The legal regime of matrimonial property in Georgia: what counts as joint property, how prenuptial agreements work, and how assets are divided on divorce

In Georgia, property relations between spouses are governed by the Civil Code. The country has no separate Family Code. As a general rule, property acquired by spouses during marriage is treated as their joint property, unless the spouses have altered that position by a prenuptial agreement.

Foreign spouses need to approach this question with particular care. In an international family it is not enough to establish where the property is located and where the marriage was registered. You also need to determine:

• which country's court has the right to hear the dispute;
• which country's law applies to the spouses' property;
• whether a foreign judgment will be recognised and enforced in Georgia;
• whether a foreign judgment can divide real estate registered in Georgia.

Let us work through each of these questions in turn.

Georgian law provides for two principal matrimonial property regimes:

The statutory regime - applies automatically where the spouses have not concluded a prenuptial agreement.

The contractual regime - established by a prenuptial agreement and capable of differing substantially from the rules laid down by law.

The first step, therefore, is always to check whether a prenuptial agreement exists and which law governs it. Only then can you determine whether a particular asset is joint or separate property.

As a general rule, all property acquired by spouses during a registered marriage is recognised as their joint property.

This rule applies regardless of:

• whose name the property is registered in;
• who signed the purchase agreement;
• who actually transferred the money to the seller;
• which spouse earned the income;
• whether the other spouse worked;
• whether the other spouse ran the household or raised the children.

The Civil Code expressly provides that a right to joint property also arises for a spouse who ran the household, cared for the children, or for another valid reason had no independent income.

For example, if an apartment was purchased during the marriage and registered solely in the husband's name, that fact alone does not make the apartment exclusively his. Under the statutory regime, the other spouse is entitled to claim a share in jointly acquired property.

Joint property may include:

• apartments, houses, commercial premises;
• land plots;
• vehicles;
• funds held in bank accounts;
• securities;
• shares and stakes in companies;
• equipment and other business assets;
• income from entrepreneurial activity;
• property acquired using credit;
• other assets acquired during the marriage.

In each specific case, however, it is necessary to establish the date of acquisition, the source of funds, the existence of a prenuptial agreement and the applicable law.

Registering property in one spouse's name carries considerable practical weight, but it does not always determine the final proprietary status of the asset.

The Public Registry records the registered owner. In a dispute between spouses, however, the court will additionally examine:

• when the property was acquired;
• whether the parties were married at the time;
• what funds the purchase was made with;
• whether a prenuptial agreement existed;
• whether Georgian or foreign law applies to the spouses' relations.

An entry in the registry in one spouse's name therefore does not preclude the other spouse from claiming that the property is joint and seeking its division.

There is a flip side, however. Until the other spouse's right is registered and no court restriction is in place, the property formally remains registered to a single owner. This creates a risk of sale, gift, pledge or other disposal of the asset.

The Civil Code provides for joint management of the spouses' common property. At the same time, a transaction entered into by one spouse cannot automatically be declared invalid merely because the other spouse did not know of it or did not agree to it. The other spouse may, however, claim the benefit derived from the management of the joint property.

Where there is a genuine risk of disposal, therefore, simply stating your objection is usually not enough. It may be necessary to apply to court and seek interim measures - for instance, a prohibition on selling or encumbering the real estate until the dispute is resolved.

Not all property owned by spouses becomes joint.

The separate property of each spouse comprises:

• property belonging to that spouse before the marriage was registered;
• property received during the marriage by inheritance;
• property received during the marriage as a gift.

In addition, items of personal use - other than jewellery and other valuables - belong to the spouse who uses them, even if they were acquired with joint funds.

Property that will typically be treated as separate includes:

• an apartment bought before the marriage;
• a land plot received by inheritance;
• a car given to one spouse by their parents;
• funds received by one spouse as a gift, where their origin can be proved.

The main practical difficulty lies precisely in proof.

Where property was acquired many years ago, money was repeatedly moved between accounts, and no deed of gift was executed, establishing the source of funds can be difficult.

