Legal Aspects of Real Estate Transactions in Kyrgyzstan

1) What legal documents are required for a real estate transaction?

For all applicants:

• application in the prescribed form;
• identity document;
• title documents for a unit of real estate;
• a document containing the technical characteristics of a unit of real estate (technical passport);
• payment receipt (payment by the applicant is made after a specialist from the state body has checked the compliance of the submitted documents with the established requirements and provided the applicant with a document for payment for state registration work).

The list of documents may vary depending on whether the party to the transaction is an individual or a legal entity, additional documents may be requested.

2) Which official institutions are authorized to make real estate transactions?

State Agency for Land Resources, Cadastre, Geodesy and Cartography under the Cabinet of Ministers of the Kyrgyz Republic and its territorial divisions.

3) What are the tax implications of buying and selling real estate?

For individuals:

10% income tax if the property was owned for less than one year, if more – the tax is not applicable. 

For legal entities:

Taxation depends on the tax regime of a legal entity – general or simplified. In the general tax regime, all taxes are applicable (income tax, VAT, sales tax). If simplified – a tax rate of a unified tax is applicable.

4) Are there any differences to consider if the purchaser of the real estate is a foreigner?

Yes, a foreign individual can own apartments, buildings, premises except for a land plot. Land plots are provided to foreigners only for fixed-term (temporary) use.

If a foreigner became an owner of the land plot as a result of foreclosure on a mortgage loan, he/she is obliged to alienate the land plot within two years from the moment ownership rights arise. 

5) What are the responsibilities of the seller in a real estate transaction?

Seller is obliged to:

• provide the buyer with all documents confirming the title to the real estate (certificate of ownership, extract from the State Property Registry and others);
• inform about the presence of encumbrances, arrests or restrictions on the property;
• guarantee that the property is free from hidden defects and encumbrances and has not been sold or mortgaged previously without notifying the buyer;
• transfer the property to the buyer on the agreed date with a deed of acceptance;
• shall pay all applicable taxes;
• obtain notarised spousal consent for the transaction if the property is jointly owned;
• other obligations prescribed by the legislation.

6) What are the implications of property liens and encumbrances?

Encumbrances and liens on real estate restrict the owner's right to use, possess, dispose of and deal with it, which may affect the sale, transfer or use as collateral. The buyer must be notified of such restrictions or the transaction may be invalidated. Where there is a lien, such as a mortgage, the lienholder retains the right to satisfy its claim against the value of the property in the event of default, which limits the ability to use the property as collateral or to obtain credit. Purchasing a property with an encumbrance can lead to financial losses and legal problems associated with foreclosure.

Author: Taalaibek Aizhamal