Purchasing real estate is a significant investment accompanied by serious risks. The "Caveat Emptor" (Buyer Beware) principle is particularly relevant in the Georgian real estate market, where hidden liabilities, lawsuits, and zoning issues are common. Real Estate Title Verification (Due Diligence) is a process where a lawyer details the property's history and legal status before a transaction occurs. An electronic extract from the Public Registry does not always provide the full picture. For example, it may not show old tax liens, ongoing litigation, or claims by heirs. A comprehensive check is the only way to avoid losing money and facing future legal problems.
What Does Due Diligence Service Cover?
Specialists on Legal.ge conduct deep research into real estate in the following areas:
- Title History Check: Examining not only the current extract but also the Public Registry archives to establish how the seller became the owner and if there were any flaws in the chain of title.
- Encumbrance Search: Identifying mortgages, seizures, tax liens, and easements. Also, checking Revenue Service databases for tax liabilities.
- Litigation Check: Checking general court search systems to see if there is an ongoing dispute regarding the property or its owner.
- Zoning and Construction Permit Analysis: Determining if the plot has the appropriate functional zone (e.g., agricultural vs. non-agricultural) and if construction is permitted.
- Corporate Authority Check: If the seller is a company, verifying the director's authority and the validity of the partners' meeting minutes.
Common Scenarios and Real-World Examples
Ignoring due diligence has harmed many buyers. Here is why it is essential:
- Tax Lien: A buyer purchased an apartment with a clean extract, but later it turned out the seller had a tax debt that arose before the purchase but was reflected in the registry after. A full audit would have revealed this risk.
- Incorrect Zoning: An investor bought land to build a hotel. During the audit, it was discovered that the plot lies in a recreational zone where construction is prohibited or strictly limited.
- Inheritance Issue: An apartment was sold by a sole heir, but later a second heir appeared from abroad claiming a share. Studying the history would have shown the risks.
- Director's Excess of Authority: A company director sold an office without the partners' consent. The partners demanded the transaction be annulled. Checking the charter was necessary.
Georgian Legislation and Regulations
Due Diligence is based on the availability of public information. The Law on Public Registry ensures data openness. The Tax Code of Georgia defines the rules for tax liens. The Law on Entrepreneurs regulates property disposal on behalf of a company. The Code on Spatial Planning defines zoning and construction parameters. A lawyer uses all these sources to create a complete picture.
Service Process
The client provides the lawyer with the property's cadastral code. The lawyer begins searching for information in various databases (Public Registry, Registry of Entrepreneurs, Court, City Hall Architecture Service). Based on the analysis of the collected information, a written Due Diligence Report is prepared, describing the property status and identified risks. The report also contains recommendations — whether the property is worth buying or what conditions should be included in the contract to hedge risks.
Why Choose Legal.ge?
Lawyers on Legal.ge are risk management experts. They know where to look for problems that are not visible on the surface. Buying real estate is a major financial decision and making it "blindly" is unacceptable. Use Legal.ge's service to rest assured that your investment is protected and you are buying "clean" property.
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