Country Buying Guides - Egypt

The conveyancing process

• Independent Lawyer
It is essential to use an independent lawyer with a legal knowledge of both the English and Egyptian legal systems, who are able to translate the documents and explain the terms to your full understanding.

• Due Diligence
It is important to carry out due diligence on the property you are purchasing in order to ensure there are no encumbrances on the property. Your independent lawyer will do this on your behalf.

• Purchase agreement
The execution of a private sale and purchase agreement between the vendor and the purchaser is the first step in the conveyancing process. Before signing the contract, your independent lawyer should have completed a due diligence report ensuring there are no encumbrances on the property.

• Draft contract
It is common the draft of the contract will be provided written in Arabic. Again increasing your need for a lawyer with experience of the two legal systems.

• The Land registry
In Egypt only 10% of properties are registered and the country does not as yet have a centralised Land Registry. This makes the searches carrying out by your independent lawyer of the up most importance. Registration of the title of the purchaser with the Real Estate Department and Public Notary therefore completes the property transfer protecting the purchaser from potential claims from Third Parties.

• Registration of the property through the Notary:
This is the most common method used for properties initially registered by the vendors, it takes between 3 to 6 months to complete and costs between 1% – 2 % of the purchase price.

• Registration of the property by decision of the court:
This method takes longer, between 6 to 9 months and is also more costly at around 7% of the purchase price. It is an action taken through the court against the vendor requesting confirmation of the validity of the sale.

• Restrictions
Non-Egyptians are permitted to own real estate with the following restrictions:
    - non-Egyptian’s are limited to owning two properties throughout Egypt for accommodation       purposes of the person and his family
    - The surface area of each property cannot be in excess of 4,000 square meters.

• Taxation
Real estate tax is paid under Egyptian law on the property itself and not on the owners of the property. The rate of tax differs dependant on location and the standard of the property itself. This tax is not affected by the transfer of legal ownership and hence the purchaser on many occasions must pay amounts to the Real Estate Tax Authorities, your independent lawyer should have discovered this amount and given you adequate warning of the said amount.

• Costs
The purchaser of a property in Egypt is subject to a registration tax of between 500 EGP and 2,000 EGP, dependant on the size of the property. The vendor normally is subject to other taxes including Capital gains tax and Transfer tax.

In Assocation With The International Property Law Centre LLP