Financial Regulatory Authority

Board of Directors Decision No. 111 of 2015

Dated 30/9/2015

Regarding Rules and Standards for Practicing Real Estate Financing Activities

Board of Directors of the Financial Regulatory Authority

Having reviewed Law No. 159 of 1981 on Joint Stock Companies, Companies Limited by Shares, and Limited Liability Companies, and its executive amendments;

And Law No. 27 of 1994 on Arbitration in Civil and Commercial Matters;

And Law No. 95 of 1995 on Financial Leasing;

And Law No. 148 of 2001 on Real Estate Financing, amended by Presidential Decree-Law No. 55 of 2014, and its executive amendments;

And Law No. 10 of 2009 on Regulating Supervision over Non-Banking Financial Secrets and Instruments;

And Presidential Decree No. 192 of 2009 Issuing the Basic Statute of the Financial Regulatory Authority;

And Decision No. (3/35) of 2005 of the Board of Directors of the General Authority for Real Estate Affairs Regarding Regulations Governing the Purchase of Real Estate Portfolios;

And Decision No. (76) of 2015 of the Authority's Board of Directors dated 1/6/2015;

And having reviewed the Authority's Board of Directors' report at its meeting held on 30/9/2015;

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ORDERED:

(Chapter One)

General Controls for the Financial Balance of Real Estate Financing Activities

(Article One)

Scope of Application

Licensed real estate financing companies shall comply with the rules and standards set forth in this Decision when practicing real estate financing activities, and shall also comply with the standards and rules set forth herein regarding the conditions and disclosures required in real estate financing agreements.

(Article Two)

Definitions

In applying the provisions of this Decision, the following words and expressions shall have the meanings indicated alongside them:

Term	Meaning
The Financier	All licensed entities under the Real Estate Financing Law.
Investor	Any natural or legal person wishing to obtain a real estate financing loan through one of the licensed entities.
Financing Agreement	The contract concluded between the Investor and the Financier to grant a real estate loan under one of the financing systems licensed under the Real Estate Financing Law.
Repayment Schedule	A schedule based on the real estate financing loan detailing the number and value of installments due from the Investor according to the agreed time periods with the Financier.
Financing Plan	The financing amount granted by the Financier to the Investor for all purposes.
Ijarah (Leasing)	Leasing a property under a lease-to-own agreement where the Financier owns the property at the end of the lease term or part of it (unless the Investor wishes not to own it during the agreed period with the Financier).
Lease-to-Own Agreement	A binding commitment by the Investor (Lessee) to lease the financed property under a lease-to-own arrangement.

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(Article Three)

Investor Awareness and Protection

The Financier shall be committed to safeguarding the interests of all Investors dealing with it and disclosing to them all data and information related to financing that enables them to make appropriate decisions, including:

1. Disclosure by the Investor regarding whether they have inspected the financed property prior to the financing period in accordance with law and regulations, and reviewed its ownership documents.
2. That financing procedures are clear and specific, ensuring the Investor's awareness.
3. All their rights and obligations, including default risks, shall be guaranteed in the financing agreement, which shall include the Investor's acknowledgment of having reviewed the standard real estate financing terms template and receiving a copy thereof.
4. Correspondence and documents sent to the Investor shall be written in a clear and specific manner.
5. And shall not contain any vague expressions.
6. Disclosure of all expenses, commissions, and service standards provided by the Financier to the Investor for any reason and under any name.
7. The Financier shall be committed to disclosing to the Investor at the time of contracting all details of expenses that will be added to the cost, and the Financier shall not add to the property cost except other administrative expenses disclosed to the Investor.
8. Notifying the Investor at least twice annually of all data related to the financing agreement, as well as upon any modification to such data, provided that the notification includes the minimum data specified in the Authority's Decision in effect on this matter.

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(Article Four)

Disclosure of the Repayment Schedule

The Financier shall attach to all real estate financing agreements a schedule for repaying financing installments according to the following:

1. The repayment schedule shall include the total financing value, its costs, the number of installments, their values, due dates, and any other expenses added to financing costs or deducted from the Investor's account.
2. Investors shall be notified of any modifications to the data shown in the repayment schedule within a maximum of fifteen days from the date of modification, and the notification shall state the reasons and basis for the modification.
3. The Investor has the right to make early repayment of any part of the financing amount at any time before its due date, subject to bearing early repayment expenses according to the conditions agreed in the financing contract. In this case, the Investor shall do the following:
   (a) Notify the Financier of the intention to make early repayment within a period of no less than one month.
   (b) Pay the financing returns due up to the date of early repayment, with the agreed lease value over the profits or remaining financing term reduced by a discount rate agreed upon with the Financier and according to the repayment schedule attached to the financing agreement.
4. The Financier shall disclose the new repayment schedule to the Investor after early repayment of part of the financing value, with necessary clarification of the changes made to it.

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(Article Five)

Cases for Forming a Sharia Supervisory Board

In the event of advertising or designing any real estate financing product as compliant with Islamic Sharia rulings, Sharia-compliant, or Islamic, or including such in the contract, the Financier shall be committed to obtaining prior approval from a Sharia Supervisory Board formed for this purpose in accordance with the Authority's Board Decision No. (8) of 2014, to review all contents in contracts and terms for compliance with Islamic Sharia rulings. All publications issued by the Financier regarding the relevant real estate financing product shall indicate that it is Sharia-compliant according to the Sharia Supervisory Board (decision number, date, and names of board members).

Egyptian real estate financing entities may form a Sharia Supervisory Board for the same purpose if they do not wish to avail themselves of the Financiers' boards.

(Article Six)

Mortgage Registration and Collateral

The Financier shall be committed to obtaining sufficient collateral before granting real estate financing to Investors:

To secure the financing granted according to the following:

1. Registration of a lien or mortgage on the collateral property, specifying the mortgage's priority rank. In case the provided collateral is insufficient, the Financier shall be entitled to register a mortgage on any other property to secure the financing granted, as agreed with the Investor.
2. In cases where the Financier accepts other collateral for financing besides a lien or mortgage on the collateral property, the collateral must be commensurate with the financing value granted to each Investor, specifying the type and conditions of collateral, its valuation method, and the entity responsible for valuation.

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(Article Seven)

Insurance for the Benefit of the Financier

The Financier may stipulate that the Investor insure their rights under the real estate financing agreement against default risks due to death or disability, or exposure in case the Investor is a self-employed professional, according to the following conditions:

1. The insurance must be with one of the Egyptian insurance companies licensed by the Authority.
2. The insurance company shall pay the insurance amount to the Investor based on the Investor's disability certificate or a medical certificate prepared by the doctor or specialist issued from one of the medical entities specified by the insurance company.
3. In cases where it is agreed that the Investor bears the insurance cost, the premium amount borne by the Investor shall be added to the financing cost that the Investor is committed to paying to the insurance company.
4. In the event the Investor receives preferential treatment from one of the insurance companies, it must be disclosed.
5. The insurance premium must be calculated on the outstanding balance, not on the total financing value.

(Chapter Two)

Controls for the Financial Balance of Real Estate Financing Activities

(Article Eight)

General Controls for Granting Real Estate Financing

The Financier, when granting real estate financing to Investors for residential and non-residential purposes, shall comply with the following provisions:

First - Real Estate Financing for Residential Purposes:

The Financier shall comply with the following controls when granting residential financing:

1. Financing shall not exceed ninety percent of the value of the unit or the provided collateral, whichever is applicable. In cases of construction, renovation, or improvement, financing may cover the full value up to ninety percent of the unit's value or the provided collateral.

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