A spouse who considers property to be separate is therefore well advised to retain:

• purchase agreements;
• deeds of gift;
• certificates of inheritance;
• bank statements;
• payment orders;
• documents concerning the sale of previously owned property;
• correspondence confirming the purpose of a payment.

Yes.
One spouse's separate property may be recognised as joint if its value increased substantially during the marriage as a result of the spouses' joint expenditure.

The Civil Code expressly gives the following examples:
-        reconfiguration of the layout;
-        completion of construction;
-        reconstruction;
-        other substantial improvements.

Suppose that before the marriage one spouse owned an unfinished house. During the marriage, using joint funds, the spouses completed the construction, installed utilities and fully renovated the property. On division, the other spouse may raise the question of recognising the property as joint.

Routine repairs alone, however, are usually not enough. It is necessary to prove:
-        the initial condition and value of the property;
-        the investments made during the marriage;
-        the source of the funds;
-        a substantial increase in the value of the asset;
-        a causal link between the investments and the increase in value.

This may require contractor agreements, banking documents, photographs, construction documentation and an expert valuation.

A prenuptial agreement can exclude the operation of this rule and preserve the separate status of the property even after substantial improvements.

One of the most complex questions is the division of a business.

Where a spouse registered a company during the marriage, several distinct subjects of dispute may arise:
-        the share or stock in the company;
-        income derived from participation in the company;
-        dividends;
-        loans made to the company by the spouse;
-        property belonging to the company itself;
-        the spouse's claims against the company;
-        funds in personal and corporate accounts.

It is important to distinguish between the spouse's property and the property of the legal entity.

If an apartment, vehicle or equipment belongs to the company, those assets do not directly become the spouses' joint property. The company remains the owner. What can be divided is the spouse's share in the company, its value, or the related proprietary claims.

This matters particularly in an LLC: the division of family assets should not automatically destroy the corporate structure or the rights of other partners. The court may therefore take the value of the share into account and award the share to one spouse and monetary compensation to the other.

Where one spouse is registered as a sole entrepreneur, no separate legal entity arises. A sole entrepreneur acts in their own name and is liable for obligations with their own property. Property used in the sole entrepreneur's activity may therefore be directly affected by the division of matrimonial assets.

Division takes account not only of assets but also of liabilities.
The spouses' joint debts are allocated in proportion to the shares awarded to them in the joint property.

Not every debt incurred during the marriage is automatically treated as joint, however.

It is necessary to establish:
-        who entered into the agreement;
-        what purposes the money was used for;
-        whether only one spouse or the whole family benefited;
-        whether the other spouse gave consent;
-        whether the property was acquired in the family's interests.

Where an obligation was incurred by one spouse, enforcement is as a general rule directed at that spouse's separate property and at their share in the joint property. Enforcement may, however, extend to the entire joint property if the court finds that the benefit obtained was used in the family's common interests.

A loan taken out by one spouse to buy the family apartment, for example, is highly likely to be treated differently from a personal loan spent on individual purposes without the family's knowledge.

A prenuptial agreement is an agreement between spouses, or between persons intending to marry, which defines their property rights and obligations during the marriage and on its termination.

In Georgia a prenuptial agreement may be concluded:
-        before the marriage is registered;
-        at any time after the marriage is registered.

Where the agreement is signed before the marriage, it takes effect from the moment the marriage is registered.

A prenuptial agreement must:
-        be made in writing;
-        be certified by a notary.

An ordinary written agreement between spouses without notarial certification is not sufficient to constitute a prenuptial agreement within the meaning of the Civil Code.

A prenuptial agreement may extend both to existing property and to property the spouses acquire in the future.

Spouses are free to vary the statutory regime and establish, for example:
-        complete separation of property;
-        joint ownership of all property;
-        a joint regime for specified assets only;
-        that real estate belongs to the spouse in whose name it is registered;
-        that the business belongs to one spouse;
-        how each spouse participates in income;
-        how family expenses are borne;
-        how loans are repaid;
-        what property each spouse receives on divorce;
-        payment of compensation to one of the spouses;
-        rules on disposing of real estate;
-        the conditions on which particular property passes to the other spouse.

