Foreigners can be 100% owners of real estate in Armenia: they can acquire, hold, lease, sell, bequest and otherwise dispose of their property on equal basis with locals. Foreigners do not need to have a residence permit or otherwise show any links to Armenia.  At the same time, investing in real estate might qualify you for a temporary or permanent residence permit. The only restriction applies to foreign ownership of agricultural land. When buying agricultural land in Armenia a foreigner may need to set up a legal entity and acquire the land in the name of that entity. Agricultural land can also be directly owned by foreigners who have special residency status in Armenia.

Sole Ownership

Irrespective of your marital status you may choose to buy the property in your sole name.

In most countries marital laws specify that assets acquired during the marriage are jointly held by both spouses, irrespective of by whom they may have been purchased (community property). The position in Armenia is generally no different. In the case of a married couple, the civil law acts as though the property were in joint ownership on an equal basis (50-50), unless there were specific provisions to the contrary in the marriage contract. Thus, your spouse will be considered as a co-owner of the property whether or not his/her name was included in the purchase agreement. 

Armenian law does not recognize "common law  marriages." If you live together but are not married, Armenian law grants no automatic rights of permanent occupation or ownership to your partner. In the absence of a will, the partner will not have any inheritance rights either. 

A single person who buys a property in Armenia and subsequently gets married, may enter into a marriage contract, in which the spouses can stipulate that the property is brought within the terms of the marriage contract. 

Joint Ownership

Joint ownership exists when the property is purchased by two or more persons, with each one holding a stake in the property in whatever terms that may be decided between them. In the case of a couple this would normally be in equal shares but, where there are more than two purchasers, it may be in proportion to the amount each person contributed in financing the purchase, e.g. 70% / 20% / 10%. In common law the equivalent is the ‘tenancy in common’.

All the owners are entitled to participate in decisions concerning the property. The law requires decisions concerning the property to be made unanimously. One or several owners can demand that the property be sold, unless it is possible for their shares to be physically separated or the other owners are willing to buy these shares. If no agreement can be reached it may be necessary to apply to the court for an order to be obtained authorizing the sale of the property.

One of the owners can also dispose by way of sale or gift the part of the property he/she owns. In case of sale of their part of the property they are obliged to grant a right of preemption to existing owners. This rule does not apply where disposal is by way of gift or inheritance. Other owners have one month to exercise their preemption rights. 

Company Ownership

It is possible to buy property in Armenia using a local or foreign limited company that has a distinct legal identity from that of its shareholders,

The main reasons for owning Armenian property through a company are:

• To allow purchase of the property by multiple persons;
• To provide stability and continuity in the ownership and management of family property;
• To facilitate the transfer and ownership of property;
• To avoid the constraints of inheritance laws;
• To create tax advantages;
• To protect the family home from business creditors.

 There may also be tax disadvantages to this solution, notably in relation to withholding taxes and capital gains tax.

Foreign buyers risk paying an inflated price for property. A valuation report can help the buyer to understand the "right" price to pay for a building or land, especially one requiring renovation. Appraisals are done by many licensed agencies with qualified staff. Although the appraisal report is not a "survey report" the appraiser can still evaluate the wear and tear to adjust the value and may provide some useful information about the condition of the property. The appraisal is generally done by comparing selling prices of similar property (sales comparison approach), the estimated cost of buying similar land and constructing a similar building (cost approach), and the annual rental income which can be expected in return (income approach).

Armenian law does not require the seller to order any surveys. While there is no building surveying profession in Armenia, you may choose to use a local architect, engineer or builder (electrician, plumber, etc.) to undertake the job. A good survey can minimize risks attached to buying a property, and can be used in price negotiations. 

It is also advisable to measure the property (land in particular) as the area shown on cadastral documents may not be entirely accurate or the boundaries may not be clearly shown. 

The clean title certificate (in Armenian - միասնական տեղեկանք) is issued by the Cadastre and shows the registered ownership as well as other rights and encumbrances over the property, including liens, mortgages, tenancies, easements, etc. It is the most important document in the due diligence process and, in many cases, the single document on which the buyers rely. The certificate is valid for 15 business days during which the agreement (preliminary and/or final) must be executed. If the 15-day period lapses a new certificate will have to be obtained. An application for a clean title certificate can be filed by the seller, the buyer or any other interested party. 

