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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.
Units are now for sale in an apart hotel ideally located in the ski resort town of Tsaghkadzor (valley of flowers in Armenian), the most desirable tourist destination in Armenia, only 50km north of the capital Yerevan. Surrounded with alpine meadows, the town is situated at a height of 1,841 meters above sea level. Summers in Tsaghkadzor are mild, while winters are cold and snowy. The skiing season normally starts in mid December and stretches well into March with the top slopes often fit for skiing in April. The infrastructure of tourism is highly developed in Tsaghkadzor, which is the second Armenian city after Yerevan to have the largest number of hotels.
Residents will enjoy a great view of the mountains. A professional company will manage the property. You may choose to personally use the property or rent it out and make extra money. Higher occupancy and rental rates means more income and higher resale profits. Tourism is growing by over 10% a year, making Tsaghkadzor a perfect place to earn a good return on property investment.
The entire process of buying a property in Armenia takes 1-2 weeks on average, although it is technically possible to complete all the formalities in 1-2 days by using the fast-track services. Armenia ranks very high – the 14th – among 190 countries on the World Bank’s “Registering Property” index which measures both the efficiency and the quality of the property registration system. By way of comparison, the U.S. ranks 38th, the U.K. – 42nd, , France – 96th.
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. 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, it does not make a difference (also from the point of view of taxation) whether you buy the property in joint names or in your sole name.
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 latter 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 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 would 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.
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:
There may also be tax disadvantages to this solution, notably in relation to withholding taxes and capital gains tax.
#1. Direct payment in cash. It is common in Armenia to buy real property with cash money. Typically, a buyer brings the money to the notary's office and hands it over to the seller when the sale and purchase agreement is executed by both parties. This arrangement is risky for the buyer because if any issues arise with ownership registration at the Cadastre it may be difficult or impossible to get the payment back from the seller.
The parties may agree to make the payment after the Cadastre registers the buyer's ownership over the property. This arrangement eliminates the risks for the buyer. In principle, the seller's interests are also protected in this scenario because he will hold a lien over the property until he gets paid in full and, in case of non-payment, he can claim back the property. However, it will be difficult to convince the seller to accept such an arrangement.
In summary, payments in cash carry risks for either the buyer or the seller, depending on whether the payment is done before or after the new ownership is registered.
#2. Direct bank transfer. In terms of the risks assumed by the buyer and the seller this method is similar to payments in cash.
#3. Bank escrow agreement. An escrow agreement is a three-party agreement between the seller, the buyer and the escrow agent (a bank). The escrow account is opened in the name of the buyer who then deposits on it the amount to be paid to the seller. Once deposited, the funds are "frozen" and cannot be accessed by the buyer for a set period of time (for example, 20 days). The seller will have access to the funds once proof of buyer's registered ownership (e.g. ownership certificate) is presented to the bank. If such proof is not presented within the specified period (20 days in our example) the buyer can take back the funds.
In Armenia, escrow accounts are mostly used in connection with transactions in mortgaged property as the bank holding the mortgage will normally insist on depositing the money on the escrow account before it agrees to the sale.
#4. Safety deposit box. The buyer deposits the amount in cash in the safety deposit box that is controlled by the lawyer, realtor or another trusted professional. The latter acts as an escrow agent and gives the seller access to the safety deposit box after the new ownership is registered. If such registration does not take place within the specified period of time (e.g. 20 days) the lawyer (realtor) will return the funds to the buyer. Because the safety deposit box is located in a bank the latter may also assist with counting the money and ensuring there are no counterfeit notes.
Direct payments in cash or via bank transfer are generally not recommended. Using an escrow account or a bank safety deposit box will minimize the risks for both the seller and the buyer.
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 is the best way of minimizing 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. If 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.
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.
A preliminary agreement may become necessary if the final sale is dependent on contingencies, such as:
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 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.
By convention, notary fees and official registration fees are paid by the buyer, but there is now reason why cannot agree that they should be shared, or even paid by the seller. These costs are around $200. Official fees are fixed and do not depend on the value of the real estate. Fast-track services are also available for additional fees.
