Selling residential property, just like buying, requires thorough legal preparation. The seller's main goal is not only to receive funds on time but also to protect themselves from future claims. It is common for buyers to demand refunds or compensation for hidden defects after the sale, or for tax authorities to impose hefty fines for unpaid income tax. A qualified lawyer helps the seller plan tax liabilities correctly (e.g., using the 2-year exemption), ensure secure receipt of funds, and sign a contract that releases them from unreasonable responsibilities.
What does this service cover?
Protecting the seller's interests includes the following aspects:
- Tax Consultation: Determining whether the seller is liable for capital gains tax (5% or 20%) and how to utilize legal tax exemptions (e.g., the 2-year ownership rule).
- Document Preparation: "Cleaning" the property before sale — removing mortgages, lifting seizures, or resolving inheritance issues to make the property attractive to buyers.
- Sales Agreement: Drafting a contract tailored to the seller's interests, clearly specifying payment deadlines and the moment of transfer of ownership (e.g., only after full payment).
- Earnest Money Agreement: Insuring against the risk of the buyer changing their mind by correctly structuring the deposit (non-refundable down payment).
- Payment Security: Using bank guarantees or escrow accounts to eliminate fraud risks.
Common Real-World Scenarios
Situations where a seller needs protection:
- Tax Mistake: A seller sold an apartment 1 year after purchase, thinking it was tax-free. The tax authority imposed a 20% tax on the surplus plus a penalty. A lawyer would have calculated this beforehand.
- Installment Risk: The buyer paid part, transferred the title, and delays the rest. If the contract lacked a mortgage clause, the seller risks losing the property.
- Repair Claims: A month after the sale, the buyer demands money back because "the walls are damp." A properly drafted handover act protects the seller from such claims.
- Selling Mortgaged Property: The seller wants to pay off a bank debt with the sale proceeds. A tripartite deal (Bank-Seller-Buyer) coordinated by a lawyer is required.
Georgian Legal Framework
The Tax Code of Georgia is crucial regarding property sales. Specifically, surplus income (capital gain) from selling a residential apartment by an individual is taxed at 5% if owned for less than 2 years. Sales after 2 years are tax-exempt. For commercial sales, the rate can be 20%. The Civil Code regulates obligations and guarantees. For foreign sellers, banking regulations regarding fund repatriation (transferring money abroad) are also relevant.
Process: How does a specialist work?
The lawyer first analyzes the seller's tax liabilities. Then, the property is prepared for sale (legally). When a buyer appears, the lawyer negotiates contract terms — rejecting standard, one-sided terms proposed by the buyer. On the day of the deal, the lawyer ensures that ownership transfer happens only in exchange for a solid guarantee of payment. Finally, a handover act is signed, and utility subscriptions are transferred.
Why Legal.ge?
Selling property is not just about posting an ad. It is a financial operation where poor planning can cost you thousands of GEL in taxes or unpaid funds. On Legal.ge, you will find lawyers who will help optimize the transaction so you get maximum benefit and minimize risks. Sell your property peacefully and profitably.
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