Check Your Fact service, a reader submitted a question about whether or not foreigners were allowed to purchase agricultural land. In fact, she asked us to verify the statement of a member of the Parliamentary Majority, MP Zurab Tkemaladze.
In one of his interviews, Mr Tkemaladze stated: "According to the law drafted by the Government of Georgia, everyone is allowed to purchase land plots without any restriction, including microfinance organisations and banks."FactCheck
verified the accuracy of the statement.
The amendments to the Law of Georgia on the Ownership of Agricultural Land were submitted to the Parliament of Georgia on 29 December 2014. The amendments are still being discussed at the level of the parliamentary committees. The amendments are jointly drafted by the Ministry of Justice and the Ministry of Economy and Sustainable Development and regulate the ownership of agricultural land by foreigners as follows:
- A private foreign individual is allowed to own agricultural land if he has obtained a residence permit, inherited that property, is married to a citizen of Georgia or has become a member of a household (although, if a private foreign person divorces, withdraws from the household or loses his residence permit he is obliged to sell the agricultural land in six months).
- A private foreign individual is allowed to purchase agricultural land with a minimum of five hectares and a maximum of 20 hectares in size.
- A foreign company established by a foreign individual is allowed to purchase agricultural land with a minimum of 20 hectares and a maximum of 200 hectares in size.
- A foreign company and private foreign individual will not be able to purchase agricultural land located within five kilometres of the country’s official border and at border zones defined by the Government of Georgia.
The amendments initiated by the Government of Georgia are supposed to regulate the issue of foreign ownership of agricultural land. Zurab Tkemaladze’s statement has to be considered in the same context. As stated by the MP, according to the amendments drafted by the Government of Georgia everyone (foreigners) is allowed to purchase land without any restrictions, including microfinance organisations and banks. Therefore, Mr Tkemaladze supports the imposition of stricter regulations. He also does not support granting an exemption to institutions such as microfinance organisations and banks.
The MP’s aforementioned opinion with regard to initiated amendments was acceptable for the Sector Economy and Economic Policy Committee of the Parliament of Georgia. Now, the Committee is set to elaborate an alternative bill which will include additional requirements such as previous experience in the cultivation of land, investment programs, etc. As we have mentioned, the Committee believes that the amendments initiated by the Ministry of Justice are not strict enough.As described earlier, there are several options for a foreigner to obtain an agricultural land ownership right in Georgia: 1) residence permit, 2) marriage and 3) to become a member of a household. A foreigner has to undergo a complicated procedure in order to obtain a residence permit. FactCheck has written about this issue multiple times (see link 1; and link 2).
Of interest is the way in which a foreign person could become a member of a household and then withdraw from it. This issue was regulated by Soviet legislation. At the present moment, after the concept of collective ownership was abolished, an owner cannot be a household (a group of several individuals) but a single individual (private person). The term “household” still remains in various laws but no law or normative act provides the procedure for how one can become a member of a household or leave that household and which organ stipulates the list of individuals comprising a household.
Of note is that if a foreigner divorces, loses his residence permit or withdraws from the household he is obliged to sell the property which was acquired legally. In 2012, the Constitutional Court of Georgia already invalidated the requirement which envisaged an obligatory selling of the property acquired by a foreigner through inheritance within a six-month period. The Constitutional Court of Georgia declared that the obligation to sell an already existing property represented a serious infringement of property rights because the legal connection between an individual and the property was already established. The amendments initiated by the Government of Georgia envisage an analogous unconstitutional restriction which deprives a foreigner of his right to own a legally acquired property.
It is clear that not every foreigner is allowed to purchase agricultural land as opposed to what Zurab Tkemaladze claims. Further, it is interesting to take a look at the restrictions which exist for those individuals who are allowed to own agricultural land. A foreign private individual can purchase agricultural land with a minimum of five hectares and a maximum of 20 hectares in size whilst a foreign company is allowed to purchase agricultural land with a minimum of 20 hectares and a maximum of 200 hectares in size. In the case if a foreign individual decides to purchase agricultural land in a smaller quantity; for instance, two hectares and from several different persons, he will fail to meet the requirements as foreseen by the Georgian legislation. Therefore, those land plots have to be registered under the name of a Georgian citizen and their consolidated area has to be a minimum of five hectares in size and then only later can it be purchased by a foreigner. The explanatory note of the amendments bill does not clarifie how these quotas were defined.
The amendments to the Law of Georgia on the Ownership of Agricultural Land establish certain criteria for foreigners to own property. Even though the law grants an exemption to commercial banks, microfinance organisations and international financial institutions at the present moment and allows them to purchase agricultural land without any restriction, there are strict restrictions foreseen for other foreign companies and foreign private individuals.Taking into account the aforementioned circumstances, FactCheck concludes that Zurab Tkemaladze’s statement: "Everyone (foreigner) is allowed to purchase land plots without any restriction," is MOSTLY FALSE.