Selling commercial property in Georgia represents a complex business transaction that differs significantly from selling a residential apartment. This process involves not only the transfer of property rights but also a detailed analysis of tax obligations (especially VAT), corporate approvals, and, in many cases, the assignment of existing lease agreements. The sale of commercial objects (offices, shops, warehouses, hotels) is often linked to high-value assets; therefore, any legal flaw can result in enormous financial losses. It is critically important for the seller that the transaction is legally impeccable to avoid subsequent disputes with the new owner or tax authorities. The involvement of a professional lawyer ensures the demonstration of the asset's clean history, which increases the property's attractiveness to investors and accelerates the sales process.
What does the Commercial Property Sale service cover?
Legal services for commercial property sales cover all aspects of the transaction, starting from preparatory work to completion:
- Vendor Due Diligence: Pre-arranging the property documentation so the buyer does not encounter problems (e.g., unauthorized extensions, old liens).
- Tax Structuring: Determining the taxation regime of the deal (asset sale vs. share sale) and analyzing VAT obligations.
- Drafting Sales Agreement: Preparing a complex contract that considers commercial specifics (transfer of inventory, warranty periods, confidentiality).
- Corporate Documentation: If the seller is a legal entity, preparing minutes of the partners' meeting regarding the alienation of property.
- Lease Audit and Assignment: If the property is rented out, conducting a legal analysis of existing leases and formalizing the succession of rights for the buyer.
- Negotiations with Investors: Providing legal support in agreeing on commercial terms.
Common Scenarios and Needs
In commercial property sales, we often encounter specific situations:
- Selling an Operating Business with Property: For example, selling a hotel or restaurant where not just the walls but the operating business is sold. Issues of brand, licenses, and employee transfer are crucial here.
- Sale with or without VAT: The sale of commercial space is often subject to VAT (18%). A lawyer helps parties clarify whether the transaction is subject to VAT and who pays it.
- Property with Lease Flows: Investors often buy commercial space because of the tenants within it. A lawyer must ensure that lease agreements are smoothly transferred to the new owner.
- Asset vs. Share Sale: It is often more profitable to sell a share of the company that owns the property rather than the property itself. A lawyer helps compare and choose between these two options.
Georgian Legislation and Regulations
The sale of commercial real estate is regulated by the Civil Code of Georgia and the Law on Entrepreneurs. If the seller is a company (LLC or JSC), the Law on Entrepreneurs requires the consent of the partners' meeting for the alienation of significant assets; otherwise, the transaction may be declared void. The Tax Code of Georgia is paramount, determining the obligation to pay VAT upon the supply of commercial space. If the operation is considered a supply of a "Going Concern," it may be exempt from VAT, which requires precise legal qualification. Additionally, the Law on Public Registry regulates the transfer of property rights, while the Law on Competition may be relevant for large Mergers and Acquisitions (M&A) type deals.
Step-by-Step Process
The process begins with a full legal audit of the asset (Vendor Due Diligence) to identify and rectify deficiencies. The next stage is structuring—deciding whether to sell the asset or the company share. This is followed by signing a Term Sheet with key commercial terms. Then, the main sales agreement and corporate documents (meeting minutes) are prepared. After signing, documents are submitted to the Public Registry for registration. Concurrently, tax invoices are issued, and VAT is administered. The final stage involves the physical handover of the asset and, if necessary, informing tenants about the change of ownership.
Why Legal.ge?
Legal.ge offers access to highly qualified corporate and real estate lawyers who have deep experience in managing commercial transactions. Through our platform, you will find specialists who will not only prepare documents but also help you with tax optimization of the deal and insurance against business risks. Choose verified experts on Legal.ge for your commercial success.
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