A mortgaged property can be sold, but an assurance that the bank will release the mortgage after payment is not a complete settlement mechanism. Obtain a lender payoff statement, a coordinated funds flow, release documentation and final registry confirmation.
Applicable legislation: Civil Code of Georgia, Law of Georgia on Public Registry
A safer settlement sequence for mortgaged property
A seller’s informal promise to discharge a mortgage after receipt of the purchase price is not a robust closing mechanism. Obtain a written debt balance, settlement directions, discharge documents and a coordinated title-transfer process.
Where part of the price directly repays the secured loan, specify the payment recipient, who files the mortgage discharge and what happens if the lender or registry does not complete the agreed steps.
Relevant statutory provisionApplying the rule in practice
For a GEL 180,000 sale with GEL 55,000 due to the lender, document who receives the payoff, the lender’s release obligation and the outcome if cancellation is not registered. The GEL 125,000 balance can be made conditional on agreed completion steps.
Understand the registered security
A mortgage secures an obligation and materially affects the transaction. Identify the mortgagee, the obligation secured and the release mechanism. A registry extract is the starting point, but details may require confirmation from the secured creditor.
Avoid unsecured sequencing
A risky structure requires the buyer to pay in full and trust the seller to release the mortgage later. If the debt remains or discharge is unavailable, significant exposure follows. Tie payment stages to discharge documents and title registration, using a mechanism all relevant parties can legally perform.
Essential sale terms
Disclose the mortgage, allocate responsibility for release, identify required documents, sequence closing and specify failure consequences. Address refund of deposits, notices and the moment title passes. Vague terms such as 'completion' or 'payment' should be defined precisely.
Before committing funds
Check cadastral data, the mortgage entry, other attachments or interests, seller authority and required consents. Discharging one mortgage may be insufficient where other creditors have rights. Significant deals require source documentation rather than assurances alone.
Completion verification
After agreed steps are completed, review the updated registry and retain payment records. Do not treat a transfer screenshot or seller message as proof of legal completion. Where agents or third parties act, keep the authority documents in the closing bundle.
Example: the purchase price will discharge a mortgage
If the buyer's money will redeem an existing mortgage, transaction sequencing is central. Avoid paying the seller on an unsecured promise that the charge will later be removed. Seek a documented balance confirmation from the lender and a completion structure tying payment, release and transfer together. Specify how to unwind the deal if registration or release fails, and check the updated registry entry after closing.