14.08.2007 Competition and Lease-Purchase Forms of Real Property Privatization are Abolished

On August 3 of 2007 the Law on Amendments and Addenda to the Law of Georgia on State Property Privatization was enacted. Based on this Law real property, including non-agricultural land, owned by the state and/or local self-government unit shall be privatized or disposed only through the auctions and direct sale.

The Law was adopted to fill up the gaps in legislation regulating the disposal of local self-government property, as well as to establish the same rules for the privatization and disposal of the property in the ownership of the state and local self-government bodies. Accordingly, the Law on State Property Privatization was renamed as the Law on Privatization and Disposal of the Property Owned by the State and Local Self-Government Unit.

In accordance with this Law the forms of competition and lease-purchase of privatization of real property were abolished. Privatization of state property and local self-government unit property are to be carried out through auction or direct sale.

In case of state property The Ministry of Economic Development of Georgia or its territorial body shall take decision and carry out privatization through the auction, and in case of local self-government unit property, executive body of local self-government is responsible to carry out auctions.

Respective authorized body, and in case of property of local self-government unit – executive body of local self-government prepares the question of direct sale and submits to the Government of Georgia for discussion. The president of Georgia based on the claim of the government of Georgia takes final decision for privatization through direct sale of the property owned by the state or local self-government body.

Direct sale may be carried out under the competitive conditions. The person interested can buy property/land if the required conditions are met.

The buyer of state/local self-government property may be natural person or legal entity of Georgia or foreign country, or the alliance of these entities, if the state owns less then 25% of its shares.

The Law also provides for the terms for the privatization and disposal of real property through auction or direct sale, as well as sets up the rules for concluding agreements and terms of payment.

The land to be transferred into private ownership under the Law on Declaration of Non-agricultural Land Used by Natural Persons and Private Law Legal Entities as Private Property shall be transferred into ownership according to the same law².

As for agricultural land, it shall be privatized based on  the Law on Privatization of Agricultural Land Existing in State Ownership (July 8, 2005).

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