Commissioning Certificate (Act of Exploitation)
Act 3 · Act of Exploitation · Certificate of Acceptance into Exploitation · Certificate of Occupancy
Definition
A Commissioning Certificate (colloquially referred to as an Act of Exploitation or Act 3) is an official document issued by municipal supervision authorities in Georgia certifying that a newly constructed building complies with all approved design plans, safety codes, and planning regulations, legally authorizing it for occupancy.
In detail
Understanding the Commissioning Certificate
The Commissioning Certificate—frequently referred to as the Act of Exploitation or historically as Act 3—is the final regulatory approval granted to a real estate development. Issued by municipal architectural and construction supervision bodies (such as the Municipal Service for Architecture in Tbilisi), this certificate confirms that a building has been fully constructed in strict accordance with original permit specifications, structural engineering parameters, fire safety mandates, and municipal planning laws.
Key Functions and Legal Importance
- Legal Occupancy: Without a Commissioning Certificate, a property remains legally classified as an active construction site. Occupying an uncommissioned building exposes property owners to municipal fines, administrative delays, and potential safety risks.
- Property Registration vs. Exploitation: In Georgia, individual apartment ownership (cadastral codes) can be registered at the National Agency of Public Registry (NAPR) while a building is still under construction or awaiting commissioning. However, property registration alone does not equal municipal commissioning.
- Utility Connection Status: Public utility providers (electricity, gas, water) often supply uncommissioned buildings under temporary commercial or construction-rate tariffs. Permanent residential direct consumer contracts require the final commissioning act.
- Mortgage Financing and Resale Value: Commercial banks in Georgia generally refuse mortgage applications for secondary market buyers acquiring units in uncommissioned buildings, significantly reducing secondary market liquidity for unit owners.
Municipal Inspection Process
1. Completion of Physical Construction: The developer finishes structural elements, facades, common infrastructure, fire safety systems, and utility connections.
2. Municipal Audit: Representatives from local municipal supervision conduct on-site inspections auditing compliance against approved plans, environmental norms, and emergency egress requirements.
3. Issuance or Defect List: If compliant, the municipality issues the official act. If defects or unauthorized structural changes are found, a formal rectification order is issued, delaying commissioning until compliance is proven.
Georgian context
In the Georgian real estate market, a critical distinction exists between a developer delivering physical keys or finishing frames ("green frame", "white frame") to buyers and the municipality issuing the formal Commissioning Certificate (ექსპლუატაციაში მიღება). Historically, developers in cities like Tbilisi and Batumi permitted buyers to move in or begin interior fit-outs months or years before formal commissioning was granted. However, recent enforcement of strict fire safety standards (Georgian Government Decree No. 41) and municipal building codes has led local authorities to inspect developments far more rigorously. Buyers must carefully distinguish between the developer's internal Handover-Acceptance Act and the municipal Act of Exploitation.
Real example
An investor purchases an off-plan apartment in Tbilisi. Upon completion, the developer signs a private Handover-Acceptance Act with the buyer, allowing interior renovation work to begin. However, during municipal inspection, city authorities discover that the building's fire suppression systems do not comply with Decree No. 41. The municipality refuses to issue the Commissioning Certificate for 10 months until the developer remedies the defects. During this time, the investor experiences higher commercial utility rates and cannot secure bank mortgage approvals for prospective buyers looking to purchase the unit on the secondary market.
Common mistakes
- ×Confusing the developer's private Handover-Acceptance Act with the municipal Commissioning Certificate.
- ×Assuming that property registration at the NAPR guarantees the building has passed municipal safety inspections.
- ×Expecting commercial banks to issue secondary mortgages on units in uncommissioned buildings.
- ×Underestimating delays caused by municipal non-compliance under fire safety regulations (Decree No. 41).
Frequently asked questions
Can I reside in an apartment before the building receives a Commissioning Certificate?
While many developers hand over keys and allow buyers to complete renovations or reside in the property prior to commissioning, the property legally remains a construction site. This can lead to temporary utility rate surcharges, periodic service disruptions, and delays in setting up individual residential utility meters.
Can I sell my apartment if the building is not yet commissioned?
Yes. You can legally transfer your registered ownership rights at the Public Registry (NAPR) even if the building lacks a Commissioning Certificate. However, your buyer pool will generally be limited to cash buyers, as Georgian commercial banks rarely issue mortgages for uncommissioned properties.
Does registration at NAPR mean the building is officially commissioned?
No. The National Agency of Public Registry (NAPR) registers legal ownership based on private sales agreements and registered cadastral plans. Municipal commissioning (Act of Exploitation) is a separate administrative process managed by city architectural supervision authorities to verify structural and safety compliance.
Why do developers in Georgia experience delays in obtaining commissioning?
Delays usually stem from architectural plan deviations, incomplete common area finishes, failure to meet strict municipal fire safety guidelines under Decree No. 41, or unresolved administrative fines levied against the developer during construction.
Can I apply for Georgian Residence by Investment with an uncommissioned property?
Yes, provided the property is registered in your name at the NAPR and an accredited independent appraiser values the property at or above the official $150,000 USD threshold. However, the appraiser will inspect the property's legal and physical status during the valuation process.
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