Real Estate Financing Law No. 148 of 2001 (Updated 2014 Edition)

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1 Law No. 148 of 2001 dated 2001/6/24 according to the latest amendment Regarding the issuance of the Real Estate Financing Law

Article 1: Enactment Without prejudice to the provisions of Decree-Law No. 15 of 1963 prohibiting foreigners from owning agricultural lands and their equivalents, and Law No. 230 of 1996 regulating the ownership of built-up real estate and vacant lands by non-Egyptians, the provisions of the attached Law regarding real estate financing shall apply, and any provision conflicting with its provisions is hereby repealed.

Article 2: Enactment In applying the provisions of the attached Law and the decisions issued to implement it, the following words and expressions shall carry the meanings indicated alongside each: (a) The Competent Minister: The Minister responsible for applying the provisions of the Law regulating supervision over markets and non-banking financial instruments issued by Law No. 10 of 2009. (b) The Authority or Administrative Body: The Financial Regulatory Authority. (c) Real Estate Financing: Financing in any of the activities specified in Article (1) of the attached Law or those added by a decision of the Competent Minister following the approval of the Authority's Board of Directors. (d) Real Estate Refinancing: Refinancing entities engaged in real estate financing activities. (e) Leasing: Leasing of real estate that concludes with ownership transfer. (f) Real Estate Financing Guarantee: The guarantee provided for real estate financing. (g) Secured Property: The property subject to a preferential right, official mortgage, or other accepted guarantees. (h) Investor: The buyer or the party who obtained financing other than in a purchase case. (i) Company: Any company conducting one or more of the real estate financing activities specified in Article (1) of the attached Law.

*Amended by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014 Text before amendment: In applying the provisions of the attached Law and the decisions issued to implement it, the expression "Competent Minister" refers to the Minister of Economy and Foreign Trade, and the expression "Administrative Body" refers to the General Authority specialized in real estate financing affairs, subordinate to the Minister of Economy and Foreign Trade.

Article 3: Enactment The Council of Ministers shall issue the executive regulations for the attached Law on the date of its implementation.

Article 4: Enactment This Law shall be published in the Official Gazette and shall take effect from the day following the expiration of three months from its publication date. This Law shall be sealed with the State seal and enforced as one of its laws. Issued at the Presidency on 3 Rabi' al-Akhir 1422 (Corresponding to 24 June 2001) Hosni Mubarak

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2 Real Estate Financing Law Chapter One General Provisions

Article 1 The provisions of this Law shall apply to real estate financing activities, which are: (a) Financing the purchase, construction, renovation, or improvement of properties for residential purposes, administrative units, service facilities, and premises designated for commercial activities. (b) Leasing, subject to the provisions of Law No. 95 of 1995 regarding financial leasing. (c) Financing the purchase of usufruct rights over properties. (d) Financing the purchase of properties under the participation and murabaha systems. (e) Real estate refinancing. The Competent Minister may, after approval by the Authority's Board of Directors, add other activities within the field of real estate financing. Such financing shall be secured by a preferential right over the property, an official mortgage, or other guarantees accepted by the financier according to the rules, procedures, and conditions specified in the executive regulations of this Law.

*Amended by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014 Text before amendment: The provisions of this Law shall apply to the investment financing activity in the fields of purchasing, constructing, renovating, or improving residences, administrative units, service facilities, and commercial premises, secured by a preferential right over the property or an official mortgage, or other guarantees accepted by the financier according to the rules and procedures specified in the executive regulations of this Law. This financing shall be called real estate financing, the guarantee shall be called real estate financing guarantee, the property subject to a preferential right, official mortgage, or other guarantees shall be called the secured property, and the buyer or the party who obtained financing other than in a purchase case shall be called the investor. The registration, renewal, and cancellation of this guarantee shall be exempt from all fees and expenses.

Article 1 bis The proof of the date of the real estate financing agreement, its publication, and the registration, renewal, cancellation, and transfer of the guarantee shall be exempt from all fees, expenses, and surveying costs. The registration of the guarantee is exempt from the provisions of Articles (43, 44) of Law No. 114 of 1946 on the organization of real estate publication until the full settlement of the debt, and Article (42) of the Income Tax Law issued by Law No. 91 of 2005, when granting real estate financing. Furthermore, properties financed under the provisions of this Law shall be exempt from transfer fees imposed by the authorities issuing land allocation decisions to financing entities.

*Added by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014

Article 2 Without prejudice to the jurisdiction of the Competition Protection and Anti-Monopoly Authority, the Authority shall be responsible for regulating, supervising, and overseeing all real estate financing activities specified in this Law.

