When purchasing property in South Sinai one can only purchase a 99 year lease on the land and therefore the buyer can only purchase through the process of Signature of validity. In other areas of Egypt where the land is freehold either process can be adopted. However, even in the areas of Egypt where foreigners can purchase freehold, signature of validity can be used instead of registration.

1. Registration of property

• .Foreigners can buy property in Egypt, under Law No 230 of 1996. Foreigners cannot buy more than two pieces of real estate, which cannot exceed 4,000 square meters (sq. m.) in total, and their purpose must be for a family member to live in the property.
• The purchase must have the approval of the Council of Ministers, which takes around two months.
• If registered, the property cannot be sold or rented for five years. The purchase sum must be brought into Egypt in foreign exchange, through one of the public commercial banks (though this provision of the law is not enforced)
• Finally, the property must be rented furnished after the 5 years period, which has tax disadvantages. 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 agreed to cap the total payable under the 3% registration fee rule at LE2,000 regardless of the purchase price of the property but this new ruling has not become law**.
• The hope for the future is that registration will be less expensive than it used to be. But the process still takes a long time approximately 18-24 months.

The advantages of registration:

• Full and maximum protection.
• It is the recognized method in the Egyptian law for transferring real estate ownership.

Disadvantages of registration:

• 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.

Please Note ** the registration cost at this time is still variable according to the price paid for the property, expensive top end real estate faces higher fees to the court, registration is a complex process and the cost of registration also depends on factors such as whether the new owner has any installments loans left to pay on the property, is the place where the property being built totally built i.e. the resort finished, are the utilities registered to the developer or has each owner taken over payment to the government for utilities. If you wish to register a property please contact me.

2. Signature validity court verdict ownership

This procedure was first introduced because property in Sinai follows a different regime, because of an administrative decree issued in 2005.

Under the decree, foreign purchasers in Sinai cannot acquire freehold rights, but only 99 year leases. In 2006 this decree was updated to include Egyptians also not being able to purchase freeholds only Usufract contract (ie a 99 year lease contract) in Sinai Therefore all purchasers in Sinai must follow a procedure called a ‘signature validity court verdict’, and various other steps.

The ‘signature validity court verdict’ method has actually become the most popular route for foreigners even outside Sinai, because it allows the foreigner to buy as many properties as he likes, rent them, and sell when he likes. The following steps must be taken:

• 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.
• The tax authorities must issue a certificate stating what taxes are due on the property.
• A sale / 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, since Arabic is the only language recognized by the courts.
• Purchasers must issue a power of attorney to their lawyer so that he can act on their behalf, a procedure which, 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. Cost of signature of validity is maximum 2,000LE

The advantages of the ‘signature validity court verdict’ method:

• This is the practical way for foreign property investors buying property in Egypt not only in Sinai, but for other areas of Egypt including Hurghada, Sahl Hashesh, Marsa Alam or elsewhere. This method allows you to resell your property whenever you want to and without need for any approvals.

The disadvantages: of the ‘signature validity court verdict’ method:

• It is a weaker form of protection than registration. However, if buying “off plan” there is no cause for concern because the main reason for full registration is to check that previous owners /sellers do not have any outstanding debt secured on the building. When you are buying “off plan” and have the services of a good lawyer he will automatically check the developer’s position with regard to debts and when they will be paid off on the resort as part of the “due diligence” process.