Spouses may, for instance, provide that:
-        the apartment in Tbilisi is jointly owned in equal shares;
-        the husband's share in the company remains his separate property;
-        the car belongs to the wife;
-        each spouse is independently liable for business debts;
-        on divorce one spouse receives the real estate and the other monetary compensation.

Rights and obligations under a prenuptial agreement may be limited in time or made conditional on the occurrence of a specified event.

A prenuptial agreement governs property relations above all.

It cannot:
-        alter parental rights and obligations;
-        determine a child's future contrary to the child's interests;
-        remove the obligation to maintain a child;
-        deprive a spouse of the right to apply to court;
-        vary the spouses' statutory duty of mutual maintenance;
-        place one spouse in a severely disadvantageous financial position.

A clause stating that "on divorce a spouse has no right to apply to court" will therefore be ineffective.

An agreement under which one spouse is entirely deprived of any property, income and means of subsistence without reasonable compensation is likewise risky. The court is entitled to vary the terms of an agreement where they place one spouse in an extremely unfavourable position.

Nor can a prenuptial agreement reliably regulate personal domestic matters, such as:
-        who is obliged to cook;
-        how much time the spouses must spend together;
-        who is responsible for raising a child;
-        who a child will live with after divorce;
-        how often the spouses must take holidays together.

Such provisions fall outside the matrimonial property regime and cannot substitute for agreements or court decisions on matters concerning children.

Yes - but as a general rule only by mutual agreement between the spouses.

A prenuptial agreement may be varied or terminated at any time by agreement of the parties. Unilateral withdrawal from the agreement is not permitted. On divorce the agreement ceases to operate, save for those provisions which by their nature govern the consequences of the marriage ending.

In addition, a spouse with a legitimate interest may apply to court where the terms of the agreement place them in an extremely unfavourable position.

No.

Joint property may be divided:
-        during the marriage;
-        at the same time as the divorce;
-        after the divorce.

Division during the marriage is sometimes used to protect a business, to put ownership in order, or to prepare for a major transaction.

Where spouses have divided only part of their property, the undivided part and any property they acquire subsequently continue, as a general rule, to be treated as joint, unless a prenuptial agreement provides otherwise.

Where there is no dispute between the spouses, the fastest and most controlled option is to conclude an agreement on the division of property.

The agreement can determine:
-        which specific real estate passes to whom;
-        who keeps the car;
-        who owns the funds in the accounts;
-        who receives the company share;
-        who continues to repay the loan;
-        whether compensation is payable;
-        the deadlines for handing over documents and property;
-        who pays registration, notarial and tax costs.

Where the agreement concerns real estate, the transfer or variation of the registered right must be recorded in the Public Registry.

Division by agreement allows spouses to depart from the principle of equality. One spouse might receive the apartment, for example, while the other takes the business and the cash.

The agreement must nonetheless be drafted so as to leave no unresolved questions. Wording such as "the parties have no property claims against each other" may in itself prove insufficient if specific assets, debts and compensation payments are not listed.

Where agreement cannot be reached, the property is divided by the court.

The court determines:
-        the composition of the joint property;
-        the composition of each spouse's separate property;
-        the value of the assets;
-        the size of the shares;
-        which property passes to each spouse;
-        the amount of compensation;
-        how joint debts are allocated.

Items needed by one spouse for their professional activity may be transferred to that spouse, even if acquired with joint funds. Where the value of the property transferred to one spouse exceeds their share, compensation is awarded to the other spouse.

Dental equipment, for example, may be transferred to the spouse who is a dentist, with monetary compensation awarded to the other spouse.

The starting rule is that the spouses' shares are equal.

The court is nonetheless entitled to depart from equality of shares, taking into account:
-        the interests of minor children;
-        the substantial interests of one of the spouses;
-        a spouse's disability;
-        minor children living with one of the spouses;
-        the other spouse having spent joint property to the family's detriment.

The mere fact that a child remains living with one parent does not automatically increase that parent's share. The court assesses the circumstances as a whole.

The court may also treat as separate any property acquired by one spouse after the family relationship had in fact ended or during a period of separation.

The legal date of divorce is therefore not always the only material moment. Where the spouses in fact ended their family life long before the divorce was formalised, this may affect the status of assets acquired later.