*Amended by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014 Text before amendment: A general authority subordinate to the Minister of Economy and Foreign Trade shall be established, specialized in real estate financing affairs, and its formation and jurisdiction shall be determined by a decision of the President of the Republic.

Article 3 The following entities exclusively may conduct the real estate financing activities specified in this Law, provided they are registered in a register maintained by the Administrative Body for this purpose: (1) Public legal entities whose activities include real estate financing. (2) Real estate financing companies specified in Chapter Five of this Law. Banks registered with the Central Bank of Egypt may, with its approval and according to the rules it determines, conduct real estate financing activities without registration with the Administrative Body. The provisions of the second paragraph of Article (4) and Chapter Seven of this Law shall not apply to them.

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Article 4 The conduct of real estate financing activities and fields specified in this Law shall be according to the rules and standards determined by the Authority's Board of Directors, ensuring that financing is proportionate to the financial capacity of the financing applicant, taking into account the general market conditions. The Authority shall issue rules, procedures, and conditions for financing, its credit limits, and the financing-to-property-value ratio or the provided guarantee, depending on the circumstances. Licensed financing and refinancing entities shall have the right to determine financing costs without being bound by maximum limits set in any other law. The value of the secured property shall be determined by certified valuation experts whose names are listed in registers maintained by the Authority for this purpose, provided they are not among the employees of any party to the financing transaction. The executive regulations shall determine the rules, conditions, and procedures for registration in these registers.

*Amended by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014 Text before amendment: The conduct of real estate financing activities shall be according to the standards determined by the executive regulations, ensuring that financing is proportionate to the financial capacity of the property buyer or the party who obtained financing other than in a purchase case, taking into account the general condition of the real estate market. The executive regulations shall determine the rules and procedures for financing, its credit limits, and the financing-to-property-value ratio, with the property value determined by certified valuation experts whose names are listed in registers maintained by the Administrative Body for this purpose, provided they are not among the employees of the financier.

Article 5 Repealed *Repealed pursuant to Law No. 93 of 2018 Text of the Article before repeal: Without prejudice to the provisions governing the Real Estate Financing Support and Guarantee Fund specified in Article (35) of this Law, the State, represented by the authorities having jurisdiction over state lands, shall be committed to providing real estate financing for low-income individuals to support housing for low-income earners by allocating land free of charge for the construction of economically level residences, bearing the actual cost of providing public utilities for them or a portion of this cost, or other forms of support. A decision by the Fund's Board of Directors shall determine the conditions and rules for eligibility for these residences, and the criteria for characterizing low-income housing projects. The executive regulations shall specify the criteria for low-income individuals and the rules and procedures for securing real estate financing for them.

*Amended by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014 Text before amendment: Without prejudice to the provision of Article (35) of this Law, the Government shall be committed to providing real estate financing by supplying economic housing for low-income earners through the following: (First) Allocating certain state-owned lands free of charge for the construction of economically level residences. (Second) Bearing half of the actual cost of the public utilities supplied to the residences. The executive regulations shall specify the criteria for low-income individuals and the rules and procedures for securing real estate financing for them.

Chapter Two Financing Agreement

Article 6 Real estate financing shall be conducted through an agreement between the financing parties according to models approved by the Authority. This agreement shall specifically include the following: (a) Description of the property and its price. (b) The amount of the down payment to be paid from the property price. (c) The number and value of installments for the remaining price and the conditions for their payment, which shall be fixed or determinable in advance using a fixed formula linked to an official indicator determined by the Authority to calculate changes in financing costs, up to full settlement. (d) The seller's acceptance of the assignment of their rights in the installments and related guarantees to the financier under agreed conditions. (e) The investor's commitment to register the preferential right for the assigned installments to the financier, as security for their payment. (f) The commitment of the agreement parties to prove the date of the financing agreement, notarize it through the real estate publication office in the standard official format or authenticate it as circumstances dictate, and place the executive formula on it. All procedures mentioned in this paragraph shall be exempt from all fees, taxes, and expenses.

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4 The executive regulations shall determine the other conditions and data that must be included in financing agreements specified in this Law according to the nature of each agreement.

