The real estate market in Georgia is growing, yet it is accompanied by significant legal challenges. Purchasing an apartment under construction is often akin to playing Russian roulette: you are investing in the future, but the guarantees are frequently vague. Statistics indicate that buyers lose millions of Lari annually due to improperly drafted contracts.

As a real estate attorney, in this article, I will discuss in detail all the "underwater currents" hidden within a residential Sales and Purchase Agreement. Here, you will find answers to the question: How can we protect our interests and avoid becoming victims of fraud?

1. "Internal Installment" vs. Public Registry: Why is this the Primary Threat?

Many citizens mistakenly believe that if they sign a contract at the developer's office and pay the money, the apartment belongs to them. This is a dangerous illusion.

Under the Civil Code of Georgia, the right of ownership over real estate arises only from the moment of registration in the Public Registry.

What is a "Preliminary Sales and Purchase Agreement"?

When a building is under construction, you cannot register as the direct owner immediately (since the apartment does not physically exist yet). Therefore, a Preliminary Sales and Purchase Agreement is used.

• This document obliges the developer to transfer ownership to you upon the completion of construction.

• Crucial: This agreement must be registered in the Public Registry.

What happens if the agreement is signed only at the office?

If your agreement is not reflected in the extract from the Public Registry, you are vulnerable to the following risks:

1. Double Alienation (Double Selling): The company may sell the same apartment to a second or third party.

2. Mortgage Encumbrance: The company may pledge the apartment to a bank as collateral for a loan.

3. Seizure/Attachment: If the company accumulates debts, the National Bureau of Enforcement may auction your apartment, as legally it remains the property of the company.

Legal Advice: Never pay any amount (including "earnest money") until you receive an extract from the Public Registry where your name is recorded as the owner (or future owner).

2. Legal Due Diligence of the Land Plot

Before considering a specific apartment, the foundation must be checked not just physically, but legally. The building is constructed on land, and if the land is problematic, your apartment is problematic as well.

What do we verify in the extract?

Our legal services include a detailed study of the land plot’s cadastral code:

• Mortgages: Is the land pledged to a bank? If so, there is a risk that the developer may default on the loan, and the bank may seize the land (along with the building under construction). In this case, written consent from the bank is required, stating that your apartment will be released from the mortgage upon payment.

• Construction Permit: Does the project comply with the issued permit? There are frequent cases where a company builds 10 floors while having a permit for only 8. In such instances, the upper floors cannot be commissioned (accepted for exploitation).

• Liabilities/Encumbrances: Is the land subject to seizure due to tax disputes or other litigation?

3. "Hidden Traps" in the Contract: What to Look Out For?

Standard contracts offered by developers are drafted in the company's favor in 99% of cases. Contract revision is critically important.

A) Construction Deadlines and "Force Majeure"

We often encounter clauses stating that "the construction term may be extended by 6 months." Furthermore, "Force Majeure" often includes items that are actually commercial risks (e.g., price increases on materials).

• Requirement: The contract must state the exact delivery date and a daily penalty (liquidated damages) to be paid by the company in case of delay.

B) Apartment Area: Project vs. Reality

The area of the apartment may change during the construction process.

• If the apartment turns out to be 5 sq.m. smaller than designed, will the company refund the amount?

• If it is larger, are you required to pay extra? These details must be stipulated in advance.

C) Delivery Condition

Terms such as "White Frame," "Green Frame," or "Premium Frame" are not strictly defined by legislation.

• Advice: The contract must include a detailed description as an annex: what materials will be used, whether heating pipes will be installed, what type of doors and windows will be fitted, etc.

4. What is the Cost of Legal Services When Buying an Apartment?

Many buyers hesitate to hire a lawyer due to fear of additional costs. However, the reality is this: the cost of due diligence is not even 0.5% of the apartment price, while the risk you are insuring against is 100%.

Our Law Firm offers a full package:

1. Reputational and legal background checks of the developer and the land plot.

2. Amendment of the Sales and Purchase Agreement to align with your interests.

3. Negotiation with the company's lawyers.

4. Monitoring of the registration process.

Frequently Asked Questions (FAQ)

Can I terminate the contract if construction stops?

Yes, if the developer has significantly breached the deadlines, the Civil Code gives you the right to demand termination of the contract and compensation for damages. However, enforcing this in court is much easier if the correct clauses are included in the contract from the beginning.

What is the legal difference between "Black" and "White" Frames?

The law does not define these terms; they are construction industry jargon. Therefore, the contract should not simply state "White Frame," but rather a precise list of works to be performed (e.g., plastered walls, screeded floors, etc.).

Is it safe to buy an apartment that is not yet built?

Risk always exists, but it can be minimized by registering a Preliminary Sales and Purchase Agreement in the Public Registry and analyzing the company's financial standing.

Conclusion

Purchasing an apartment is not just about receiving keys; it is a complex legal process. Do not rely solely on the seller's smile and beautiful renderings.

Qualified legal assistance ensures that your investment is protected and that your new home is not only beautiful but also legally flawless.