The Civil Code sets a three-year limitation period for claims by divorced spouses for the division of joint property.

Postponing division indefinitely is therefore risky.

The more time passes, the harder it becomes to:
-        obtain banking documents;
-        confirm the sources of funds;
-        establish the value of the property;
-        locate documents concerning repairs and investments;
-        prevent the disposal of assets;
-        prove the circumstances of acquisition.

No.

Owning property in Georgia - and even divorcing in Georgia - does not automatically mean that Georgian family law will govern all of the spouses' property relations.

The Georgian Law on Private International Law sets out a sequence for determining the applicable law.

The general effects of marriage, including the spouses' property relations, are as a general rule governed by the law of the country:
-        of which both spouses are or were nationals;
-        in which both spouses have, or during the last period of the marriage had, their habitual residence;
-        with which the spouses are most closely connected.

For example:
-        if both spouses are nationals of Kazakhstan, Kazakh law may apply;
-        if the spouses hold different nationalities but lived permanently in Georgia, Georgian law is likely to apply;
-        if the spouses hold different nationalities and lived in several countries, the court will determine which country the marriage is most closely connected with.

In an international dispute, therefore, you cannot start from the mechanical assertion that "the apartment was bought during the marriage, so it is split fifty-fifty under Georgian law."

The applicable law must be determined first.

Yes.

To govern their property relations, spouses may choose the law of a country:
-        of which one of the spouses is a national;
-        in which one of the spouses has their habitual residence;
-        in which the real estate is located.

The choice of law must be executed before a notary.

Spouses who are nationals of different states but live permanently in Georgia may, for instance, choose Georgian law to govern their real estate in Georgia.

It is important, however, to distinguish between:
-        the choice of applicable law;
-        the choice of forum;
-        the place where the property is registered.

A clause providing for the application of Georgian law does not in itself always mean that any dispute will necessarily be heard by a Georgian court.

The spouses' property relations may be governed by foreign law. However, the creation, variation, transfer and termination of a proprietary right in an asset are determined by the law of the country where that asset is located. For real estate in Georgia, that is Georgian law.

This means two questions must be kept separate:
-        whether the property is the spouses' joint property;
-        how ownership of the asset in Georgia arises, is registered, transferred or terminated.

The first question may be resolved under foreign family law. The second is governed by Georgian property and registration law.

The mere fact that a marriage was registered in Georgia does not always give a Georgian court the right to hear the divorce.

Georgian courts have international jurisdiction in matrimonial matters where:
-        one of the spouses is a Georgian national, or was a Georgian national at the time the marriage was concluded;
-        the respondent spouse is habitually resident in Georgia;
-        one of the spouses is stateless and habitually resident in Georgia.

Matrimonial matters include divorce, termination or annulment of a marriage, as well as establishing the fact of a marriage or of the spouses' cohabitation.

Two foreign nationals who registered their marriage in Georgia but then lived permanently in another country and have no requisite connection with Georgia will therefore not always be able to dissolve the marriage in a Georgian court.

Conversely, if the respondent spouse lives permanently in Georgia, a Georgian court may have international jurisdiction even where both spouses hold foreign nationality.

JUST Advisors has previously analysed situations of this kind involving foreign spouses: what proves decisive is not only where the marriage was concluded, but also nationality, habitual residence and the procedural connection with Georgia.

They can, provided the Georgian court has international jurisdiction over the relevant property claim.

Jurisdiction over the divorce and jurisdiction over the division of property must nonetheless be checked separately.

A particularly important rule applies to Georgian real estate:
Disputes relating directly to immovable property located in Georgia fall within the exclusive international jurisdiction of the Georgian courts.

This means that a dispute over rights to an apartment, house, commercial premises or land plot in Georgia must be approached with the exclusive competence of the Georgian courts in mind.

Different rules may apply to movable property, cash, shares in foreign companies or assets held abroad. Separate proceedings in another country may be required.

In practice, an international division of assets often has to be split across several sets of proceedings:
-        the divorce in one country;
-        division of Georgian real estate in Georgia;
-        division of foreign real estate in the country where it is located;
-        a dispute over shares in a foreign company under the rules of the relevant jurisdiction.

