Saturday, July 5, 2014
Real Estate Financing Law
Sunday، 20 July 2014 - 12:00 AM
The following text will replace the second article of Law No. 148 for the year 2001 on issuing the real estate financing law:
While applying the rules of this law and decisions issued for its implementation, the following words and phrases have the meaning mentioned as follows:
A- Minister concerned: The minister entrusted with implementing the rules of the law regulating monitoring markets and non-banking financial apparatuses that was issued by Law No. 10 for the year 2009.
B- The administrative authority or quarter: The General Authority for Financial Supervision.
C- Real estate financing: Financing in any activity mentioned in article (1) of this law or that are added in accordance with a decision by the related minister after the approval of the board of directors of the Authority.
D- Real estate re-financing: Re-financing quarters that are undertaking the activity of real estate financing.
E- Lease: Renting real estate that ends with ownership.
F- Real estate guarantee: Guarantee that is offered by the real estate financing.
G- Guaranty real estate: The property that has the right to franchise or official mortgage or any other form of guarantees.
H- Investor: The purchaser or anybody who got finance in any other case than purchase.
I- Corporation: Every company that is undertaking one activity or more of the real estate financing activities that is mentioned in article (1) of this law.
Texts of articles (1,2,4,5,6,11,28,33,34,35,36,40,42,46,47,50,51) of the real estate financing law issued by law No. 148 for the year 2001 are replaced by the following texts:
The rules of this law are applied on activities of real estate financing which are the following:
A- Financing the purchase, building, renovating or upgrading property for residential purposes and administrative units and services buildings along with buildings of shops designated for commercial activity.
B- Lease while observing rules of law No. 95 for the year 1995 on hiring finance.
C- Financing the purchase of right to usufruct of property.
D- Financing the purchase of property under the systems of partnership and profit-sharing.
E- Real estate re-financing.
The minister concerned has the right, after getting the approval of the board of directors of the Authority, to add new activities in the domain of real estate financing.
This financing should be undertaken under the guarantee of the right to franchise on the property or placing it under official mortgage or any other sort of guarantees that are accepted by the financier in line with the rules, measures and preconditions set by the rules and regulations of this law.
Without violating the jurisdiction of the Agency for Protecting Competition and Prevention of Monopolistic Practices, the Authority is entrusted with monitoring and overseeing all activities of real estate financing that are mentioned in this law.
Practicing any activity of the real estate financing mentioned in this law should be in line with rules and criteria set by the Authority's board of directors in a way that guarantees that the financing is commensurate with the financial ability of the applicant for the financing in light of the general condition of the market.
The Authority issues the rules, measures and preconditions of financing and its credit ceiling along with the ratio of financing in relation to the value of the property or the guarantee that is presented according to the conditions.
The permitted financing and re-financing quarters have the right to set the costs of financing without being restricted by the maximum limit set in any other law.
The value of the guaranty property is set by assessment experts who are registered in the schedules that are outlined by the Authority for this purpose under the condition that the expert should not be a worker with any of the parties to the financing process.
The rules and regulations set the bases, preconditions and measures of registration in these schedules.
Without violating the rules regulating the Fund of Guaranteeing and Supporting the Activity of Real Estate Financing mentioned in article (35) of this law, the State, represented in the quarters that have a mandate on the State-owned lands, is committed to supporting low-cost housing in an effort to provide real estate financing for low-income brackets, through allocating lands for free to set up low-cost housing units. The State is also committed to shouldering the actual costs for providing public utilities or part of the costs for these lands or any other sort of support.
A decision is issued by the Fund's board of directors setting the preconditions and rules of obtaining the right to these houses and the criteria of specifications of low-cost housing projects for the low-income brackets.
The rules and regulations set the criteria of low-income segments and rules and measures of providing real estate financing for them.
The real estate financing should be in accordance with an agreement by the parties concerned and in line with accredited formats of the Authority. This agreement should include particularly the following:
A- A statement about the property and its price.
B- The amount of down payment that will be paid up as part of the total price of the property.
C- The number and value of installments of the remaining part of the price and preconditions of payment provided that they should be definite and could be determined beforehand through using a stable equation pinned to an official index that is set by the Authority regarding any change in the costs of financing, whether increasing or decreasing, until paying it to the full.
