Buying a flat from a developer during construction: what to do under Georgian law

What to do

1. Qualification: until the building is commissioned, this is only an obligation to transfer the flat. Ownership arises only through a written transaction plus registration of the buyer's right in the registry (Civil Code of Georgia, Art. 183). A flat may be alienated only after it has been registered as a separate object (Law of Georgia on Public Registry, Art. 15⁶).
2. Secure the purchase BEFORE paying. While the building is not registered, the developer's obligation to transfer the future flat is registered against the plot, if development conditions for construction have been issued (Law of Georgia on Public Registry, Art. 15⁶). Alternatively, preliminary registration of the buyer's right blocks other rights under transactions, such as a double sale or a mortgage (Law of Georgia on Public Registry, Art. 12). The right to the flat is also registered in the building under construction, on the basis of the construction documentation (Art. 15⁶). A refusal to register is a red flag.
3. Construction: the basis for building is a notification or a construction permit (Spatial Planning, Architectural and Construction Activities Code of Georgia, Art. 93). The permit is issued in two stages: development conditions first, then the permit itself (Art. 101). It is issued by the municipal City Hall or its legal entity under public law (LEPL) (Art. 100). Without a permit, a building without construction documentation, acceptance or legalisation is not registered (Law of Georgia on Public Registry, Art. 15⁶). The supervisory body may order an illegal structure demolished (Spatial Planning, Architectural and Construction Activities Code of Georgia, Art. 127).
4. The plot, checked against a fresh extract: the extract shows rights, restrictions, tax liens or mortgages, and the debtor register (Law of Georgia on Public Registry, Art. 10). Construction on someone else's plot is allowed only with the consent of its owner (Spatial Planning, Architectural and Construction Activities Code of Georgia, Art. 97). For a bank mortgage on the plot: the building is a component of the plot (Civil Code of Georgia, Art. 150), and the mortgage-holding bank is satisfied from the collateral with priority (Art. 286). The bank's consent is therefore needed.
5. Contract: a description of the flat (cadastral code, floor, area, plan); payment in stages tied to construction; the deadline for handover and registration; a penalty, which is valid only if agreed in writing in the contract (Civil Code of Georgia, Art. 418); a right of withdrawal and return of money; and an unfair standard term of the developer is void (Civil Code of Georgia, Art. 346).
6. Where to apply: National Agency of Public Registry (საჯარო რეესტრის ეროვნული სააგენტო) for the extract and registration; City Hall (in Tbilisi, the Architecture Service) for the permit.
7. Evidence: plot extract, permit, floor plan, contract with annexes, payments to the developer's account.
8. Pitfalls: paying under an unregistered contract, which allows the same flat to be resold or pledged; mistaking development conditions for a permit; a bank mortgage on which the bank has not consented to sales of flats; no penalty clause and no right of withdrawal.

Be sure to check

• until handover, the buyer is not the owner; protection comes through registration of the developer's obligation or preliminary registration of the right in the Public Registry
• verify the building permit and its stage (development conditions are not a permit); the issuing authority is the City Hall
• verify the plot through the extract (owner, bank mortgage, attachments) and the effects of a mortgage
• key contract terms: flat description, payment by stages, penalty in writing, withdrawal, nullity of unfair standard terms