Georgia generally recognises final judgments of foreign courts. Recognition is dealt with by the Supreme Court of Georgia, unless the law provides for an exception.

Separate recognition of a judgment in a matrimonial matter is not required, however, where at the time the judgment was given both spouses were nationals of the state whose authority issued it.

If two French nationals divorced in France, for example, a separate judicial recognition procedure in Georgia may not be necessary.

Where the spouses held different nationalities, or the judgment was given by a state of which neither was a national, an application to the Supreme Court of Georgia may be required.

Using a foreign document in Georgia will also generally require:
-        a judgment that has entered into force;
-        confirmation that it is final;
-        an apostille or consular legalisation, unless an international treaty provides an exemption;
-        a certified translation into Georgian.

A foreign divorce terminates the marriage, but does not in itself always change ownership of property in Georgia.

You need to check whether the foreign judgment contains:
-        a decision on divorce only;
-        a decision on the division of property as well;
-        a specific reference to the Georgian real estate;
-        an obligation on one spouse to transfer property to the other;
-        monetary compensation.

Where the foreign court only dissolved the marriage, the spouses must still resolve the question of the Georgian property separately by:

-        concluding an agreement on division;
-        registering the transfer of the right;
-        bringing a claim before a Georgian court.

In principle, foreign judgments in civil matters may be recognised and enforced in Georgia. To that end, the interested party applies to the Supreme Court of Georgia.

The application must be accompanied by, among other things:
-        a certified copy of the judgment;
-        a certified translation;
-        a document confirming that the judgment has entered into force;
-        confirmation that the judgment is enforceable, where this does not follow from its text.

Recognition may nonetheless be refused where:
-        the matter falls within the exclusive jurisdiction of Georgia;
-        a party was not duly notified;
-        a final judgment of a Georgian court in the same dispute already exists;
-        the foreign court was not regarded as competent under Georgian law;
-        identical proceedings are already pending in Georgia;
-        the judgment conflicts with the fundamental legal principles of Georgia.

This is one of the most important practical questions.

Because disputes relating to real estate in Georgia fall within the exclusive international jurisdiction of the Georgian courts, there is a serious risk that a foreign judgment directly altering ownership of Georgian real estate will not be recognised or enforced in Georgia.

A foreign court might rule, for example, that the apartment in Batumi passes to the wife. To actually change the entry in the Georgian Public Registry, however, it may be necessary to have:
-        the spouse voluntarily sign the relevant document; or
-        a separate judgment of a Georgian court.

Where Georgian real estate is involved, it is therefore safer to settle the procedural strategy in advance rather than assume that a foreign judgment will automatically change the owner in the registry.

A different outcome is possible where the foreign judgment does not alter a proprietary right directly but establishes a monetary obligation of one spouse to the other. Even then, the content of the judgment and the scope for enforcing it must be analysed separately.

This is an entirely plausible scenario.

For example:
-        the spouses divorced in Germany;
-        the divorce is recognised in Georgia;
-        the spouses' apartment is in Tbilisi;
-        the foreign court did not deal with the apartment.

In that situation the former spouse may apply to a Georgian court seeking division of the property.

The Georgian court must then determine:
-        whether the marriage has in fact been terminated;
-        which law governs the spouses' property relations;
-        whether the apartment is joint property;
-        whether the limitation period has expired;
-        whether there are grounds for departing from equality of shares;
who the asset should pass to and whether compensation is required.

In this situation it is essential to act before the dispute concludes, not after the property has been sold.

Possible steps include:
-        obtaining a current extract from the Public Registry;
-        checking for mortgages, attachments and other encumbrances;
-        gathering evidence that the property was acquired during the marriage;
-        preparing the claim;
-        filing an application for interim relief at the same time;
-        seeking a prohibition on disposing of or encumbering the asset.

The Law on Private International Law allows a Georgian court to grant interim measures where they are to be enforced in Georgia, or where the Georgian court has international jurisdiction.

Where the statutory regime applies and the apartment was purchased during the marriage, the other spouse may claim a share even though their name does not appear in the registry.