D- The seller should accept a remittance of his right to the installments and related guarantees to the financier under the preconditions the two have agreed upon.
E- The investor should be committed to registering the right to price franchise whose installments are transmitted to the financier as a guarantee for payment.
F- All parties to the agreement should be committed to writing down the date of financing agreement and documenting the real estate financing agreement with the Notary in an official way or ratifying it according to the situation along with outlining its executive wording. All measures mentioned in this article are exempted from all fees, taxes and expenses.
The rules and regulations set the preconditions and other data that should be mentioned in real estate financing agreements that are stipulated for in this law according to the nature of each agreement.
The financier could refer his rights emerging from an agreement on real estate financing whether in the form of ownership or mortgage to a company or any quarter permitted to practice the activity of secularization provided that the guaranty agreements are pawned. All this is undertaken according to rules set by the rules and regulations of this law.
The mortgage contract is registered in a file that is kept by the Authority or any other quarter that is defined by its board of directors.
The agreement on real estate financing should include the investor's acceptance of a remittance of the right of the financier to one of the quarters that were mentioned in article one. The investor should be notified of the remittance and the financing agreement should set the way of notification.
The company should take the form of an SAE and its issued and paid capital should not be less than the minimum level set by the rules and regulations. As an exception of article one of this law, rules of law 230 for the year 1996 regulating ownership by non-Egyptians of built property and vacant lands, are not applicable to companies that are subject to this law whatever the non-Egyptian capital would be except for the texts of article (2) item (3) and article (4) of the law in question.
Permit for practicing the activity of real estate financing should be in accordance with the rules of the following articles and what is set by the rules and regulations of this law.
The company is committed to outlining financial lists and presenting them to the Authority in line with the common criteria and in dates that are set by the Authority's board of directors.
Two auditors should undertake reviewing the accounts of the company. The auditors should be registered on the list outlined for this purpose in the Authority and in accordance with the auditing criteria that are set by the board of directors of the Authority.
The company should not be merged into another company working in the same activity or other activity. It should not also stop its activity or liquidate its assets or the major part of them or take over quotas in the capital of other real estate financing companies unless after obtaining a written permit from the Authority otherwise the merging is not legally valid. All this should be undertaken in line with the rules and measures set by the Authority's board of directors.
The Authority has the right to withhold its approval for serious reasons related to considerations of stability of the real estate financing activities or the interests of investors or shareholders.
A fund is set up for guaranteeing and supporting real estate financing with a legal personality. It should answer to the minister concerned.
The fund is concerned with supporting the activity of real estate financing in the domains of selling houses or using them or offering them to rent that ends with ownership. It would also support renting residential houses. All this is undertaken for the low-income brackets through different means including shouldering part of the value of the installments in the two cases of selling or offering houses to rent that ends with ownership in a way that guarantees easing up the burden of finance to the limits that cope up with the income of these brackets provided that the installment does not exceed the ceiling set by the board of directors of the Authority.
The fund could practice the activities, adopt the measures and take the decisions necessary to guarantee achieving its goals and provide guarantees against the risk of non-payment of the commitments emerging from the activity of the real estate financing. To attain this goal, it has the right to set up or contribute to setting up specialized companies and funds or resort to the support of already existing companies and funds or extending guarantees to facilitate the operations of real estate financing for financiers and investors or any other means that are approved by its board of directors.
A republican decree should be issued to regulate the work of the fund and specify its other capacities.
The fund's resources are raised from:
1- Subscription that the financier and investor are committed to pay up equally to the fund according to its statute provided that it does not exceed (2 percent) of the financing installment. These subscriptions are allocated for paying up installments for defaulters in line with the rules set by the fund's statute that are approved by its board.
2- Allocations by the State for the fund, including money and assets.
3- The revenues of investing money of the fund.
4- The revenues of fines emerging from the activity of the fund that are operating according to the rules of this law and its rules and regulations.
5- Donations and contributions that are approved by the fund's board of directors along with money of charity and endowments and their revenues and loans and grants from inside and outside parties according to the laws, rules and measures common in this regard.
6- The fees of formats and applications for getting the support of the fund for the low-income segments that are set by the fund's board of directors which do not exceed one hundred pounds for each application.
7- Fees of inquiry about the low-income brackets according to the rules set by the fund's board of directors which do not exceed three hundred pounds for each inquiry.
