Before it’s Too Late: Missing Laws in the Real Estate Sector

Awards Edition 21'

International Law


Mostafa Adel

In Egypt, the real estate sector is one of the most long standing vital pillars of the economy. Over the decades, Egyptians, followed by foreigners, have expressed unprecedented interest in investing in real estate, whether residential, commercial, or administrative.

For Egyptians, this investment comes second, and sometimes first, to purchasing risk-free bank deposit certificates. Despite the turmoil Egypt has faced since the 2008 global financial crisis until the COVID-19 pandemic, reports show that Egypt’s real estate prices continue to grow

However, sector growth is accompanied by many issues; uncertainty, conflict, and inevitably, legal disputes. Egyptian courts review countless lawsuits related to real estate transactions every year. More often than not, those lawsuits are not necessarily legal disputes but procedural cases like signature validity lawsuits as well as validity and enforcement lawsuits. To address this issue, we must have several laws and regulations in place.

Ownership Registration

Over the past few months, uncertainty arose due to the recent amendments to the Notary Public Law no. 114 of 1946. Despite the goals of such amendments, the attention leading to a vast public debate wouldn’t have occurred if clear, simple ownership and proprietary registration laws were in place. For example, a law stipulating that each property, regardless of its nature, should have the same registration process and its serial number or ‘National ID’ would eliminate several concerns.

Moreover, having one entity, such as the Ministry of Housing or the Ministry of Planning, as the sole authority implementing this law is a must. The seller and the buyer can conclude the transaction before a single governmental authority. The proof of ownership would be a title deed for the property, clearly listing the property’s details (for example, type, location, size, serial number, any related consequential rights, i.e. mortgages). Buyers would not have to file a validity and enforcement lawsuit. Instead, they would go to one governmental entity and demand registration.

NUCA Requirements

The New Urban Communities Authority (NUCA) imposes ﹣ rightfully so ﹣ several obligations on buyers, who in many cases are developers with different profiles. The bottom line of such obligations is that the buyers have to develop the purchased plot per some standards and pay the purchase price to NUCA within a certain period. Until then, no proprietary registration will be allowed.

However, this obligation means that the secondary buyer is taking on two risks. The first risk is the seller (or the developer) not building the property as promised. The second risk is the latter not fulfilling his obligations towards NUCA. The first risk is natural in any mutually binding contract, since there is always the risk of nonperformance. However, the second risk is far more of a burden than the secondary buyer can control, since they are risking something challenging to demand proof of or track.

Moreover, large-scale developments would take years to meet such a requirement, and several unregistered resale transactions within the project would have taken place. Therefore, NUCA should consider allowing proprietary registration for secondary buyers even if the original buyer or developer is still performing their obligations towards NUCA. This step would add confidence in the real estate sector and encourage new developers to engage in the already fierce competitive market.

Escrow Accounts

Very few Egyptian banks offer escrow accounts services to corporations, and not for all transactions. For individuals, banks rarely offer escrow accounts services to individuals. Escrow accounts would reduce the number of fraudulent transactions in the real estate market.

For example, in recent years, people have been selling their properties through a p