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www.sharmwomen.com • View topic - Buying property
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 Post subject: Buying property
PostPosted: Sat Nov 11, 2006 11:19 am 
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 Post subject: Legal Status Concerning Purchasing a Property in Sharm.
PostPosted: Sun Jan 14, 2007 4:29 pm 
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Location: Sharm el Sheikh.
Legal Procedures to Purchase a Property in Sharm el Sheikh



Purchasing a property in Sharm el Sheikh is different than purchasing a property in any different location in Egypt, according to the difference in legal status. There was an administrative decree issued by the prime minister of Egypt in 2005, stating that foreigner purchasers in Sharm el Sheikh may not be granted the right to be "landlords" on the properties they purchase, but only would have the "Freehold" right, for the maximum time of 99 years, and since the term "Freehold" originally applies to the right to enjoy a property and all its advantages for one's life time, and since the decree has stated the maximum limit of freehold as 99 years, which normally exceeds one's life time, it is better to be rephrased to "Usufruct". Usufruct is the best description for the current real estate sales legal name involving foreigners in Sharm el Sheikh, and it, consequently, raises many questions concerning registration of the sale. Registration, in principle, is this process done in the notary office, to register your sale contract, as a deed, and a proof of owning a property. Since the aforementioned decree stated that foreigners are not granted the rights to be landlord, then it is not allowed for foreigners to register their properties, while practically, even Egyptians are not allowed to register their properties in Sharm el Sheikh. Therefore there has been an urgent need to find an alternative legal method to suit the new status of foreigners in Sharm post the prime minister's decree.

The only option available for foreigner purchasers in Sharm el Sheikh is a legal suit called "Signature Validity". Signature Validity legal suit, however, is a legal suit aims to obtain a court verdict, stating that the signature of the seller in a sale / usufruct contract, is truly theirs. This legal suit, however, DOES NOT touch on the origin of right, or in other words; it is non-concerned about neither who is the current owner of the property, nor who was the previous owner, but is only concerned about the belonging of the signature to the seller, and therefore is a mere precautionary legal suit. This legal suit, however, is the common suit used for sales and usufructs in Sharm el Sheikh, and it has a legal value after all, despite the fact of not being as valuable and authenticated as registration.


Purchasers should take the following procedures into their consideration while purchasing a property in Sharm el Sheikh:


A) Obtaining a real estate certificate and a tax certificate for the property:

Purchaser's lawyer should obtain a "NEGATIVE" certificate for the property from the government, stating that there are no mortgages, pledges, or any other sort of rights arranged to any other party on the desired property. The certificate must be governmental and stamped with the official stamp of the state. Also a certificate must be obtained from the tax authorities determining the exact due taxes on the desired property. There has been a wide-spread myth stating that there are no taxes due on Sharm el Sheikh's properties. The truth, however, is that THERE ARE taxes estimated on each property in Sharm el Sheikh. Those taxes vary in value according to the original usage of the property. Purchasers are requested to consult their lawyer in order to handle the taxes issue. Taxes can be reduced to almost 60 EGP in case if the property is used for the sole purpose of residence, while these taxes would be higher in case if the property was used for the purpose of renting out.

B) Articulating a precise and bilingual sale / usufruct contract:
Sale / Usufruct is actually all about the contract, and therefore it is imperative for a purchaser to have a precise and detailed contract, defining the property boundaries in a definitive manner, purchase price, how did the property evolved to the previous owner, method of payment?etc.
This contract should be articulated in both Arabic and English languages, and it must be taken into consideration that the only authenticated and recognized language in courts is the Arabic language, and consequently English is used for the mere purpose of guidance. Here is a golden advice: NEVER sign a contract which was articulated only in English or any other languages than Arabic when it comes to purchase a property in Egypt, or you will be in serious risk.

C) Authenticating Sale / Usufruct Contract:
Prior to the point of authenticating Sale / Usufruct contract, purchasers are required to issue a power of attorney to their lawyer, in order to be able to act on their behalf in courts. Power of attorney, however, requires the purchaser "Principal" to obtain a multi-entry visa from El Tur city, which is located not far from Sharm el Sheikh, and where all the governmental utilities for Sharm el Sheikh's area are located. After obtaining the power of attorney from the notary office, the lawyer is responsible for establishing the signature validity legal suit. This legal suit takes between 6-8 months before obtaining the final verdict from the court.

These were simply the imperative steps needed to purchase a real estate property in Sharm el Sheikh, which in practice are not any different between Egyptians and foreigners, Except for the fact that Egyptians are entitled to choose between having a sale or usufruct contract, while foreigners have the sole choice of having a usufruct contract.

Appendix

It must be mentioned that Egypt has replaced its old method of registration ? out of Sharm el Sheikh ? for a taking a percent equals to 3% of the purchase price as fees for notarizing a contract. The new policy is to take a certain amount of funds not exceeding 2000 EGP as fees for the registration process. It must also be emphasized that other types of legal suits which purpose to prove the transfer the ownership are invalid whenever a foreigner party is included i.e. Contract Validity legal suit. This legal suit is available only in case if the purchaser was the first purchaser, and when the seller is the government or a governmental utility. There is NO PERCENT taken by the government for the signature validity legal suit, but only administrative fees, which shall be included in the attorney fees.



Zeiad Yehia
Attorney at Law
Head of Legal Department
ERA Coastline Real Estate
Mall number 8 - Neama Bay.
Cellular Phone: +20 12 3344988
Email: zeiad.yehia@era-egypt.com
Website: www.era-egypt.com

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