The fund should have a separate budget with its fiscal year starting with the State's fiscal year and ends with its end. The fund should have its own accounts with the Central Bank of Egypt with which all its resources are lodged. The deposit of these accounts is carried over from one year to another and all accounts of the fund are subjected to the supervision of the Finance Ministry and the Central Auditing Agency.
The financier is committed to inform the investor at least twice a year about the data related to the finance agreement and also inform him when any amendment is introduced to these data according to the rules set by the Authority.
The board of directors of the Authority has the right to take the required measure or measures in case of violation by the company of any of the rules of this law or decisions issued in its implementation or in case one of the preconditions for permit became missing or when it acts in a way that would jeopardize the stability of the market or the interests of shareholders or its clients. These measures include:
A- Warning the company to remove the violation within a certain period of time or through the preconditions set in the warning.
B- Demanding the chairman of the company to convene its board of directors or the general assembly to look into the violations in question and take the required measures thereof.
C- Dissolving the board of directors of the company and appointing a commissioner for running it until a new board is appointed through the approved legal mechanism.
D- Prevention from practicing all or part of the permitted activity for a certain period of time or prevention of dealing with new clients.
E- Canceling the permit for practicing all or part of the activity.
The measures mentioned in items (A, B) could be issued by the head of the Authority. He could also issue the measures mentioned in item (D) of this article if the ensuing danger would result in irrevocable harm. This is made in a period not more than a month or until presenting the issue to the Authority's board of directors; which is nearer.
The Authority's board of directors could also decide what is appropriate of other measures to maintain the rights of clients with this company.
The board could also force the company to increase its paid capital or funds allocated for practicing the activity or the rate of its solvency in line with a time frame to maintain the stability of the market and protect the rights of clients of the company or when the company is exposed to financial problems that would affect its financial status.
Anybody who practices without permit any of the real estate financing activities that are mentioned in this law will be punished with imprisonment and a fine that is not less than 200,000 pounds and not more than one million pounds or any of the two punishments.
Anybody who violates the criteria and rules mentioned in articles (4) and (32) of this law or which are set by the rules and regulations while practicing any of the real estate financing activities will be punished with an imprisonment term that is not more than three months and a fine that is not less than 50,000 pounds and does not exceed 500,000 pounds or any of the two punishments.
Anybody who violates the rules and regulations or the rules issued by the Authority's board of directors in accordance with this law will be punished with the fine mentioned in the previous paragraph.
The rules of article 16 of the law No. 10 for the year 2009 are applicable to the crimes that are committed in violation of the rules of this law.
The official in charge of the virtual management of the company will be punished with the same approved punishments over acts that are committed in violation of the rules of this law or its rules and regulations if he was proven aware of these acts and if his negligence of duty would have contributed to the occurrence of the crime.
The company will be responsible in association for implementing the financial punishment or compensations.
The title of the fifth chapter of the law on real estate financing that was issued according to law No. 148 for the year 2001 is amended to be "Financing and Real Estate Re-Financing Companies". Also, new articles Nos. (1 bis, 32 bis, 34 bis, 36 bis, 42 bis, 42 bis (A) and 43 bis) are added to this law with the texts as follows:
Article (1) bis:
Registration of the date of real estate financing agreement and its proclamation and registering the guarantee and its renewal or canceling measures along with its remittance are exempted from any fees and expenditures and survey costs.
The rules of articles (43, 44) of the law No. 114 for the year 1946 regulating the Notary are not applied to guarantee registration until the full payment of all debt and article (42) of the income taxation law that was issued according to law No. 91 for the year 2005 while granting real estate financing.
Property that are financed according to the rules of this law are exempted from leaseback charges that are imposed by the quarters issuing the decisions of land allocations for the financing parties.
Article (32) bis:
The indebted rates that are paid up by the company on loans and others are considered means of financing and allocations that are accrued from financing that are suspected of being collected in line with the criteria set by the Authority and according to the costs that are set by the auditors of the company that should be deducted while defining the new income that is subject to tax in accordance with the rules of the income tax law No. 91 for the year 2005.
Debts that are decided by the board of directors of the company to be waived according to a report by the auditors and would exceed the allocations in question are considered costs that should be deducted. This is undertaken according to serious measures that should be met in line with the rules and measures set by the board of directors of the Authority in this regard.
Deposits of loans or any other form of financing that are extended by the company to its clients are exempted from stamp tax and other taxes and charges in accordance with the rules of this law.
Article (34) bis:
A union is set up under the name " the Egyptian Union for Real Estate Financing" that has a legal personality and answers to the Authority. A decision on its formation is issued by the Authority's board with the union being registered in a record with the Authority that included all companies that are subject to this law and the quarters that are set by the rules and regulations.
The union is assigned with unifying the efforts of real estate financing companies and coordinating their efforts for upgrading the real estate financing sector in the Arab Republic of Egypt.
Vocational criteria and measures, that are set by the union, are not applicable unless after endorsement by the board of directors of the Authority.
The Authority appoints a representative for it to the union who would have the right to attend its sessions and take part in its discussions while having no right to vote.
A decision on the union's statute is issued by the Authority's board of directors and is published in the official gazette at the expense of the union.
Article (36) bis:
Anybody who benefited from a housing unit that is subsidized by the fund of guaranteeing and supporting the activity of real estate financing is committed to use this unit for the residence of himself and his family. He is banned from using it or dealing on it in any form unless after seven years of obtaining the subsidy and getting the approval of the fund.
Any measure regarding the subsidized units that were mentioned before that is undertaken in violation of the rules of this law and its decisions that are issued in its implementation are considered null and void. The Notary is banned, before getting the fund's approval, from proclaiming or conducting personal registering or property registering, or ratifying or validating the date on these measures or conducting any proxies or waiver or undertaking any dealings on these subsidized units except registering the unit in the name of the investor and registering the mortgage or the right to franchise in favor of the real estate financing quarters.
Article (42) bis:
The board of directors of the Authority has the right to take any of the following measures it sees appropriate if any of the real estate agents or real estate appraisal experts or real estate brokers would violate any of their commitments mentioned in this law and its rules and regulations or when violating the rules and criteria set by the board of directors:
1- Forwarding a warning for removing the violation
2- Stopping the practice of the activity for a period that would not exceed one year.
3- Cancellation from the registers of the Authority.
Article (42) bis (A):
A committee or more is set up to look into complaints by the companies and the real estate agents and real estate appraisal experts and real estate financing brokers against administrative decisions issued in implementation of the rules of this law and its rules and regulations.
A decision from the minister concerned is issued for forming each committee. The committee should be chaired by one of the deputy chairmen of the State Council with the membership of two counselors of the State Council who are selected by the head of the council along with a representative of the Authority and a member with experience who is selected by the related minister.
Complaining against the decision should be before this committee within 15 days of the day of notification provided that the committee should issue its decision on the complaint in a date that should not exceed 30 days and it should be an irrevocable decision.
A lawsuit that is filed with the related court is not accepted unless after resorting to the committee in question and the expiry of the date for deciding on the complaint.
Filing the complaint with the committee should result in suspending the periods set by the law for dropping the rights of the complainer in retrospect or filing a lawsuit until the date of deciding on the complaint would expire.
A decision by the related minister is issued on the measures of looking into the complaint and the fees that should be paid which should not exceed 20,000 pounds for the real estate companies or real estate re-financing and 10,000 pounds for the real estate agency and real estate appraisal experts and real estate financing brokers.
The fees should be paid back to the complainer in case of accepting his complaint or issuing a ruling canceling the decision.
Article (43) bis:
The company is committed to the decisions of the Authority on paying back the financial dues of the investor if it was proven while undertaking any acts of monitoring that there were financial dues for the investor that were obtained by the company in violation of the rules of this law and its rules and regulations and decisions issued in its implementation.
Article (48) bis:
Anybody who would obtain subsidy from the fund of guaranteeing and supporting the activity of real estate financing through fraud, cheating or incorrect data will be punished with an imprisonment term that is not more than one year and a fine that is not less than 50,000 pounds and not more than 100,000 pounds or any of the two punishments. The court also orders the convicted to return the housing unit and the value of subsidy granted to him by the fund.
The rules and regulations of this law is issued in line with a decision by the Cabinet after taking the opinion of the Authority within six months of the date of its operation. Until these rules and regulations are issued incumbent rules and regulations and decisions will be applied as long as they do not contradict the rules and regulations in question.
This decision that has the force of law is issued in the official gazette and is implemented as of the following day of its publication.