Here we will briefly explain the current laws governing buying property in Egypt by foreigners. To understand the process of the entire transaction of buying property in Egypt as well as costs involved, please read the Transaction page.

Buying property in Egypt - real estate law

Foreigners can buy property in Egypt, under Law No 230 of 1996. Foreigners cannot buy more than two pieces of property in Egypt, which cannot exceed 4,000 square meters.

The main document involved with the purchase of property in Egypt is an initial sales and purchase contract. This is a formal, legally-binding contract which contains all of the key information about the agreed deal including the details of the property in Egypt, the total amount payable, the deposit, penalty clauses, etc.

Property registration in Egypt

If registered, the property in Egypt cannot be sold for five years. The purchase sum for the property in Egypt must be brought into Egypt in foreign exchange, through one of the public commercial banks (however, the provision of this law is not enforced).

Recently Egypt capped the total payable under the 3% registration fee rule at LE2,000 (US$350), regardless of the purchase price of the property in Egypt. So the registration of property in Egypt is now less expensive than it used to be.

‘SIGNATURE VALIDITY COURT VERDICT’ ownership

Property in Sharm El Sheikh cannot be registered in the Land Registry. Property in Sharm El Sheikh follows a different regime, because an administrative decree issued in 2005 abrogated the 1996 law for property in Sharm El Sheikh. Under the decree, foreign purchasers of property in Sharm El Sheikh cannot acquire freehold rights, but only 99 year leases. Foreign purchasers must therefore follow a procedure called a ‘signature validity court verdict’, and various other steps.

The ‘signature validity court verdict’ method has become the dominant route for foreigners buying property in Egypt even outside Sharm El Sheikh, 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 in Egypt 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 in Egypt.
• 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 of property in Egypt 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.

The two methods, registration of property in Egypt and the ‘signature validity court verdict’ each have their own advantages and disadvantages:

Advantages of registration: 

Full and maximum protection. It is the recognized method in the Egyptian law for transferring ownership of property in Egypt.

Disadvantages of registration:

You are not entitled to resell your property in Egypt 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.

Advantages of the ‘signature validity court verdict’ method:

This is the practical way for buying property in Egypt either in Sharm el Sheikh, Hurghada, or Marsa Alam or elsewhere. This method allows you to resell your property whenever you need, and without need for any approvals.

Disadvantages of the ‘signature validity court verdict’ method:

It is a weaker form of protection than registration. A real estate lawyer’s services are much needed when buying property anywhere in Egypt. One reason is that people have in the past been reluctant to register properties, because it was costly to be the first owner of a building to register a property in Egypt. Even in a modern area like Maadi, sometimes sellers have not registered their property in Egypt because they still have an outstanding debt secured by the building, and fear that upon registration the creditor would be able to claim the building.

Sinai (Sharm El Sheikh) property law for foreigners

- Non-Egyptians shall only be granted a usufruct right to their purchased property in Egypt not to be granted the "ownership" right and this restriction was imposed on Non-Egyptians by the Prime Ministers Decree No. 548 Of the year 2005 (published in al-wakaye al masrya –governmental bulletin- issue no. 76 supplement – dated April 5, 2005).
- The prime-ministers` decree in Article (2) providing that:

[It is permissible to grant a usufruct to Non-Egyptians with regard to residential units for a period of Ninety-Nine years maximum in Sharm El Sheikh city by virtue of a decree of the competent body after obtaining the approval of the concerned entities].
From the preceding article it is clear that Non-Egyptians has only the option to acquire a tenement by a Usufruct contract not by the ordinary sale contract.
- A question here arise (what is meant by Usufruct?)
The legal meaning of Usufruct: The right to enjoy the use or the profit of the property or land of another person.*
* "Peter Collin publishing"
(Profit prendre) a Dictionary of Law ISBN: 1-901659-43-7
- From the previous legal definition of Usufruct it is clear that the Non-Egyptian who wants to acquire a residential property in Sharm El Sheikh by a Usufruct contract will not be granted the right to be the "Landlord" but only the exclusive enjoyment of all profits of the residential unit for the period of the contract {99 years}.
- Despite not being the "Landlord" the holder of the Usufruct contract is entitled other than using the tenement for his own residential purposes, to rent the tenement or the unit , renounce (assign) it to others or dispose his Usufruct to others for money, it also can be transferred by succession or even by will.
- As a result of not granting the Non-Egyptians the right to be "Landlords" and of not using a sale contract, a problem of registration and authentication of the Usufruct contract evolves, this problem not only facing Non-Egyptians but also the Egyptians, as in practice Egyptians are not allowed to register their property in Sharm El Sheikh even, in reality there isn’t any property registration in Sharm El Sheikh.
- So the alternative way to register or authenticate properties is done by action, a legal suit called "signature validity "

"Signature validity legal suit"

- It is a precautionary legal suit which aims to get a conclusive evidence or verdict that the signature of the seller of property in Egypt on the Usufruct contract is truly theirs.
- The judge in this legal suit only make a preliminary investigation on the validity of the seller's
signature, and not going far to inquest the legality of the origin and the gist of the conveyance only the validity of the seller's signature.
- So whenever a court verdict enacted to ratify the signature of the seller of property in Egypt, he can't claim that the property in Egypt (the object of the Usufruct contract) is still his property, and the ratified Usufruct contract proves that he has disposed the property in Egypt to the buyer.
- So this legal suit aims to authenticate, ratify and upholds the contract with a court verdict.
In order to allow the lawyer to take his steps forward to bring an action to justice or act on the client behalf in any legal matter in general (not only related to signature validity legal suit) the client must issue a power of attorney to the lawyer as described previously.

Legal assistance

Because of the complexity of Egyptian property registration process, My Red Sea Real Estate advises buyers to hire their own Arabic-speaking lawyers. Legal documents written in Arabic are the only ones recognized in courts. It is a common practice that contracts are written both in Arabic and English language, where the English (or any other language) translation is for a reference only.

The developers of the majority of developments that My Red Sea Real Estate represents will be able to recommend a local lawyer to you in order to assist you in the process of buying property in Egypt. However, in order to ensure that you receive totally independent and unbiased advice, we strongly recommend that you hire a lawyer of your own. We will be happy to recommend some English speaking independent lawyers to you. Please contact us for details of independent lawyers.