The existence of other interests in the property, such as easements, rights of heirs etc., cannot always be entirely verified by the clean title certificate. There may be persons who have a right of prior acquisition, or preemption, on the sale of a property. There may also be unauthorized alterations or additions carried out to the property that have not been declared to the planning authority. For building land, the certificate merely states that the land is zoned for construction; it will subsequently be necessary to obtain full planning consent (building permit).

In Armenia, verbal offers/agreements to buy or sell real property are not valid and enforceable. Even a written agreement is not enforceable, unless it is authenticated by a notary or a Cadastre official. Thus, standard forms of contracts used by real estate agencies are not enforceable. It is therefore not advisable to make any payments (deposit etc.) at this stage. 

That being said, it may be useful to prepare a formal written offer to show the seriousness of your intentions and to clarify the terms of the sale, such as payment structure, the amount of earnest money deposit, the seller's obligation to pay any outstanding utility bills and taxes, the costs of the transaction, contingencies etc. The written offer can take the form of a draft preliminary agreement. 

A preliminary agreement does not transfer the property, but specifies a future date or period during which the property will be transferred, and may set out the conditions (contingencies) which must be satisfied before closing occurs. Signing a preliminary agreement is not a mandatory step and you may proceed to closing the sale directly. However, having a preliminary agreement may be useful if you are not ready to close the sale immediately but want to secure the property and have a legally binding agreement. Also, a preliminary agreement is useful to make sure that all the parties agree to the terms of the deal and are "on the same page."

A preliminary agreement may become necessary if the final sale is dependent on contingencies, such as:

• Securing a mortgage or other financing;
• Clearing the property from liens;
• Carrying out an appraisal;
• Obtaining other documents/permits, such as the consent of the guardianship (municipal) authority if one of the sellers is a minor.

A preliminary agreement must be notarized to be legally enforceable. Although preliminary agreements are generally not formally registered it is advisable to file a copy with the Cadastre to minimize the possibility of the seller breaching the contract by selling the property to a third party.

Typically, at this stage the buyer will pay a deposit to the seller. The amount of the deposit may vary and shall be agreed upon by the parties.

A preliminary agreement is a mutually binding instrument. Once it is validly signed, neither party may walk away from the deal, unless one or more of the contingencies is not met. If either party fails to observe the agreement's terms, the other party will have a range of legal remedies open to him. As a minimum, a defaulting buyer risks his deposit. It is common to stipulate that a defaulting seller must pay double the amount of the deposit as a penalty. Unless otherwise stipulated, a court may order specific performance to compel the parties to complete the transfer.

The final sale and purchase agreement must be executed in the presence of a notary. Although the most basic agreements can also be authenticated directly by a cadastral officer a notary will be required if the agreement has to be customized or if one of the parties does not speak Armenian. The notary has the legal obligation to provide you with information on the nature and implications of the agreement you are signing. The notary will need to be satisfied as to the identity of the parties and their legal capacity to proceed with the transaction. The passports (and possibly marriage certificates) of all signatories will be required. If the seller is a minor or elderly or handicapped they may be under the protection of a guardian, in which case the approval of the guardian will be sought before the sale can be concluded. If the seller is married then the notary will wish to be satisfied that the spouse agrees to the sale.

Each notary will have his/her own agreement template and these templates may vary in detail. It is necessary to ensure that all the important clauses are included in the agreement. Normally, agreements are in Armenian language only and the translation is done verbally by reading the whole agreement to the buyer. You will be charged a small fee for the interpreter's service.

The sale and purchase contract must be the final and comprehensive agreement because the parties will have only 30 days to have it registered at the Cadastre. If there are conditions that still have to be fulfilled it is better to sign a preliminary agreement. There are no "cooling-off" rules in Armenian law. Once signed, the agreement becomes effective and the parties may not withdraw from the contract.

If you are buying any fixtures or fittings as part of the purchase of the property, then you should arrange for an inventory to be prepared. If you are able to do so, visit the property the day before the agreement is signed to ensure that all is as it should be, particularly if the sale includes a certain number of fixtures and fittings. At the same time you can also check that you will get vacant possession of the property following the execution of the agreement, unless the latter provides that the property will be vacated at a later stage.

If you are unable to get across to Armenia for signing the agreement in person, you can arrange to give a relative, friend or lawyer a power of attorney to sign on your behalf.

After the final sale and purchase agreement is executed the buyer has 30 business days to register his/her ownership rights with the Cadastre. Failure to register these rights within the 30-day period will result in invalidation of the sale and purchase agreement. The buyer will have to submit an original copy of the sale and purchase agreement and a notarized translation of the passport. A notarized power of attorney will be required if the registration is done through a lawyer or other representative. The registration process can take from a few hours to a few days, depending on whether you pay the fast-track service fees. An ownership certificate will be issued with basic details about the property and the new owner. You will then present the ownership certificate to the public utility services (electricity, gas, phone etc.) so that they also register the change in ownership and prepare new agreements in your name. 

Capital Gains Tax

Transfer of residential property between individuals is normally not taxable, provided that both the buyer and the seller are individuals (not registered as private entrepreneurs). Thus, tax on capital gains realized by individuals form selling residential property is 0%. However, if the buyer is a legal entity or a private entrepreneur a withholding tax of 10% may be applicable on the whole amount of the transaction.

Sales Tax for Developers

Individual real estate developers are taxable at 20% of the price at which they sell the properties.

Real Estate (Property) Tax

The real estate tax is payable by the owner of the real estate on an annual basis. Tax rates are in the range of 0% to 1% of the cadastral value which is normally significantly lower than the market value. It is possible to check the exact amount of property tax for a particular property on the website of the Cadastre. 

Recent amendments make it obligatory for the seller to procure a certificate confirming the absence of tax liabilities from the local municipality before it is possible to register the sale.

Rental Income Tax

Rental income not exceeding 58.35 million Armenian drams (approximately, US$120,000) per year is taxed at 10%. Rental income in excess of that amount is taxable at 20%.   

Stamp Duty, Inheritance & Gifts Taxes

Armenia does not have stamp duties, gifts or inheritance taxes. 

Communal Charges

If you own a property such as an apartment there will be maintenance and service charges to pay. They will depend on the size and quality of the complex, such as whether there are lifts, a pool, gardens and other facilities.

The possibility of financing the purchase with a mortgage depends on your nationality, the country you live in and where your income comes from. Certain banks will work only with Armenian nationals or residents. You would usually need to provide a deposit of 10-30% of the purchase price depending on the lender. The term is for up to 30 years and the average interest rate is 10-13% (local currency) and 8-10% (US dollars). 

For information on opening bank accounts please click here. 

Annual costs of property insurance are normally in the range of 0.1-1% of the value of the property. 

Armenian laws require that the buyer of real property make the payments in local currency, Armenian drams. If the payment is done through a bank, the latter must ensure that these rules are complied with. 

Currency exchange services are provided by banks, other credit institutions, as well as currency exchange offices.

There are no restrictions on transferring foreign currency to or from Armenia. 

If the amount of the transaction exceeds 50 million drams (approx. US$105,000) the excess payment must be done through a bank transfer.

Intestate Inheritance. In the absence of a will the law stipulates an order of inheritance, as follows:

1. Spouse, children and parents;
2. Brothers and sisters (and their descendants);
3. Grandparents; 
4. Uncles and aunts (and their descendants).

Each order of inheritors excludes the following inheritors, and those in the same order share the inheritance equally between them. Accordingly, those beyond the first order of inheritance will only inherit if there are no spouse, children and parents. Thus, if you die leaving a surviving spouse, two parents and two children, each of them will receive 1/5 of your estate. It is possible to increase the rights of the surviving spouse or the children but this requires some inheritance planning.

Spouse. The surviving spouse is not specifically protected under Armenian inheritance law. This is because the law has traditionally considered that the estate of the deceased belongs to the whole family, rather than any single member of it. That being said, only that part of the estate belonging to the deceased is subject to inheritance laws, so a surviving spouse will normally retain ownership of at least 50% of their jointly held assets. 

If the marriage was not registered, the surviving partner will have no rights of inheritance of the estate of the deceased. As between one another those living in free union are legal strangers, with no inheritance rights between them.

Children. Children of the couple born outside of the marriage benefit from the same rights as those of the children from within the marriage, as do children of the deceased born with another partner. Adopted children of the couple benefit from the same rights as natural children, but they are excluded from any rights of inheritance from their natural parents. The grand-children receive no entitlement, unless one of the children of the deceased is himself deceased. In this case, they step into the shoes of their deceased parent.

Testamentary Freedom.  Under Armenian law you can freely dispose of your estate and you may choose to disinherit your spouse, children and parents by making a will or a gift. However, they may still claim 50% of the value of the property that they would be entitled to in the absence of a will if:

1. They are aged under 18 or above 60;
2. They are disabled or legally incapable.

The will must be made in writing and notarized. Failure to notarize the will makes it invalid. 

Inheritance Planning. If you want to have some control over your estate on your death, then you need to undertake some inheritance planning, such as:

• Increase the proportion of an heir's share by making a will;
• Make gifts during your lifetime;
• Buy the property through a limited company;
• Take a life insurance policy.

Taxes. Inheritance and gifts are not taxed in Armenia. However, the disposition of property may still be taxable in the country where the heir has his/her tax residence, unless there is a double tax treaty between Armenia and that country.

Accepting the Inheritance. The heirs have 6 months following the death to accept the inheritance by making a notarized declaration. The notary will establish the list of beneficiaries, verify if a will exists, undertake the division of the estate, and issue inheritance certificates to the inheritors. 

Executor. You may appoint a lawyer or another person to act as the executor. The executor shall take measures for the maintenance and management of the estate, inform the heirs and other beneficiaries of the will, pay and collect debts, represent the estate in courts, ensure that the estate is distributed in accordance with the will, assist with the interpretation of the will, report to the heirs, work with the notary etc.

While buying real estate in Armenia is generally safe, prospective buyers are advised to take certain precautions.

1. Marital Status. If the seller is married or divorced it is likely that the spouse's consent will be required for the sale. Even if the property was not acquired in marriage you still have to be careful because the spouse (ex-spouse) may claim that he/she had contributed to the improvements of the property and thus acquired rights in it. Armenia does not recognize common law marriages. However, relying solely on public records may not be sufficient as the marriage could be contracted in a foreign country.
2. Gifts & Inheritance. If the seller inherited the property or received it as a gift you need to find out if there are other family members who are likely to contest the will or the gift. It is possible that an heir will appear after the sale and claim rights in the property. Note that if there are children involved, the transaction will need to be approved by the guardianship authority (head of the local community). The latter is required by law to ensure that the sale is in the best interests of the child.
3. Capacity to Contract. You need to be attentive if the seller's behavior appears strange. Under Armenian law people with mental disability may be declared incapable by a court order, while those addicted to drugs, alcohol or even gambling may be limited in their capacity. Agreements with such people can be contested and invalidated by their guardians or other interested parties. You may want to check the court records or ask for a certificate confirming the seller is not registered with mental institutions.
4. Insolvency. If it turns out that the seller is in a difficult financial situation and sells the property below market value it is possible that he will be declared bankrupt shortly after the sale and the bankruptcy trustee may challenge the sale in court within a 3-year period of time. Thus, if you buy property at a discounted price make sure that the likelihood of bankruptcy is low.
5. Encumbrances and Litigation. Prior to signing the sale agreement the Cadastre will issue a clean title certificate confirming that the property is not mortgaged, arrested or otherwise encumbered with third party rights. However, it is still recommended that you find out if the seller is involved in any litigation that may affect the property.
6. Preceding Transactions. Even if there are no encumbrances and pending disputes the property's history needs to be checked to make sure there had been no suspicious activities in the past. For example, a number of transfers over a short period of time can be a sign of potential problems. The statute of limitations in Armenia normally does not exceed 10 years but even older transactions can be scrutinized. Particular attention must be paid to acquisition of property by donations, inheritance or privatization.
7. Tax Liabilities and Utility Bills. Recent amendments make it obligatory for the seller to procure a certificate confirming the absence of tax liabilities from the local municipality. By law the new owner does not assume any unpaid utility bills. However, in practice it may be difficult to sign new contracts in your name with the utility companies if the old owner failed to pay the bills. To save time and nerves it is recommended that you ask for statements confirming the full payment of all utility bills.
8. Notarization. While certain sales do not require notarization you should still consider having the contract executed before a notary public. A notary is personally liable for malpractice and has the incentives to do all the necessary checks, such as ensuring all consents are in place, powers of attorney are valid and not revoked, the seller is in sound mind etc. Notarizing the agreement will show your good faith if any dispute arises in the future.
9. Escrow Accounts. The common practice in Armenia is for the seller to make the payment in cash at the time of signing the sales agreement at the notary's office. However, this practice is not advisable because carrying bags full of dollar bills is not very safe, and the seller may want to take the money to the bank to check if the notes are fake (the ratio of fake dollar bills in Armenia is relatively high). More importantly, it is not recommended to pay the full amount before your title is officially registered.  These problems may be avoided by using an escrow account or an equivalent tool. The drawbacks of using an escrow account are the additional bank charges in the range of 0.1-0.3% of the money deposited and the costs of converting the money into local currency (the law requires the payments to be done in Armenian drams but the seller normally expect to get paid in US dollars). Please check Paragraph #3 "Payment Methods" fore more information.