Property financing structuring is a complex legal and financial service designed for developers, investors, and large commercial projects. Unlike standard mortgages, this process involves multi-layered capital raising schemes combining bank loans, private equity, mezzanine financing, and pre-sale contracts. Properly structured financing reduces project risks, ensures tax optimization, and increases return on investment. The lawyer's role is crucial in creating a solid legal framework that satisfies the interests of all parties (bank, investor, developer).
What does this service cover?
The financing structuring service includes the following key components:
- Legal Analysis of Investment Model: Selecting the optimal form of project financing (debt, equity, bonds).
- Preparation of Contract Package: Drafting loan, mortgage, surety, and shareholders' agreements.
- Creation of Special Purpose Vehicles (SPV): Establishing special legal entities to segregate assets and manage risks.
- Tax Planning: Arranging the financing structure to optimize tax liabilities within the legal framework.
- Negotiations with Financial Institutions: Representing the developer or investor in dealings with banks and investment funds.
Common Real-World Scenarios
This service is essential for the following types of projects:
- Residential Complex Construction: A developer needs a bank loan for construction, but the bank requires pre-sales. The lawyer sets up a scheme where buyers' funds are protected while satisfying bank requirements.
- Acquisition of Commercial Centers: A group of investors buys a mall. It is necessary to define capital contributions, profit distribution, and exit strategies for the project.
- Mezzanine Financing: When a bank loan is insufficient, a third party enters with a high-interest loan convertible into equity. This requires complex corporate agreements.
- Foreign Investments: A foreign investor finances a hotel construction in Georgia and wants to protect their capital from local risks.
Georgian Legal Framework
The field is regulated by the Civil Code of Georgia, the Law on Entrepreneurs (governing corporate structures and partner relations), and the Tax Code of Georgia. The Law on Securities Market is also relevant if financing is raised through bond issuance. For foreign investments, the Law on Promotion and Guarantees of Investment Activity applies, providing additional protection to investors.
Process: How does a specialist work?
The process starts with reviewing the project business plan. The lawyer assesses risks and proposes a legal structure (e.g., establishing an LLC with a specific charter). Then, a Term Sheet is prepared for investors or the bank. During negotiations, the lawyer agrees on all details: payment schedules, collateral conditions, covenants, and default consequences. The final stage is the Closing of the transaction, involving the signing of agreements and registration in the Public Registry.
Why Legal.ge?
Property financing structuring requires not only legal knowledge but also an understanding of business language. Legal.ge features specialists with experience in major commercial transactions who work with leading financial institutions. They will help increase your project's viability and protect your investment. Choose a qualified corporate lawyer on Legal.ge and start your project on a solid foundation.
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