed to purchase property in Georgia, but there are certain restrictions on acquiring land in border regions or agricultural land. Foreigners may need to obtain government approval to purchase land in these areas.
Foreign buyers must also comply with the standard property transfer process, including notarization and registration in the Public Registry.
Property Transfer Through Inheritance:
Inheritance of property is also subject to the provisions of the Civil Code of Georgia. When a person dies, their property is transferred to their heirs according to the terms of their will or under the rules of intestate succession.
The transfer of inherited property requires notarization and registration in the Public Registry.
Dispute Resolution:
If any disputes arise during a property transaction, such as a title dispute or breach of contract, these can be resolved through the court system in Georgia.
Disputes over property can also be subject to arbitration or mediation in some cases, especially if the contract includes such provisions.
Conclusion:
In Georgia, property transfers are primarily governed by the Civil Code, the Public Registry Law, and the involvement of notaries for formalizing transactions. For immovable property to be legally transferred, it must be notarized and registered in the National Public Registry. There is no stamp duty on property transactions, but there are state duties, property transfer taxes, and registration fees involved. Foreigners can purchase property in Georgia but may face restrictions in certain areas (e.g., borderlands or agricultural land).
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