Co-ownership
HOA · NAPR · joint ownership · fractional ownership · tenancy in common · condominium co-ownership
Definition
Co-ownership is a legal structure where two or more individuals or corporate entities hold simultaneous title to the same real estate property. Each co-owner holds a distinct fractional share or undivided interest, governing their respective rights to usage, rental income distribution, maintenance costs, and eventual asset disposition under property law.
In detail
Overview of Co-ownership
Co-ownership arises when title to real estate is legally registered under multiple natural or legal persons. It allows investors to pool capital, share risk, or co-invest in prime commercial or residential assets. Depending on the legal jurisdiction, co-ownership can take various forms, primarily differentiated by transfer rights and rights of survivorship.
Key Types of Co-ownership
1. Fractional Co-ownership (Tenancy in Common): Owners hold ideal fractional shares (e.g., 50/50 or 70/30) of an unpartitioned asset. Shares do not require equal distribution and can be transferred, mortgaged, or inherited independently, subject to statutory pre-emptive rights.
2. Joint Tenancy: Owners hold equal rights to the entire property simultaneously, frequently accompanied by a right of survivorship (where a deceased owner's share automatically transfers to surviving co-owners).
3. Condominium Ownership: Individual residential or commercial units are owned privately, while common elements—such as structural foundations, stairwells, roofs, elevators, and underlying land plots—are held in permanent common co-ownership by all unit owners.
Rights and Duties of Co-owners
- Income and Expenses: Operational costs, property maintenance, Homeowners' Association (HOA) dues, and municipal liabilities are divided proportionally based on ownership percentages. Rental income and dividends are distributed along identical lines.
- Asset Management: Decisions regarding major capital repairs, long-term leasing, encumbrances (e.g., mortgages or liens), or full sale typically require unanimous consent or a strict majority as defined by civil law.
- Pre-emptive Purchase Rights: When a single co-owner wishes to sell their fractional share to a third party, existing co-owners generally hold a statutory legal right of first refusal to purchase the share on matching terms.
Partition and Dissolution
If co-owners reach an irreconcilable deadlock regarding property management, disposition, or usage, any co-owner typically maintains the statutory right to request a court-ordered partition. The court may execute a physical division of the land or asset (partition in specie) or order a public judicial auction, dividing net cash proceeds relative to registered equity shares.
Georgian context
In Georgia, co-ownership (tanasakutreba) is defined under Articles 170-173 and 953-968 of the Civil Code of Georgia. It is categorized into shared ownership with defined fractional shares (satsilobrivi tanasakutreba) and joint ownership without fixed shares (ertoblivi tanasakutreba, common among legally married spouses). All real estate co-ownership rights must be formally registered at the National Agency of Public Registry (NAPR).
In Georgian multi-apartment buildings, common structural spaces are governed by the Law on Homeowners' Associations, placing common elements in mandatory joint co-ownership. Under Georgian civil law, a co-owner selling a fractional share must grant statutory pre-emptive rights to existing co-owners. Furthermore, for foreign investors seeking a Georgian short-term residency permit via real estate investment, the eligibility threshold is strictly USD 150,000 per applicant. If multiple foreign investors co-own a single property, each applicant's individual fractional share must independently meet or exceed the USD 150,000 threshold based on an official accredited appraisal.
Real example
Two foreign investors purchase an apartment in Tbilisi for {{data:property_price}} USD. The ownership title registered at the National Agency of Public Registry (NAPR) grants Investor A a 60% share and Investor B a 40% share. After deducting monthly HOA maintenance fees, net annual rental yields of {{data:annual_rental_yield}} USD are disbursed according to ownership ratios (60% to Investor A, 40% to Investor B). When Investor B later decides to exit the investment, Georgian law requires them to formally offer their 40% share to Investor A first under identical market conditions before offering it to outside prospective buyers.
Common mistakes
- ×Assuming one co-owner can sell or mortgage the entire property without unanimous written consent from all other registered co-owners.
- ×Attempting to sell a fractional share to a third party without first notifying existing co-owners to honor statutory pre-emptive rights.
- ×Believing a single USD 150,000 property purchase split evenly among multiple investors qualifies each co-owner for Georgian investment residency.
- ×Failing to draft a comprehensive co-ownership agreement governing expense contributions, management obligations, and dispute resolution mechanisms.
Frequently asked questions
Can a co-owner in Georgia sell their share without informing other owners?
No. Under the Civil Code of Georgia, existing co-owners hold a statutory pre-emptive right of first refusal. The selling co-owner must formally notify other co-owners of the proposed sale price and terms, allowing them a legally defined period to purchase the share before it can be offered to external third parties.
Does a co-owned property qualify foreign investors for Georgian residency?
Yes, but only if the market value of the individual applicant's specific fractional share equals or exceeds USD 150,000. For example, if two partners purchase a property valued at USD 200,000 on a 50/50 basis, each share is valued at USD 100,000, meaning neither investor meets the minimum USD 150,000 threshold required for residency.
How is VAT handled when co-owning a new-build residential property in Georgia?
Georgian Value Added Tax (VAT) on new-build residential properties is 18%. This tax is ALWAYS included in the developer's advertised price. Co-owners purchasing new development properties pay a total purchase price that incorporates this 18% VAT, distributed relative to their equity shares.
What happens if co-owners in Georgia disagree on managing or selling property?
If co-owners encounter a deadlock, any co-owner can petition a Georgian court to dissolve the co-ownership. The court may order either a physical division of the asset (if feasible) or a judicial public sale, distributing the proceeds to each owner relative to their registered share.
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