Presentation on theme: "National Bank of Georgia Giorgi Kadagidze Governor Legal Reforms to Support Liquidity in Real Estate Market."— Presentation transcript:
National Bank of Georgia Giorgi Kadagidze Governor Legal Reforms to Support Liquidity in Real Estate Market
National Bank of Georgia The Aim of the Reform To ensure liquidity of real estate market of the Country
National Bank of Georgia The Essence Ensuring of “Presumption of Truthfulness” of Public Registry records Simplification of collateral enforcement Simplification of hearings procedures Protection of creditors by ensuring time value of money Protection of interests of primary owners
National Bank of Georgia Presumption of Truthfulness Before Reform: Requirement of written consents from any co-owners, including spouse, any child of full legal capacity, any possible heirs to enter into transaction involving real estate
National Bank of Georgia Presumption of Truthfulness After Reform: The Power of Attorney shall only be presented by the person indicated as owner in the public registry New owners are immune from any possible claims of co-owners or heirs
National Bank of Georgia Simplification of collateral enforcement Before Reform: The realization of collateral was only possible by means of court, which lasted for over 2 years on average The price of collateral was determined by the market price Possible Claim of other Co- owners Up to 6 months Possible return to the 1 st instance Court Up to 6 months Appeals proceeding s 3 to 6 months Consideration by 1 st instance Court 1 to 6 months Oral Hearing date is fixed 30 days Civil Claim is Filed Start
National Bank of Georgia Simplification of collateral enforcement After Reform: creditor claim can be satisfied either by means of auction or by transfer of collateral directly into the ownership of the creditor The price on first auction is fixed as the amount of creditor claim, and not the market value of the collateral Overall, the procedure of enforcement requires 6 months on average
National Bank of Georgia Simplification of Hearing Procedures Before Reform: The creditor was required to issue notifications of default At least two stages of Court hearings were required Any claim from possible co-owners could delay the enforcement for at least 6 months and eventually invalidate the transfer of ownership
National Bank of Georgia Simplification of Hearing Procedures After Reform: First instance Court may issue rulings without oral hearing Immediate enforcement of decision of First Instance Court became possible Appeal against First Instance Court ruling, does not affect the enforceability of this ruling
National Bank of Georgia Time Value of Money Before Reform: The accrual of interest over monetary claim seized as soon as enforcement was initiated; The Court was entitled to discontinue enforcement proceedings taking into consideration personal or economic conditions of the debtor.
National Bank of Georgia Time Value of Money After Reform: The creditor is entitled to accrue interest over the outstanding amount during the enforcement procedures The Court cannot rely on personal or economic conditions of the owner to delay the enforcement of claim
National Bank of Georgia Protection of Interests of the Debtor Before Reform: The creditor, was free to satisfy his claim with any property of the debtor The debtor did not have right to use the collateral or the product of it
National Bank of Georgia Protection of Interests of the Debtor After Reform: The creditor is not entitled to demand enforcement against the property of the debtor, other than collateral; The debtor is entitled to exploit the collateral, as well as to use any product derived from it.
National Bank of Georgia Other Relevant Amendments Discretionary powers of the parties have been widened Detailed regulation for contractual auction has been introduced Hypothec Certificate was introduced as an instrument of securitization
National Bank of Georgia Conclusion The procedure of enforcement has been reduced to up to 6 months. By facilitation of collateral enforcement, the liquidity and turnover of real estate has significantly increased.
National Bank of Georgia World Bank Ratings 2nd place in Property registration World Bank, th place in Ease of Starting Business World Bank, th place in Doing Business World Bank, 2010
National Bank of Georgia Thank you for your Attention! Thank you for your Attention!