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Mandatory Notarization Introduced for Registered Transactions under Foreign Powers of Attorney in Georgia

Changes came into effect on October 20, 2023
October 26, 2023
Shalva Georgadze, Lawyer at JUST Advisors
As of October 20, 2023, notarization is required for transactions registered in the Public Registry based on powers of attorney issued in a foreign country. These changes affect any real estate transactions and the redistribution of shares in company capital (LLCs), impacting both the timelines and costs associated with the transactions.
On October 20, 2023, the Minister of Justice introduced amendments to two regulatory acts:

  • Amendments to the Public Registry Instructions (Article 56 is presented in a new edition).
  • Amendments to the Notarial Actions Procedure Instructions (Article 28 is supplemented with point 6, and Article 66 is supplemented with point 11).
The amendments establish specific oversight for transactions requiring registration in the Public Registry and executed based on powers of attorney issued in another country. The Minister of Justice has tasked Georgian notaries with verifying the powers granted by foreign powers of attorney. It is mandated that such transactions must be notarized as a public deed.

Henceforth, only transactions executed by a notary will be accepted for registration. This implies that for transactions based on foreign powers of attorney, notarization of the translation into the Georgian language (as previously required) is needed, along with an additional contract drafted by a notary.

The previous procedure for concluding transactions based on a power of attorney issued in a foreign country was as follows:

  • 1
    Properly issue the power of attorney (affix an apostille or undergo consular legalization procedures in the country of issuance, if required).
  • 2
    Provide a notarized translation of the power of attorney into the Georgian language directly in Georgia.
Based on such a power of attorney, a representative of a person or entity could independently conclude a notarized transaction (in this case, the documents for registration were submitted by a notary) or sign a contract in the presence of specialists from the Public Registry at the House of Justice and then directly apply for the registration of the transaction.

What changed since October 20, 2023:

Considering amendments in legislation, a representative acting based on a foreign power of attorney can no longer sign a transaction in the presence of Public Registry specialists. Only exclusively notarized transactions, i.e., contracts drafted by a notary (distinct from a notarized signature on a contract), will be accepted for registration.
All transactions submitted for registration after October 20, 2023, that do not comply with the requirements of notarization have been or will be suspended. This action directly follows the enforcement of the new law.

What procedure for concluding transactions is now mandatory

Here’s the sequence of steps required for someone planning to conclude a transaction based on a foreign power of attorney in Georgia:
  • 1
    Have a legally valid foreign power of attorney and its notarized translation into the Georgian language — this point remains unchanged.
  • 2
    Approach a notary to draft a contract upon which the transaction will be officially registered and sign it. The notary prepares the contract according to legal requirements, involves a certified translator (if the signatory doesn’t speak Georgian), and verifies the authority of the individuals involved in the transaction.
  • 3
    Pay for the notary's services in drafting the contract (tariff provided below) and the translator's services (based on the number of translated pages).
If the notary is authorized to submit documents for registration, an additional fee for registration actions is required:
  • Registration within 4 days — 157 GEL.
  • Same-day registration — 350 GEL.
  • Next working day registration — 270 GEL.
Then the notary will submit the documents for registration. If the notary doesn’t have the authority to submit documents, either party to the contract must independently submit the notarized contract for registration in the Public Registry.

Rates for the notary’s remuneration when drafting a contract (source):

What transactions and objects does the new rule apply to?

The changes apply to:

  • Any real estate: apartments, houses, land plots.
  • Property rights: future ownership rights, lease rights, mortgage rights.
  • Shares in LLCs.

Accordingly, the process for:

  • Any real estate transactions and their rights: purchase, sale, mortgage, mortgage, lease, transfer, donation.
  • Any transactions with shares in LLCs and their rights: purchase, sale, mortgage, donation, capital contribution.
The changes have affected both the primary and secondary real estate markets. This means that a sale and purchase agreement or a preliminary agreement with the developer must now also be registered in the form prepared by a notary.

How will the amendments affect transaction procedures?

In our Telegram channel, we've already discussed potential consequences for the real estate market and businesses (you can read the summaries here). Let's highlight two significant effects: transaction processing will become more expensive and time-consuming.

Notarial services are priced by notaries based on the transaction amount. Additionally, consider the services of a translator. All this is in addition to the state fee required for transaction registration. For instance, when buying an apartment for 265,000 GEL (or $100,000), you'll have to spend an average of about 950 GEL, including:

  • 692.5 GEL — notary's fee (result of the operation: 362.5 + (265,000 - 100,000) × 0.2%). VAT is also added to the amount if the notary is a VAT payer.
  • 100 GEL — translator's services (for a three-page contract and translation into Russian and English).
  • 157 GEL — state fee (for registering the transaction within 4 days).

The registration period for the transaction in the Public Registry itself hasn't changed — you can still choose the standard 4 days or process the transaction on the day of submission by paying an increased fee. However, the process of drafting a notarial contract, its translation by a certified translator (if the representative under a foreign power of attorney doesn't speak Georgian), and the transaction itself will take time. Additionally, consider the limited notarial and translation resources — notaries with certified translators mainly work in Tbilisi; there are few in Batumi.

Remember, all the requirements mentioned above apply when two conditions are met simultaneously: the transaction requires state registration, and the interests of one of the parties to the transaction are represented by a person under a power of attorney issued in a foreign country. It is possible that these requirements for the notarial form will subsequently be extended to corporate decisions requiring registration in the Public Registry — company registration, appointment of a director, amendments to the charter. We are awaiting clarifications from the regulators.
To stay informed about new legislative initiatives, you can turn to JUST Advisors for legal support for your business and trust us with handling real estate transactions and many other matters

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MARIA GUSEINOVA
Leading Manager of Commercial Department