Property Registration

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What are the best ways to register your property in Egypt?

  • Signature validity by Court Veredict

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El Gouna Properties

El Gouna Properties

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Foreigners can acquire freehold real estate in Egypt according with new regulations issued in the last 90´s, having two legal ways for that depending on the purpose of the buyer.

1- Under Law No 230 of 1996:

This is the case they want to establish their residence in Egypt. According to this law foreigners are not allowed to buy more than two pieces of real-estate, which cannot exceed 4,000 square meters (sq. m.) each (8.000 s-m. In total). The purchase must have the approval of the Council of Ministers, which takes around two months and that/those piece/s of Land should be registered through the Registration office (similar to a common Land registry).Throughout this method the property cannot be sold or rented for five years. The purchase sum must be transferred into Egypt in foreign currency, through one of the public commercial banks (though this provision of the law is not enforced). Finally, the property can be rented only furnished after the corresponding 5 years period. The rental income obtained may be taxed as reflected on the tax section.
If the foreigner is married to a local, the obvious solution is to get his/her spouse to buy the property and then let the property unfurnished, as locals do, usually avoiding tax.

Recently Egypt capped the total payable under the 3% registration fee rule at 2,000 EGP (US$350),regardless of the purchase price of the property. So registration is now less expensive than it used to be. But the process still takes a long time

2- Under the Law 8/1997( Investment Law) :
In this case foreigners are allowed to purchase as a pure investment. A registration/legalization process through the court should apply (signature validity court verdict). This is a weaker level of protection than the one by means of the Registration office, but has the advantage that the investor can resell or rent the property anytime. It usually takes between 6 and 8 months the decision of the court to be approved and, therefore, the property to be legalized.

The following steps must be taken in order to legalize the property through the court:

a. A ‘negative’ certificate for the property should be obtained from the government, stating that there are no mortgages, pledges, or any other sort of rights on the property registered to any other party.

b. The tax authorities must issue a certificate stating what taxes are due on the property.

c. A purchase / usufruct contract should be drawn up. The validity of the sale depends on the terms of the contract. So it is essential for the purchaser to have a detailed contract, defining the property boundaries, the purchase price, the method of the acquisition of the rights of the previous owner, and the method of payment. The contract must be in Arabic, so that Arabic is the only language recognized by the courts.

d. Purchasers must issue a power of attorney to their lawyer so that he can act on their behalf in order to proceed with all works for the legalization, a procedure which, oddly enough, first requires the purchaser to obtain a multi-entry visa. Then the lawyer files a legal suit to obtain a court verdict certifying that the signature on the sale / usufruct contract truly belongs to the seller (This is the 'signature validity court verdict'). This suit will take between 6-8 months.
The two methods, registration and the ‘signature validity court verdict’ each have their own advantages and disadvantages:

-The advantages of registration in the R. O: Full and maximum protection. It is the recognized method in the Egyptian law for transferring real estate ownership.

Disadvantages: You are not entitled to resell your property unless 5 years have passed since the date of purchase, and even then you would need to obtain a written approval from the Prime Minister (only on demand).

-The advantages of the ‘signature validity court verdict’ method:
This is the practical way for real estate transactions either in Sharm el Sheikh, Hurghada, or Marsa Alam or elsewhere. This method allows the buyer to resell/rent the property whenever needed, without any further requirements.

Disadvantages: It is a weaker form of protection than the registration. A real estate lawyer’s services are much needed when buying property anywhere in Egypt. One reason is that people have in the past been reluctant to register properties, because it was costly to be the first owner of a building to be still registered. Even in a modern area like Maadi, sometimes sellers have not registered because they still have outstanding debts secured by the building, and fear that upon registration the creditor would be able to claim the building.

It is therefore important to investigate the registration carefully. The lawyer helps to ensure that the property being sold is truly owned by the seller, and after sale, the buyer usually gets the title registered (or otherwise) under his/her name legally.

Property in Sharm El Sheikh cannot be registered.

Property in Sharm El Sheikh follows a different regime, because an administrative decree issued in 2005 abrogated the 1996 law for property in Sharm el Sheikh.
Under the decree, foreign purchasers in Sharm el Sheikh cannot acquire freehold rights, but only 99 year leases. They must therefore follow by imperative the above mentioned procedure ‘signature validity court verdict’, as well as various other steps.

The ‘signature validity court verdict’ method could well become the dominant route to establish the foreign purchaser´s rights even outside Sharm, because it allows the foreigner to buy as many properties as he likes, rent and resell them anytime.

The only relevant point is that in Sharm the purchaser will only acquire 99 years leasing rights over the property, while in Hurghada, Sahl Hashesh… will be freehold property
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