Living in a flat for a lump sum (girao) in Georgia

Under Article 286 of the Civil Code, a private lender that isn't a supervised financial institution generally may not take real estate as security for a loan to an individual. Girao is the exception: when the mortgaged home is handed to the lender to live in. From the third mortgage in favour of the same person, the exception no longer applies.

A mortgage exists only once registered in the Public Registry, and a mortgage securing a loan must be notarised — the notary explains the consequences (Article 289). If a flat has several mortgages, the one registered first has priority (Article 290).

Before you pay

1. Get a fresh Public Registry extract: who owns the flat and whether there is a mortgage, seizure or other restriction.
2. Check whether the owner is on the debtors register.
3. If the flat has several owners, all of them must sign.
4. Sign before a notary and register the mortgage in the Public Registry — before paying or on the same day.
5. Pay by bank transfer so the payment is documented.

What the contract should say

• The amount, currency and exact repayment date
• Your right to live there and who pays utilities and repairs
• What happens if the owner wants to sell or mortgage the flat again
• What happens if the money isn't repaid on time — enforcement through the mortgage
• Early termination terms for both sides

If the owner doesn't repay when the term ends, your mortgage lets you recover the money from the flat through enforcement. The flat can pass into your ownership only on a joint application by owner and creditor (Article 300).