On Relations Arising from the Use of Residential Premises

On Relations Arising from the Use of Residential Premises

Law of Georgia

On Relations Arising from the Use of Residential Premises

Article 1. Scope of Regulation of the Law🔗

1. This Law regulates those relations arising between the owner and the user of residential premises from 25 February 1921 to 25 November 1997 that require special legal regulation.

2. The operation of this Law shall not extend to the right to use residential premises arising on the basis of lease or on another basis provided for by the Civil Code of the Georgian SSR (Bulletins of the Supreme Council of the Georgian SSR, 1964, No. 36, Art. 662).

3. If the parties have regulated by a legally valid contract a relation provided for by this Law, the agreement of the parties shall be given priority over the rules established by this Law.

4. The time limits established by the Civil Code of Georgia shall not apply to the rights provided for by this Law.

Article 2. Definition of Terms🔗

1. For the purposes of this Law, the terms used herein have the following meaning:

a) User – a person who, as of the moment of entry into force of this Law, in good faith actually possesses residential premises on the basis of a written purchase agreement concluded with the owner without observing the notarial form, or a person who has received the right of possession by a transaction on the assignment of the right to use the residential premises or by an administrative-legal act;

b) Registration – registration (enrolment) in residential space under the procedure existing before the entry into force of the Law of Georgia of 27 June 1996 "On the Procedure for Registration of Citizens of Georgia and Foreigners Residing in Georgia, Issuance of Identity (Residence) Certificate and Passport of a Citizen of Georgia" (Parliamentary Gazette, No. 19-20, 30.07.96, p. 28);

c) Residential premises – a residential house or part thereof, including extensions and additions made by the user, together with the land plot of which it is an essential component;

d) Written purchase agreement – a written document/documents by which the owner confirms the intention to sell the residential premises and the receipt of the purchase price;

e) Value of residential premises – the market price of the residential premises as of the moment of exercise of the right provided for by this Law;

f) Compensation – a monetary amount calculated as a percentage corresponding to the value of the residential premises. Moreover, when determining the compensation payable by the user, the value of extensions and additions and/or other substantial improvements of the residential premises made by the user shall be deducted from the value of the residential premises. When determining the compensation payable to the user, the full amount of the value of extensions and additions and/or other substantial improvements of the residential premises made by the user shall be added to the corresponding percentage of the value of the residential premises (minus the value of extensions and additions and/or other substantial improvements of the residential premises made by the user).

2. The rights and obligations provided for by this Law shall apply equally to the owner and the user, as well as to their successors.

Article 3. Recognition of a Purchase Agreement as Concluded🔗

1. A user who has concluded a written purchase agreement with the owner without observing the notarial form and who has continuously possessed the residential premises for not less than 30 years shall be entitled to demand, through a court, recognition of the purchase agreement as concluded (a claim for recognition of the purchase agreement as concluded).

2. A court judgment on recognition of the purchase agreement as concluded shall be the basis for carrying out the corresponding registration in the Public Registry.

Article 4. Recognition of a Sale Contract as Concluded by Payment of Compensation🔗

1. A user who has concluded a written sale contract with an owner without observing the notarial form, but has possessed the residential premises for less than 30 years, is entitled to demand, through a court, that the sale contract be recognised as concluded, subject to payment of compensation in the amount of 10 per cent of the value of the residential premises.

2. An action for recognition of a sale contract as concluded shall, in addition to the documents provided for by Article 178 of the Civil Procedure Code of Georgia, be accompanied by an expert opinion on the value of the residential premises, as well as a document confirming the deposit of compensation in the amount of 10 per cent of the value of the residential premises into the deposit account of the court or a notary.

3. Where the court recognises the sale contract as concluded, it shall also decide the issue of awarding compensation to the defendant. If the compensation determined by the court exceeds the amount deposited in accordance with paragraph 2 of this Article, the court shall, within the difference between them, establish a mortgage of the defendant over the residential premises. This mortgage shall terminate from the moment the compensation is paid in full. This rule shall also apply where the court, when considering an action filed in accordance with this Article, establishes that the claimant is not a user provided for by this Article but a user provided for by Article 5 of this Law.

4. A court judgment recognising a sale contract as concluded shall be the basis for carrying out the relevant registration in the Public Registry. If that judgment also establishes a mortgage of the defendant, the ownership right and the mortgage right shall be registered simultaneously, regardless of which party exercises the right to request registration.

5. The rules established by paragraphs 3 and 4 of this Article shall also apply where the court, when considering an action filed in accordance with this Article, establishes that the claimant is not a user provided for by this Article but a user provided for by Article 5 of this Law.

