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Office Space Leasing

Do I need to register my office lease in Georgia?

Yes, if the lease term is longer than one year, it must be registered with the Public Registry of Georgia to be fully enforceable against third parties, such as a new owner of the building.

Can I pay rent in USD or EUR?

Payments within Georgia must be made in the local currency, GEL (Lari). However, lease contracts can peg the rent amount to a foreign currency (like USD), and the payment is made in GEL at the exchange rate on the day of payment.

What taxes apply to office rental?

Typically, if the landlord is a VAT payer, 18% VAT applies. If you rent from an individual, you (as a company) may need to withhold 20% income tax at the source. It is crucial to check the landlord's tax status.

What is a "break clause"?

A break clause allows the tenant (or landlord) to terminate the lease early, usually after a specific period (e.g., after 2 years in a 5-year lease), often with a penalty or notice period. This is a key negotiation point.

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Office space leasing is a fundamental aspect of operating a business in Georgia. Whether you are a startup looking for your first office in Tbilisi or an international corporation establishing a regional headquarters, executing a lease agreement correctly is critical. Commercial leasing is a far more complex legal relationship than renting a residential apartment, as it involves long-term obligations, tax nuances, and the allocation of risks between parties. In the Georgian market, it is common for tenants to sign standard agreements without detailed legal analysis, which later becomes a cause for serious financial loss and disputes. Qualified legal assistance ensures that your business interests are protected and you can use the office space without interruption.

What Does Office Space Leasing Service Cover?

Legal services for office space leasing encompass complex procedures aimed at a secure and transparent transaction. Specialists on Legal.ge offer the following types of assistance:

  • Legal Due Diligence: Verifying the landlord's ownership rights in the Public Registry, identifying any liens, mortgages, or other encumbrances on the property that could threaten the stability of the lease.
  • Contract Drafting and Revision: Creating a customized lease agreement that addresses rent payment terms, indexation (price adjustment regulations), rights to conduct renovations, and timelines.
  • Tax Consultation: Settling issues regarding VAT taxation, withholding tax (if the landlord is a physical person), and expense recognition in accordance with the Tax Code of Georgia.
  • Lease Registration: If the lease term exceeds one year, registration in the Public Registry is mandatory. Lawyers provide full support for this process.
  • Negotiations: Negotiating commercial terms (for example, "rent-free periods") and clarifying lease termination conditions.

Common Scenarios and Real-World Examples

Many challenges arise regarding office leasing during business activities. Let's consider several common situations:

  • IT Company Relocation: A foreign IT company is moving to Georgia and needs a 500 sq.m. office. They want a 5-year contract but require the right to terminate early without penalty after 2 years. The landlord refuses. A lawyer helps structure a "Break Option" correctly.
  • Dispute Over Renovation Costs: The tenant conducted expensive renovations, but the contract did not provide for reimbursement of these costs upon lease termination. The landlord demands the space be returned to its original condition. Lawyer involvement is needed to reach a settlement or manage litigation.
  • Hidden Defects: After moving in, it was discovered that the HVAC system is faulty. The landlord refuses to repair it. It is necessary to use contract clauses and Civil Code articles to hold the landlord liable.
  • Lease Registration Issue: A company signed a 3-year agreement but did not register it in the Public Registry. The building was sold, and the new owner demanded the premises be vacated. The absence of a registered lease places the tenant in a weak position.

Georgian Legislation and Regulations

Office space leasing is regulated by the Civil Code of Georgia, which defines general principles of rental and lease agreements. The Code establishes the landlord's obligation to transfer property free of material and legal defects. Also important is the Tax Code of Georgia, which governs the taxation of lease income (e.g., 18% VAT, income tax). The Law on Public Registry establishes the mandatory registration rule for agreements concluded for a term of more than one year. Legislation allows for contractual freedom, but there are mandatory norms that parties cannot alter, which must be considered when drafting the agreement.

Service Process

Collaborating with a professional lawyer on office leasing issues involves several stages. First, an audit of the client's needs and determination of desired commercial terms takes place. In the next stage, the lawyer legally verifies the selected space (checking the cadastral code). This is followed by drafting the contract or conducting a detailed revision of the version presented by the other party and exchanging comments. After negotiations conclude, the contract is signed and, if necessary, registration in the Public Registry is organized. The final stage involves signing a handover act upon the actual transfer of the space.

Why Choose Legal.ge?

Legal.ge is a platform that connects you with experienced real estate law specialists. The lawyers and attorneys in our database possess deep knowledge in the field of commercial leasing and are familiar with the specifics of the local market. Finding a specialist on Legal.ge allows you to receive high-quality service, save time, and avoid the hidden legal risks that often accompany renting commercial space. Find your trusted legal partner on Legal.ge and ensure the stability of your business.

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