How to Prove a Sham or Disguised Contract in Georgia

1. What Article 56 says

Paragraph 1 voids a transaction made only for appearances, without intent to create legal consequences (a sham transaction).

Paragraph 2 covers a sham that conceals another transaction: the rules for the hidden transaction apply, so it holds only if it meets its own requirements.

2. What courts examine

In case No. ას-1333-2022, the Supreme Court declared a cassation appeal inadmissible and endorsed findings that a sale with a right of redemption was genuine. Both parties must share the purpose of concealment, and under civil procedure rules the burden rests on the claimant. An oral assertion was not enough;

The missing proof included interest payments, a disproportionately low price and witness testimony.

By contrast, in case No. ას-1174-2022 a party's own e-mail became decisive, admitted as written evidence. These are individual cases, not a universal test; see wider Supreme Court practice.

3. Risks and limitation periods

Limitation depends on how the claim is framed: Article 129 sets three years for contractual claims and six for those relating to immovable property, while Article 128 sets a ten-year general period, running from when the person learned or should have learned of the violation. Each claim needs its own assessment.

Registration adds risk: a good-faith acquirer relying on the Public Registry is protected unless he knew the registered transferor was not the owner, and the Constitutional Court held in 2017 that this protection fails where the record is under challenge and the acquirer knows it.

4. Practical step

Preserve contemporaneous correspondence, bank transfers and witness details, compare the price with market value, and obtain a Public Registry extract.

If you suspect a contract was merely formal or concealed another deal, Abashidze Law Office can assess the documents, evidence and available remedies.

Contact us now!