Article 5. Redemption of residential premises🔗

1. A usufructuary who has continuously possessed the residential premises for not less than 30 years and who acquired the right of possession by a transaction on the assignment of the right of use of the residential premises is entitled to demand the redemption of the residential premises subject to the payment of compensation in the amount of 25 percent of the value of the residential premises (claim for redemption of residential premises).

2. The transaction on the assignment of the right of use of the residential premises must be confirmed by the following circumstance/circumstances: registration in the disputed residential premises, payment of utility charges and/or payment of a certain fee to the owner.

3. If, for the assignment of the right of use of the residential premises, the usufructuary paid a certain fee to the owner, the court is entitled, taking into account the amount of this fee, to reduce the amount of compensation determined by paragraph 1 of this Article to 15 percent of the value of the residential premises.

Article 6. Termination of possession by payment of compensation, claim for transfer of the right of ownership🔗

1. If the usufructuary has possessed the residential premises for less than 30 years and acquired the right of possession by a transaction on the assignment of the right of use of the residential premises, the owner is entitled to demand from the usufructuary the termination of possession subject to the payment of compensation in the amount of 75 percent of the value of the residential premises.

2. If the usufructuary does not receive the compensation and does not vacate the residential premises, the owner is entitled to exercise the right provided for by paragraph 1 of this Article through the court (claim for termination of possession).

3. The usufructuary is entitled to demand from the owner the payment of the compensation determined by paragraph 1 of this Article. The owner is obliged to pay the compensation within 3 years from the receipt of this demand in written form.

4. If the owner does not pay the compensation within the period determined by paragraph 3 of this Article, the usufructuary is entitled, through the court, to demand from the owner the transfer of the right of ownership of the residential premises in exchange for the payment of compensation in the amount of 25 percent of the value of the residential premises (claim for transfer of the right of ownership).

Article 7. Termination of the rights to have a contract recognized as concluded and to demand redemption🔗

1. If the owners offer in writing to the users provided for by Articles 4 and 5 of this Law the transfer of the right of ownership over the respective residential premises in exchange for payment of the respective compensation determined by the same articles, the users shall be obliged to pay the compensation within 3 years from the receipt of such demand or, within the same period, to file the claims provided for by Articles 4 and 5 of this Law.

2. In the event of non-fulfilment of the obligation provided for by paragraph 1 of this Article, the user loses the right to file the claims provided for by Articles 4 and 5 of this Law. In such case the owner is entitled to demand through the court that the user's possession be terminated, subject to payment of compensation in the amount of 50 per cent of the value of the respective residential premises. Possession shall be terminated from the moment of full payment of the compensation.

3. If the residential premises is encumbered with a mortgage, the period determined by paragraph 1 of this Article shall be suspended for the term of validity of the mortgage right.

Article 8. Termination of possession acquired by administrative procedure🔗

1. A user who acquired the right of possession by an administrative-legal act shall have possession terminated from the moment the State compensates the value of the residential premises.

2. The right to file a claim against the State for receiving the compensation provided for by paragraph 1 of this Article is vested in both the user and the owner (a claim for compensation of the value of the residential premises).

3. The owner is entitled to compensate the value of the residential premises to the user himself or herself. In such case the right to demand from the State the compensation provided for by this Article shall pass to him or her.

Article 9. Ownerless residential premises🔗

1. If the owner of the residential premises has died or has been declared dead and there are neither heirs by law nor heirs by will, or none of the heirs has accepted the inheritance, or all the heirs have been deprived of the right of inheritance, the user is entitled to demand that the occupied residential premises be declared ownerless (a claim for declaring the residential premises ownerless).

2. Residential premises declared ownerless in accordance with paragraph 1 of this Article shall be transferred free of charge into the ownership of the user by a court judgment and registered in the public registry.

Article 10. Additional rules in respect of the claims provided for by this Law🔗

The claims provided for by Articles 5–7 of this Law shall be governed by the rules established by paragraphs 2–4 of Article 4 of the same Law, taking into account the peculiarities of the respective norms establishing the right of claim.

Article 11. Final Provisions🔗

1. Upon the entry into force of this Law, the Law of Georgia of 25 June 1998 "On Relations Arising from the Use of Residential Premises" (Parliamentary Bulletin, No. 25-26, 15.07.1998, p. 11) shall be declared invalid.

2. This Law shall enter into force upon publication.

President of Georgia Giorgi Margvelashvili

Kutaisi,

24 June 2016

No. 5601-IIs