You will need:
-        the marriage certificate;
-        the acquisition agreement;
-        an extract from the Public Registry;
-        proof of payment;
-        evidence that no prenuptial agreement exists, or its contents;
-        the information required to determine the applicable law.

The apartment is initially separate property.

The other spouse may nonetheless seek to have it recognised as joint property, or to have their investments taken into account, if they can prove a substantial increase in value attributable to expenditure during the marriage.

A valuation before and after the improvements is needed, together with proof of the source of the investment.

Such an apartment does not necessarily become joint property automatically.

If the spouse can prove that the new apartment was paid for exclusively with proceeds from the sale of their separate pre-marital property, they may argue that the newly acquired asset is likewise separate.

The decisive factor will be the ability to trace the movement of funds:
-        the agreement for the sale of the old apartment;
-        the bank statement;
-        the agreement for the purchase of the new apartment;
-        the dates and amounts of the transfers;
-        the absence of any commingling with joint funds.

Where joint funds were added to the separate money, a dispute over shares or compensation may arise.

As a general rule the apartment is the separate property of the spouse who received it.

If joint funds were subsequently used for a major reconstruction and the value of the asset rose substantially, however, the other spouse may bring a claim connected with the improvements made.

The transaction does not become automatically invalid merely because the other spouse did not consent.

Depending on the circumstances, the other spouse may:
-        claim their share of the benefit received;
-        allege bad faith on the part of the acquirer;
-        challenge the transaction on other grounds;
-        claim compensation;
-        seek to have the value of the disposed asset included in the division.

The outcome will depend on the nature of the transaction, the buyer's knowledge and the available evidence.

Where the money was joint property and was spent contrary to the family's interests, this may be taken into account on division.

The court is entitled to depart from equality of shares where one spouse spent joint property to the family's detriment.

It is therefore important to obtain bank statements promptly and establish the movement of funds.

Even in the absence of conflict, it makes sense to:
-        determine which law governs the family's property;
-        check the status of the real estate and the business;
-        retain documents evidencing the origin of funds;
-        execute deeds of gift;
-        avoid commingling separate and joint funds unnecessarily;
-        conclude a prenuptial agreement where there is a business, real estate or assets in several countries.

A prenuptial agreement is not preparation for divorce. In an international family it is, above all, a way of removing legal uncertainty in advance.

Before filing a claim it is advisable to:

1. Draw up a complete list of assets and liabilities.
2. Obtain extracts from the registries.
3. Gather banking documents.
4. Check whether a prenuptial agreement exists.
5. Determine the spouses' habitual residence.
6. Establish the applicable law.
7. Check international jurisdiction.
8. Assess the risk that property will be sold.
9. Prepare interim measures where necessary.
10. Determine whether proceedings will be needed in more than one country.

-        Property acquired during the marriage is, as a general rule, treated as joint even where it is registered to one spouse alone.
-        Property acquired before the marriage, or received as a gift or by inheritance, normally remains separate.
-        Separate property may be recognised as joint where its value increased substantially as a result of joint investment during the marriage.
-        A prenuptial agreement allows the statutory regime to be varied, separate ownership to be established, and the fate of a business, real estate, income and debts to be determined.
-        Property can be divided both during the marriage and after divorce - by agreement or through the courts.
-        Equality of shares is the general rule but not an absolute one. The court may take into account the interests of children, the position of the spouses, and improper spending of joint property.
-        For foreign spouses, the applicable law and international jurisdiction must be determined first. The place where the marriage was registered does not in itself resolve these questions.
-        Disputes over real estate located in Georgia fall within the exclusive international jurisdiction of the Georgian courts.
-        A foreign divorce does not always automatically resolve the fate of property in Georgia. Recognition of the judgment or separate Georgian proceedings may be required.
-        A foreign judgment dividing Georgian real estate may be refused recognition, because rights to real estate in Georgia engage the exclusive competence of the Georgian courts.

In an international family dispute it is not enough simply to establish who owns what on paper. Family law, property law, corporate law, procedural law and private international law must all be considered together. An error in choosing the forum or the applicable law can leave you with a judgment in your favour that cannot be enforced where the assets actually are.