Mortgage agreement services cover a wide spectrum of legal relationships between a creditor and a borrower where real estate serves as collateral. Unlike standard bank mortgages, this category often includes private and commercial mortgage deals where parties have more freedom to define terms. However, with freedom comes increased risk. An incorrectly drafted agreement can lead to the loss of property or unforeseen tax liabilities. Legal assistance is essential to ensure the contract is balanced and complies with the mandatory norms of Georgian legislation.
What does this service cover?
Specialists on our platform offer comprehensive legal support:
- Drafting Individual Agreements: Preparing specific contracts for private lenders and investors that reflect unique agreements between parties.
- Risk Assessment: Legal audit of the property, checking for third-party rights (e.g., leases, easements) that might affect mortgage realization.
- Defining Enforcement Mechanisms: Including clauses that simplify or, conversely, protect a party during forced enforcement proceedings.
- Tax Consultation: Clarifying income and VAT taxation issues related to mortgage loans.
- Dispute Prevention: Inserting mediation or arbitration clauses for rapid dispute resolution.
Common Real-World Scenarios
Typical scenarios include:
- Business Lending: An entrepreneur mortgages a commercial space to obtain working capital. The contract needs to be drafted so that a temporary business setback doesn't lead to immediate property loss.
- Collateral Porting: A borrower wants to transfer the mortgage from one property to another. This requires signing a new agreement and canceling the old one.
- Co-Mortgaging: Several individuals pledge their properties to secure one large loan. It is crucial to strictly define their joint and several liability.
- Private Investor Protection: A person lends money and takes an apartment as collateral. The lawyer ensures the contract protects the investor from fraud.
Georgian Legal Framework
The main regulator is the Civil Code of Georgia (Property Law section). For private mortgages, Article 625 of the Civil Code is critical, as it limits the annual effective interest rate and penalty amounts. Violation of these norms renders the agreement void in the excessive part. Also relevant are the Law on Entrepreneurs (if parties are legal entities) and the Tax Code of Georgia regarding taxation of benefits received from mortgages.
Process: How does a specialist work?
The lawyer first establishes the client's goals: is it maximum security (for the creditor) or flexibility (for the borrower). Then, the property is checked in the Public Registry. The lawyer drafts the text of the agreement, taking into account all statutory limitations (e.g., interest rate caps). Before signing, the lawyer explains the legal consequences of each clause to the parties. The transaction concludes with registration in the Public Registry, often supervised personally by the lawyer.
Why Legal.ge?
Mortgage transactions are full of legal nuances that are costly to ignore. On Legal.ge, you will find specialists possessing deep knowledge in both banking and private mortgage law. They will assist you not only in drafting documents but also in strategic planning of the transaction. Trust the professionals and safeguard your assets with the help of Legal.ge.
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