*Amended by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014 Text before amendment: Real estate financing in the field of property purchase shall be conducted under this Law through a financing agreement between the financier, the buyer as the investor, and the property seller. The agreement must include the following: (a) The conditions accepted by the seller and buyer regarding the installment sale of the property, including a description of the property and its price. (b) The amount of the down payment paid to the seller. (c) The number and value of the remaining price and payment conditions, which shall be fixed until full settlement. (d) The seller's acceptance of the assignment of their rights in the installments to the financier under agreed conditions. (e) The seller's commitment to register the property in the buyer's name free of any third-party real rights. (f) The buyer's commitment to register the preferential right for the assigned installments to the financier as security for payment. (g) The commitment of the agreement parties to provide it with a fixed date. If financing is for the purpose of investing in constructing a property on land owned by the investor, or for renovating or improving a property they own, or other fields, the financing must be conducted through an agreement between them, the financier, and any other party involved in the agreement. The Competent Minister shall issue a decision on the models of the agreements mentioned in the preceding two paragraphs.

Article 7 The investor may dispose of the secured property by sale, gift, or other dispositions, or arrange any real right over it, only after the financier's approval and provided that the transferee accepts to assume the investor's obligations under the financing agreement. The investor may lease the secured property or allow others to exclusively occupy it only after obtaining the financier's approval. The financier may require the assignment of the right to the property's rent or occupation fee to settle their dues. The financier may not refuse approval for the disposal, leasing, or exclusive occupation of the secured property except for serious reasons endangering their interests and rights. They must notify the investor in writing of these reasons within thirty days from the date of the investor's notification of their intent to dispose, lease, or allow exclusive occupation; otherwise, they shall be deemed to have consented. The financier may require the investor's joint liability with the transferee for fulfilling obligations under the financing agreement. The executive regulations shall determine the rules and procedures to be followed in the aforementioned cases.

Article 8 If the investor disposes of, leases, or allows others to occupy the secured property in violation of the previous Article, the financier may demand the remaining installments or the remaining value of the financing agreement, as applicable, by formal notice to pay within a period of no less than thirty days. If the investor fails to pay, the financier may take the procedures specified in Chapter Four of this Law against them.

Article 9 The investor may prepay the settlement of installments or the entire或部分 financing. In this case, the due installments shall be reduced proportionally to the early settlement according to the rules determined by the executive regulations of this Law.

Chapter Three Registration of Real Estate Financing Guarantee and Assignment of Rights Arising from the Financing Agreement

Article 10 A request for registration of the real estate financing guarantee shall be submitted to the real estate publication office within whose jurisdiction the property is located, by the financier or the investor, including the data specified by the executive regulations, accompanied by the financing agreement and the property ownership document. The request must be decided upon within one week after verifying the property boundaries as stated in the request and ownership document, or by instructing the applicant to complete required documents within one week from the submission date. The applicant shall be notified of the issued decision via a registered letter with acknowledgment of receipt. The decision to reject the request must be reasoned.

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Article 11 The financier may assign their rights arising from the financing agreement, whether for ownership or mortgage, to the Company or one of the entities licensed to conduct securitization activities, provided the guaranteeing agreements are pledged possessory, all according to the rules determined by the executive regulations of this Law. The mortgage contract shall be registered in a register maintained by the Authority or one of the entities determined by its Board of Directors. The financing agreement must include the investor's acceptance of the assignment of the financier's rights to one of the entities mentioned in the first paragraph. The investor shall be notified of the assignment, and the financing agreement shall specify the notification method.

*Amended by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014 (**) Article No. 11 replaced by Law No. 143 of 2004 – Official Gazette No. 25 (Supplement A) on 17/6/2004 Text before amendment: The financier may assign their full rights and their due installments with the prescribed guarantees for the financing agreement, in accordance with the provisions of Chapter Three of Chapter Three of the Capital Market Law issued by Law No. 95 of 1992.

Chapter Four Enforcement on the Property

Article 12 In case of the investor's failure to pay due amounts and thirty days having passed from their due date, or upon proof of a material deficiency in the financier's guarantee due to the property's value caused by the investor or occupier's action or negligence, the financier may, by a final executable court judgment, notify the investor to pay or provide adequate security, as applicable, within at least sixty days from the date of notification.

Article 13 Without prejudice to the provisions of Articles (35) and (37) of this Law, if the notified period expires without the investor paying or providing security, they shall be obligated to pay the full remaining amounts according to the real estate financing agreement. The financier may then request the execution judge within whose jurisdiction the property is located to issue the executive formula on the financing agreement and order the seizure of the secured property in preparation for its sale, after legally notifying the investor to hear their statements.

Article 14 After issuing the executive formula on the financing agreement, the financier shall notify the investor, instructing them to pay within a period of no less than thirty days. They shall also notify the competent real estate publication office to endorse it free of charge within a period not exceeding one week on the margin of the real estate financing guarantee registration, notifying all creditors whose rights are registered on the property and its occupier; otherwise, the payment instruction shall not be enforceable against them.

