Real estate finance in Georgia is one of the most complex and multi-layered legal fields. It encompasses not only standard mortgage loans but also the financing of large construction projects, investment deals, asset securitization, and complex financial restructuring. In recent years, the rapid growth of the Georgian real estate market, especially in Tbilisi and Batumi, has created a demand for sophisticated financial instruments. Developers, investors, and owners of large commercial properties require legal support that ensures secure capital raising, proper risk allocation, and optimization of tax obligations. The involvement of a qualified lawyer in this process is critical, as an improperly structured financial transaction can lead not only to project suspension but also to the total loss of assets.
What Does Real Estate Finance Service Cover?
Specialists registered on the Legal.ge platform offer a wide range of services covering all legal aspects of real estate finance:
- Structuring Loan and Mortgage Agreements: Negotiating with banking and non-banking financial institutions, analyzing contract terms (interest rates, schedules, penalties), and adjusting them in the client's favor.
- Construction Finance: Preparing specialized contracts for developers that provide for tranche financing, control of construction stages, and protection of buyer contributions.
- Investment Agreements: Legal execution of foreign or local investor entry, drafting Joint Venture agreements, and specifying profit distribution mechanisms.
- Loan Restructuring and Refinancing: Managing distressed loans, negotiating with banks to extend terms, convert currency, or reduce obligations.
- Tax Planning: Effective management and legal optimization of taxes related to real estate financing (VAT, profit tax).
Common Scenarios and Real-World Examples
In practice, situations often arise where lawyer assistance is inevitable. For example:
- Developer Financing: A construction company needs $5 million to build a residential block. The bank requires mortgaging the land plot and future apartments. A lawyer develops a scheme allowing the developer to release specific apartments from the mortgage during construction to transfer them to buyers without harming the bank's interests.
- Foreign Investment in a Hotel: A foreign investor buys an operating hotel in Tbilisi but must cover part of the amount with a bank loan. A complex tripartite agreement (investor-bank-seller) and the use of an Escrow account are needed for transaction security.
- Distressed Mortgage: An individual has a mortgage loan in USD and can no longer pay due to exchange rate changes. The bank intends to auction the apartment. A lawyer intervenes in negotiations, achieves a "grace period" or loan term extension, allowing the client to keep the property.
- Mezzanine Financing: An investor wants to enter a project not as a shareholder but as a lender with a high interest rate and conversion rights. The lawyer drafts a convertible loan agreement.
Georgian Legislation and Regulations
Real estate finance is regulated by several key legislative acts. The Civil Code of Georgia defines general principles of loans and mortgages, including the rights and duties of the mortgagee. The Law on Activities of Commercial Banks and National Bank regulations govern the rules for issuing loan products (for example, restrictions on issuing loans in foreign currency to individuals). The Law on Public Registry defines procedures for registering mortgages and other liens. A lawyer must know these regulations thoroughly for the transaction to be valid and enforceable.
Service Process
The process begins with an audit of the client's financial goals and current situation. The lawyer assesses the legal status of assets (Due Diligence). The next stage involves developing the financing structure (preparing the Term Sheet). This is followed by negotiations with the financial institution or investor, where the lawyer protects the client's interests. After reaching an agreement, the main contracts (loan, mortgage, surety) are drafted and registered in the Public Registry. Once financing is obtained, the lawyer ensures monitoring of the conditions (Covenants) provided by the contract.
Why Choose Legal.ge?
Legal.ge is a platform gathering lawyers specialized in banking and finance law. Specialists in our database have experience working with both major banks and private investment funds. Hiring a lawyer through Legal.ge means you have a professional advocate who will balance the power dynamic between you and the financial institution, save you money by identifying hidden fees, and ensure the safety of your real estate assets.
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