Thousands of foreign buyers purchase property in Georgia each year, a considerable number of whom never set foot in the country before completing the purchase. Georgian law permits property to be purchased entirely remotely. However, remote acquisition concentrates all the usual risks into a single instrument and a single individual: the power of attorney and the person to whom it is granted. This article explains the legal mechanics of remote purchase and how such risks may be properly managed.
Can You Buy Property in Georgia Without Physical Presence?
Yes. Georgian law permits the acquisition of property to be effected entirely by way of representation, through a duly executed power of attorney (“PoA”) Your authorized representative can execute the purchase agreement and effect registration of title on the purchaser’s behalf before the Public Registry, while the purchase price is remitted directly by the purchaser to the seller The essential preconditions are, first, a PoA that has been properly executed and duly legalized, and, second, the appointment of a representative in whom the purchaser may place well-founded confidence.
How Remote Purchase Works: The PoA Route
A power of attorney is the legal instrument by which a representative is authorized to act on the purchaser’s behalf in Georgia. In the context of a remote purchase, the process generally proceeds as follows:
- The PoA is drafted in accordance with Georgian legal requirements, specifying precisely the acts which the representative is authorized to undertake.
- The PoA is executed abroad, by signature before a notary in the purchaser’s home country.
- The PoA is legalized, either by way of apostille (in respect of Hague Convention states) or through consular legalization
- The original instrument is sent to Georgia, where it is translated into Georgian and the translation is duly notarized.
- The representative then acts on the purchaser’s behalf: executing the purchase agreement, attending the Public Service Hall, and effecting registration of title in the purchaser’s name.
Additionally, your identity document typically needs a notarized Georgian translation. Once registration completes, the purchaser receives an electronic title extract, constituting proof of ownership irrespective of the purchaser’s location.
Scope and Limitations of the Power of Attorney
A power of attorney is effective precisely because it enables the representative to act in the purchaser’s absence. For this reason, the scope of authority granted is the purchaser’s principal safeguard. A properly drafted power of attorney for a remote purchase should generally:
- Identify the specific transaction with precision – ideally by reference to the cadastral code of the property in question, or, where a specific property has not yet been identified, by clearly defined criteria
- Impose a cap on the price that the representative is authorized to agree to
- Exclude powers that are not required for the transaction, including the receipt of funds, resale, mortgaging, or gifting of the property.
- Specify an expiry date corresponding to the anticipated completion of the purchase; and
- Remain revocable, with the applicable revocation procedure ascertained in advance.
Risks Inherent in Remote Purchase, and Their Mitigation
Purchasers acquiring property remotely are subject to three principal structural risks. First, the purchaser is unable to conduct any personal inspection of the unit, the building, the surrounding locality, or the seller. Photographic and audio-visual materials provided in the course of marketing are typically curated by parties possessing a pecuniary interest in the completion of the sale, and certain practices prevalent in the market are known to affect remote purchasers disproportionately.. Second, the holder of the power of attorney may misuse the authority conferred upon them, or may otherwise conduct the transaction without the requisite degree of care.Third, funds are remitted internationally into a transaction over which the purchaser is not in a position to exercise direct supervision.
The requisite controls, while not onerous, are not matters of discretion: independent verification of all material aspects of the transaction (as addressed further below); a narrowly scoped power of attorney, conferred upon a regulated professional rather than upon a broker or personal acquaintance; and a payment structure conditioned upon the registration of title. It has been our experience that the majority of adverse outcomes arising in the context of remote purchases originate in the grant of a broadly scoped power of attorney to a personal acquaintance, rather than to a suitably qualified professional.
Conducting Due Diligence in the Purchaser’s Absence
Physical distance does not diminish the necessity for due diligence. On the contrary, it increases it. Retaining a buyer-side lawyer serves, in effect, to provide the purchaser with independent verification on the ground in Georgia.
- Registry verification: obtaining a current Public Registry extract confirming the true owner of the property and disclosing any mortgages, liens, or seizures registered against it.
- Verification of Seller and developer: confirmation of identity, status on the debtor registry, litigation history, and, in the case of off-plan property, verification of the relevant permits and land title.
- Physical inspection: an in-person visit to the property or construction site, with photo and video reporting provided to the purchaser.
- Contract review: review of a bilingual agreement, such that the purchaser may read and understand its terms prior to authorizing execution. Accordingly, the right question is not whether the seller is to be trusted, but rather who has independently verified the relevant matters on the purchaser’s behalf. Where the answer is that verification was undertaken by the seller’s own agent, the due diligence should be regarded as not yet having been performed.
Paying From Abroad Safely
The transfer of funds is frequently the point at which remote transactions succeed or fail. Purchase funds are normally transferred by bank transfer directly to the seller: the purchaser’s representative should not act as an intermediary in respect of the purchaser’s funds. Moreover, Georgian banks apply source-of-funds and AML verification to incoming international transfers, and relevant documentation (evidencing the origin of funds, together with the purchase agreement) should accordingly be prepared in advance of any transfer being initiated.
The purchaser’s position may be protected by structuring payment around defined milestones: no funds should be released prior to the completion of due diligence, and the principal payment should be structured to coincide with the registration of title. Where agreed between the parties, escrow arrangements may provide a further layer of protection. Purchasers intending to open a local account for the purposes of the transaction, or thereafter, may refer to our article on opening a bank account in Georgia.
Remote Purchase by Foreign and CIS Nationals
Foreign buyers enjoy the same ownership rights as Georgian citizens for residential and commercial property; agricultural land alone is subject to restriction. For buyers from Russia and other CIS countries, the legal right to buy is the same – the material distinction lies in the payment process, where bank compliance checks applicable to such transfers require careful advance planning as to the transfer route and supporting documentation. In addition, a purchase meeting the requisite value may subsequently support an application for a residence permit in Georgia; the property-based routes available in this respect are addressed in detail in our guide to the investment residence permit.
Frequently Asked Questions
Is it necessary to visit Georgia in order to purchase property?
No. Every step – due diligence, signing, payment, and registration – can be completed without the purchaser entering Georgia, provided a properly legalized power of attorney has been issued. Many purchasers nonetheless choose to visit once before completing the transaction.
May the purchaser’s lawyer execute the purchase on the purchaser’s behalf?
Yes. Under a power of attorney, the purchaser’s lawyer can sign the purchase agreement, submit it at the Public Service Hall, and register the title in the purchaser’s name. Using a regulated, buyer-side lawyer as the purchaser’s PoA holder – rather than a broker or acquaintance – is the safest structure for remote purchases.
Is a power of attorney executed abroad valid in Georgia?
Yes, provided it has been properly legalized. A power of attorney signed abroad generally requires notarization in the purchaser’s home country, followed by an apostille (for Hague Convention states) or consular legalization, and thereafter certified Georgian translation and local notarization.
How should funds for the purchase be remitted?
By international bank transfer, normally directly to the seller’s account. Expect source-of-funds and compliance checks. should be anticipated from the banks involved, and relevant documentation should be prepared in advance. Payment should be structured around the clearance of due diligence and the registration of title, and purchase funds should never be routed through an individual’s personal account.
Purchasing From Abroad? Engage Representation on the Ground
MB Legal manages remote property purchases on a comprehensive basis: we draft and administer the power of attorney, verify the property and seller, conduct an in-person inspection, execute the transaction, and register title in the purchaser’s name, reporting to the purchaser at every stage, in English, Georgian, or Russian. For a full overview, please see our article on how to buy property in Georgia, or proceed directly to our real estate legal services and book a consultation.