Article 15 The endorsement of the executive document at the real estate publication office replaces the registration of an eviction notice.

Article 16 If the investor fails to pay within the period specified in the executive document notification, the execution judge shall, upon the financier's request, issue an order to appoint a real estate agent from among those registered in a register maintained by the Administrative Body for this purpose, to conduct the property sale procedures at public auction as specified in the following Articles under the direct supervision of the execution judge. The executive regulations shall determine the conditions required for real estate agents, the rules for determining their fees, and the registration procedures in the register.

Article 17 Any interested party may request the replacement of the real estate agent by submitting a request to the execution judge stating the reasons. The mere submission of the request shall not suspend enforcement proceedings on the property unless the judge decides otherwise. The judge may order replacement if the request's reasons appear serious.

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Article 18 Two of the valuation experts mentioned in the second paragraph of Article (4) shall determine the base price of the property. The real estate agent shall determine the conditions for the public auction sale, including the date, time, and place of the sale, the property's base price, and the auction participation security. The executive regulations shall determine the rules for calculating the security.

Article 19 The real estate agent shall notify the investor, property occupier, and registered creditors of the sale conditions at least thirty days but no more than forty-five days before the scheduled bidding date. They shall also post the notice on the property and on the court's designated notice board within whose jurisdiction the property is located, and publish it in two widely circulated daily newspapers at the investor's expense. The financier or investor may request additional notices or publications at their own expense.

Article 20 The real estate agent shall conduct the bidding on the scheduled sale day. Bidding shall begin with a call for the base price and conclude with the award to the highest bidder. If this bid is lower than the base price or if the number of bidders does not exceed three, the real estate agent must postpone the sale to another day within the following thirty days, notifying it using the same procedures specified in Article (19) of this Law. The financier may not participate in the bidding. However, if the highest bid does not reach the base price and is less than the financier's dues, the financier may request the sale be awarded to them in exchange for discharging the investor from all obligations. In all cases, a bid that remains unchallenged for five minutes after the bidding concludes shall be considered final.

Article 21 If the investor pays their due installments at any time prior to the sale award, the real estate agent must suspend the proceedings, and the investor shall be obligated to pay the expenses estimated by an order from the execution judge to the financier.

Article 22 The judge shall issue a judgment awarding the sale based on the completed procedures and full payment of the price. It shall include a list of conditions and procedures followed on the sale day, and the operative part must order the delivery of the property free of occupants to the party awarded the sale, unless the financier had previously consented to their occupation under Article (7) of this Law, or they were tenants under fixed-date contracts prior to the financing agreement. The original copy of the judgment must be deposited in the execution file the day following its issuance.

Article 23 The party awarded the sale shall register the judgment, and this registration shall clear the property of all subordinate real rights whose owners were notified via the executive document and sale procedures under Article (19) of this Law.

Article 24 The sale award judgment may only be appealed on grounds of procedural defects in the bidding or judgment nullity. However, the property occupier may appeal if the judgment includes eviction. The appeal shall be filed with the competent court through standard procedures within fifteen days following the judgment pronouncement, except for the property occupier, whose period begins from the date of notification of the judgment.

Article 25 Filing a third-party ownership claim shall not suspend enforcement proceedings on the property unless the court rules otherwise.

Article 26 The real estate agent shall deposit the sale proceeds with the court treasury. The execution judge, unless an appeal against the sale award judgment is filed by any party regarding the bidding procedures, shall distribute these proceeds to creditors according to their priority the day following the expiration of the appeal period or the issuance of a judgment rejecting it, after deducting all execution expenses. A report shall be drawn up and deposited in the execution file.

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Article 27 The provisions of the Civil and Commercial Procedures Law shall apply to matters not specifically addressed in this Chapter.

Chapter Five Financing and Refinancing Companies

Article 28 The Company must take the form of an Egyptian joint-stock company, with its issued and paid-up capital not less than the threshold specified by the executive regulations. Exception to Article One of the enactment provisions of this Law: The provisions of Law No. 230 of 1996 regulating the ownership of built-up real estate and vacant lands by non-Egyptians shall not apply to companies subject to this Law, regardless of the percentage of non-Egyptian capital, except for the provisions of Article Two, clause (3), and Article Four of the aforementioned Law. Licensing to conduct financing and refinancing activities shall be according to the provisions of the following Articles and what the executive regulations of this Law determine.