Fast-Track (Same Day)
Fast-Track (Next Day)
Fast-Track (Three Days)
Notarization Government Fee
Clean Title Certificate Fee
Ownership Registration Fee
Registration Government Fee
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% is applicable.
An individual is subject to a 20% sales tax (income tax) if he sells two or more properties within one fiscal year, provided that these properties were acquired during the same fiscal year. Sale by individuals of commercial or industrial property is taxed at a rate of 10%. However, if the buyer is a legal entity or a private entrepreneur a withholding tax of 20% is applicable. Individual real estate developers are taxable at 20% of the price at which they sell the properties.
The real estate tax is payable by the owner or 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. Where the real property is sold by an individual the new owner assumes the tax liabilities for any unpaid property 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%.
Armenia does not have stamp duties, gifts or inheritance taxes.
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).
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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 payment must be done in through a bank transfer. In such cases cash payments are not allowed.
Intestate Inheritance. In the absence of a will the law stipulates an order of inheritance, as follows:
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 themselves deceased. In which 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:
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:
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.
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Armenian real estate market grew exponentially between 2002 and 2008 with prices going up by 570%. In 2009 the country’s economy was hit by the global financial crisis and real estate prices went gradually down over the next few years. They remained flat during 2014-2016, and started growing in 2017. In 2018 prices in central Yerevan went up by 18.8%. The main factors contributing to the increase in prices are:
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Information on properties in Armenia is abundant on listing websites such as estate.am, myrealty.am, bnakaran.com, and list.am. These websites can give an idea of the type of properties available and their prices before you actually start your search. Having a clear idea of the type of property you are looking for (main residence, holiday home, rental or investment property) and its location (town or the countryside) will help make the property hunt a lot easier.
The services of real estate agents in Armenia are generally limited to bringing together the seller and the buyer. Normally they do not have exclusive agency rights, and one property can be listed by dozens of agents who will indicate different prices. In Armenia it is common for the agents to charge 2% to the seller and 2% to the buyer, bringing the amount of the commission to 4% of the value of the deal. The buyer will be asked to pay the commission separately and on top of the price of the property. The agents are not licensed by the government or any professional association. They are not bound by any code of ethics, not bonded, and if anything goes wrong with the sale they will not take any responsibility. They also have a strong incentive to sell the property at the highest possible price as their commission will ultimately be based on it.
Location. If you are looking for rental property your search should be focused on central Yerevan, namely properties within the "circle" formed by Moskovyan, Khanjyan, Khorenatsi and Saryan streets. There is always demand for properties in this area, particularly during the high tourist season from April to October. Many owners prefer to rent out the apartment on a daily basis to tourists and other visitors during the high season and rent it out on long-term basis for the remainder of the year (November to March). It is generally recommended to avoid "Glendale Hills" neighborhood on Argishti Street despite its good location near the Republic Square.
Building. The majority of apartments in Yerevan are in low-cost, concrete-paneled buildings (high-risers) or lower quality stone buildings ("Khrushchyovkas") built in 1960-80s. Investors should generally avoid such apartments. This leaves them with two options: the so-called "Stalinkas" built in 1930-50s and new buildings raised after Armenia's economic recovery in 2000s. "Stalinkas" are generally cheaper but because of their age, lack of elevators and poor maintenance of common areas they are not always attractive to buyers. New buildings also differ a lot in quality. Not all developers are reputable, and similar apartments in neighboring buildings can have very different prices.
Apartment. Apartments on the ground (first) floor and the last floor are generally sold at a discount. Ground floor apartments are avoided for reasons of security, lack of privacy, noise, humidity coming from the basement, while apartments on the last floor (especially in older buildings) are less demanded because of potential leaks from the roof, stronger sun heat in summer and difficulties of access without an elevator. Many old buildings have superstructures in the form of one or two extra-floors. It is better to avoid investing in those. Apartments facing north generally lack natural light. Apartments with large windows facing south can create the opposite problem.
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