Privatization of Agricultural Land — Forms and Implementing Bodies
Agricultural land held in state ownership is disposed of under a special regime. The law distinguishes the following forms of its privatization: auction; direct sale; direct sale on the basis of competitive selection; direct sale of a leased parcel; and free transfer into ownership.
The distribution of implementing bodies is equally clear: auction-form privatization of an unleased parcel is carried out by the property manager. Direct sale and direct sale on the basis of competitive selection of an unleased parcel are implemented on the basis of a decision of the Government of Georgia, while direct sale of a leased parcel is again carried out by the property manager. Direct sale is possible only in the cases provided for by a Government decree.
Border territories carry an additional safeguard: a special decision on the privatization of individual parcels located in the 500-metre border strip defined by the Law on the State Border is taken by the Government, considering state and public interests, with the preliminary consent of the Ministry of Internal Affairs. An obligatory rule of order is the determination of the parcel category — disposal without a determined category is impermissible. Agricultural land means a parcel of pasture, hayfield, arable or household-plot category that is used or can be used for that purpose.
Initiation of the Auction and Preparatory Work
The right to initiate auction-form privatization of an unleased agricultural parcel belongs to a citizen of Georgia, a private-law legal entity registered in Georgia, the property manager and a third party. The citizen, the legal entity and the third party apply to the property manager, while the surveying, measurement and transfer of the parcel in kind are carried out by the property manager or by the initiator of the issue.
The initiator bears three principal obligations: to select unleased parcels and, where necessary, divide them into optimal-size units of no less than 3 hectares — this restriction does not apply where the parcel is smaller than 3 hectares; to prepare a detailed cadastral survey or measurement drawing and to establish information on the category and quality of the parcel; and to submit to the privatization implementing body an application expressing interest.
Where a farm or auxiliary building or perennial plantings belonging to the state are located on the parcel put up for auction, the parcel is sold at the price of the land parcel, regardless of the buildings and plantings on it. The initial privatization amount of a parcel put up for auction is set by the Government of Georgia by administrative-territorial units.
The auction winner pays the privatization fee within 30 calendar days of the holding of the auction. This deadline is strict, and missing it may prove costly for the winner, so take your own liquidity into account already at the planning stage.
Direct Sale on the Basis of Competitive Selection
The purpose of direct sale is to transfer ownership to the buyer who will fully and conscientiously perform the established condition, and in competitive selection — to the interested person who best assumes the obligations. Competitive selection takes place where there is a multitude of conditions for implementing an investment, or where the conditions proposed by interested persons are alternative.
The procedure begins with an expression of interest by an interested person. The decision on conditions is published in information media of national or international significance, and a deadline for the expression of interest is set which, as a rule, may not be less than 30 calendar days. Where delay could harm state or public interests, the Government may reasonably shorten this deadline, on condition that publicity is otherwise ensured and potential investors are informed.
After the expiry of the deadline the property manager reviews the applications and presents justified proposals to the Government. The final decision is taken by the Government, although the law entitles it, in exceptional cases, to decide without these measures as well. The amount of the fee and the payment procedure are determined by the respective Government decision.
During competitive selection, the interested person must, before the expiry of the interest-expression deadline, submit an unconditional and irrevocable bank guarantee or place on the respective deposit an amount equal to 10% of the proposed value. Where the volume of the proposed investment exceeds the value of the parcel, the guarantee or deposit must correspond to 10% of the volume of the investment. Upon non-performance of the privatization conditions, this amount is credited to the state budget. Disposal under this rule does not apply to property held for use or on balance by a state body or a public-law legal entity.
The Special Rule of Transfer to the Church
On the basis of the Constitutional Agreement between the Georgian state and the Georgian Apostolic Autocephalous Orthodox Church, agricultural parcels in the Church's use are declared the property of the Church. The Church is also entitled, in agreement with the ministry, to receive unleased parcels into ownership without payment of any fee.
Direct Sale of Leased Land — the Tenant's Position
A leased agricultural parcel is subject to privatization in the form of direct sale. An essential condition is a lease contract concluded between the state and the tenant and registered in the public registry, and the privatization proceeds on the basis of the lease contract, an extract from the public registry and a cadastral plan.
Privatization of a part of a parcel is impermissible. Where the leased area consists of several spatially or geographically independent parcels, the tenant may buy out the desired parcel. Upon the sale of a part, the lease contract on the remaining parcel is terminated and it is sold under the procedure established for unleased parcels. If the tenant does not apply to the respective body, then after the expiry of the deadline established by law the parcel is likewise sold under the procedure for unleased parcels.
The right to amend, supplement, terminate and rescind the lease contract belongs to the property manager, who also holds the power to complete the lease-granting procedure. Oversight of the payment of rent and the provision of information to the respective structures is exercised by the municipality within delegated powers.
Deadlines for Reviewing the Application and Concluding the Contract
The property manager must, within 10 working days of receiving the tenant's application, review the submitted documentation and, if it is correct, send the tenant a notice concerning payment of the privatization fee. After the submission of a document confirming payment, the manager concludes with the acquirer, within 15 calendar days, a purchase contract for registration of ownership in the public registry.
The privatization revenue is set by the Government by administrative-territorial units, and by its decision the fee may be reduced. The tenant may pay the fee in full or in instalments within 1 year, and upon payment of 50% of the fee a purchase contract is concluded, recording the obligation to pay the remaining part under partial payment. Farm and auxiliary buildings and perennial plantings on the parcel are sold at the price of the land parcel.
Restrictions defined by the organic law may affect private-law legal entities connected with foreign interests: such an entity may acquire a parcel by the direct-sale forms only where the organic law permits it. The remaining details — including the cases of requiring a bank guarantee at the preparatory stage — are determined by Government decrees. If you are planning to buy or sell land, understanding the exact deadlines and conditions in advance will save you both time and financial resources.