*Amended by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014 Text before amendment: The real estate financing company must take the form of an Egyptian joint-stock company, with its issued and paid-up capital not less than the threshold specified by the executive regulations. Licensing to conduct real estate financing activities shall be according to the provisions of the following Articles.

Article 29 The license application shall be submitted to the Administrative Body on the form prepared for this purpose. The executive regulations shall determine the licensing rules, procedures, and fees, not exceeding ten thousand Egyptian pounds.

Article 30 The Administrative Body shall issue the applicant with a certificate of receipt of submitted documents or a statement of other required documents. The applicant must complete these documents within three months following the issuance, otherwise the application shall lapse.

Article 31 The Administrative Body shall decide on the license application and notify the applicant in writing of its decision within thirty days from the date of completing the required documents. The Administrative Body may not refuse the license except in the following cases: (1) Failure to meet the conditions specified in this Law or the decisions issued to implement it. (2) Lack of the criteria determined by the executive regulations regarding professional experience and competence of the Company's managers. (3) A bankruptcy declaration judgment against any of the Company's founders or managers within the five years preceding the application, unless their reputation has been restored. (4) A previous conviction against any of the Company's founders, managers, or board members within the five years preceding the license application for a felony or misdemeanor crime against honor or trust, unless their reputation has been restored.

Article 32 The executive regulations shall specify the financial standards the Company must comply with, including the following: (1) The method followed in valuing the Company's assets. (2) Determining the minimum ratios of shareholders' equity to the Company's assets and liabilities, and the size of the financing portfolio. (3) Determining the minimum ratio of current assets to current liabilities. (4) The necessary rules to ensure the proper conduct of the Company's operations and the protection of creditors' and clients' rights.

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Article 32 bis The receivable returns paid by the Company on loans and other financing means, and the provisions calculated on financing with doubtful collectibility, shall be determined according to the standards set by the Authority and what the Company's accountants approve as deductible costs when determining net taxable income according to the Income Tax Law No. 91 of 2005. Debts that the Company's Board of Directors decides to write off based on the accountants' report shall also be considered deductible costs, in addition to the aforementioned provisions, after taking serious collection measures according to the controls and procedures set by the Authority's Board of Directors in this regard. Loan balances and any form of financing provided by the Company to its clients under the provisions of this Law shall be exempt from stamp duty and other taxes and fees.

*Added by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014

Article 33 The Company shall be committed to preparing and submitting financial statements to the Authority according to the standards and deadlines determined by the Authority's Board of Directors. The Company's accounts shall be audited by two accountants registered in the register maintained by the Authority for this purpose, according to the audit standards determined by its Board of Directors.

*Amended by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014 Text before amendment: The Company's accounts shall be audited by two accountants registered in the register maintained by the Administrative Body. The Company shall be committed to submitting its financial statements to the Administrative Body every six months within the deadline specified by the executive regulations.

Article 34 The Company shall not merge with another company operating in the same or other activities, cease operations, liquidate its assets or the majority thereof, or acquire shares in real estate financing companies without obtaining written approval from the Authority; otherwise, the merger shall be legally ineffective. All of this shall be according to the rules and procedures determined by the Authority's Board of Directors. The Authority may refuse approval for serious reasons related to the stability of the real estate financing activity or the interests of investors or shareholders.

*Amended by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014 Text before amendment: The Company may merge with another company operating in the same or other activities, cease operations, or liquidate its assets or the majority thereof after obtaining written approval from the Administrative Body, all according to the rules and procedures determined by the executive regulations. The Administrative Body may not refuse approval except for serious reasons related to the stability of the real estate financing activity or the interests of investors or shareholders.

Article 34 bis An association named the Egyptian Real Estate Financing Union shall be established, possessing public legal personality, subordinate to the Authority, and its formation shall be determined by a decision of its Board of Directors. It shall be registered in a special register maintained by the Authority, encompassing all companies subject to this Law and entities specified by the executive regulations. The Union shall be responsible for unifying the efforts of real estate financing companies and coordinating among them to advance the field of real estate financing in the Arab Republic of Egypt. The professional standards and rules established by the Union shall not apply until approved by the Authority's Board of Directors. The Authority shall appoint a representative to the Union who shall have the right to attend its sessions and participate in its discussions, without having a voting right. The Union's bylaws shall be issued by a decision of the Authority's Board of Directors and published in the Egyptian Official Gazette at the Union's expense.

*Added by the decision of the President of the Arab Republic of Egypt under Law No. 55 of 2014

Chapter Six Real Estate Financing Guarantees

Article 35 Repealed *Repealed pursuant to Law No. 93 of 2018 Text of the Article before repeal: