Real Estate Transactions in Lebanon
The vibrant real estate market in Lebanon is a reflection of its rich cultural heritage and diverse landscapes. Engaging in property transactions in this country involves a multi-layered process, influenced by legalities, cultural norms, and specific regulations.
Real estate transactions in Lebanon are governed by a robust legal framework that comprises laws, regulations, and established procedures, in addition to the Land Registration and Cadaster System (the “System”) that is managed by the Land Registration Office[1].
In this article, we will tackle the particularity of such System, along with the procedures to follow for the sale and purchase of lands and real estate properties in Lebanon and their related fees.
- System Overview
The System, originally implemented in 1926[2], is composed of a Real Estate Register (the “Register”), where each real estate is duly recorded in a special file, that gives a descriptive status of each Real Estate such as ownership rights, surface, the owners’ shares in case of joint ownership, and determine its legal condition by noting useful information related to liens, encumbrances, mortgages, charges and others, in addition to any subsequent amendments related thereto. As such, the System plays a pivotal role in safeguarding property rights and in preventing unlawful actions on the concerned properties.
The System is also composed of a Daily Register, where the declarations of transfers and Real Estate operations are recorded chronologically, and Cadastral Maps, which accurately state the situation, boundaries, and area of the Real Estate.
All changes affecting the Real Estate on the related records must be registered in the Register and updated on the Cadastral Maps, through the Land Registration Office.
- Particularities of the System
The System presents several particularities. First, the Register has a probative force vis-à-vis third parties, especially in matters related to ownership rights and the delimitation of land parcels and areas of the real estate. For instance, the right of ownership is acquired upon its registration before the Register. This differs from the French system, where ownership rights are established upon the execution of the transfer, preceding any registration in a system.
Second, the Register is comprehensive and accessible to the public. It displays all pertinent facts and agreements regarding the real estate property. The System is also easy to access, allowing third parties to consult it effortlessly. Any individual can retrieve details about registered properties by acquiring a cadastral certificate directly from the Land Registry Office[3].
The System also presents particularities in its functionality. In fact, transfers of properties and real estates between individuals and/or corporations follows an easy and straightforward procedure, that shall be initiated before the Land Registry Office where the property in located[4].
Sales and purchase transactions can be processed either directly between the concerned parties (owner/seller and purchaser), or indirectly through a representative authorized to perform, execute and register the transaction by virtue of a power of attorney from the owner. The purchaser can also be represented by similar means before the Notary public where the sale and purchase agreement must be signed.
Furthermore, the System allows non-Lebanese individuals to sell and purchase real estates in Lebanon under Decree No. 11614/1969. This decree enables foreigners to acquire property in the country while placing specific constraints on the scope of their property ownership. Specifically, foreign individuals or entities are limited to owning a maximum of 3% of the entire land area across Lebanon. However, within the city of Beirut, they are permitted to possess a larger proportion, reaching up to 10% of the city’s total area. Any acquisition exceeding such limitation is subject to a special authorization from Lebanese authorities by virtue of a decree issued by the Council of Ministers.
- Sales and Purchase Transactions – Steps and Procedure to follow
The process of acquiring real estate property in Lebanon involves several essential steps, including the sales agreement before a notary public and subsequent procedures at the Land Registry Office.
The process usually starts with negotiations between the buyer and the seller to agree on the price, the payment methods, the conditions of the sale, and other particularities. A sales agreement (also known as a sale contract or deed) is thereafter drafted, detailing the terms and conditions of the sale, the name of the parties and relevant information related to the property/land. The sales agreement shall be signed by the parties in the presence of a notary public who ensures the legality and authenticity of the document.
It is worth mentioning that prior to signing any agreement, the buyer shall verify the ownership right of the seller with regard to the purchased property and the latter’s status. Also, in case of property purchases by non-Lebanese individuals, the buyer is required to possess a non-ownership certificate, as evidence of adherence to the limitations outlined in Decree No. 11614/1969, as mentioned previously.
The next step involves registering the sales agreement at the Land Registry Office, within the Registry and its documentation in the System. This requires several documents to be submitted at the Land Registry Office, the most important ones being described as follows:
- For built up properties, it is essential to first acquire a clearance document from the Ministry of Finance, confirming the absence of any outstanding fees associated with the property being sold. This document will also establish the estimated value[5] of the specific plot as fixed by the authorities, serving as a baseline for determining the registration fee.
- For lands, it is essential to obtain a statement of contents from the municipality of the area where the land is located, evidencing that no built up property exists on said land, and that the latter is not being exploited for industrial and commercial purpose. The buyer is also required to obtain an official cadastral map from the Registry showing the location of the land parcels in the relevel area.
In both situations mentioned above, the purchaser must acquire an official statement from the Registry detailing the surface area of the plot.
Various fees are incurred during the registration process, including the notary fee amounting to 0.7% of the sale price as stipulated in the sale agreement[6]to be paid to the notary, and registration fees amounting to approximately 3.5% of the estimated value of the transaction as finally adopted by the Land Registry Officer[7].
After paying the requisite fees and submitting all the required documents, the Land Registry Officer shall give its final approval on the registration process, and thus issue a title deed confirming the buyer’s ownership of the property.
It is important to note that the buyer/new owner benefits from all protective ownership rights resulting from the sale transaction, upon filing the request for registration at the Land Registry Office and before completing the registration process and obtaining the newly issued title deed.
In light of the above, it is recommended to always seek professional legal advice prior to engaging in any real estate transaction, to ensure compliance with legal requirements and understand the exact fees applicable to the transaction.
Robert Keyrouz
Associate
11/11/2023
For personalized guidance regarding real estate matters, and buying or selling properties in Lebanon, please do not hesitate to contact our team by sending an email to: attorneys@omlfirm.com.
DISCLAIMER: This blog post does not constitute legal advice, and no attorney-client relationship is formed by reading it. Additional facts or future developments may affect the content of this blog post. Before acting or relying upon any information within this newsletter, please seek the advice of an attorney.
[1] There are several Land Registry Offices existing among the Lebanese territory.
[2] Decisions number 186, 188 and 189 of 15 March 1926.
[3] The System also generates e-certificates by filing a request on the official Register website. Online services also include digital tracking of any registration process of transfer of ownership.
[4] Every property consists of 2,400 shares, which can be allocated between bare property and usufruct property, and that is situated within a real estate district with a particular Land Registry Office located throughout Lebanon.
[5] The estimated value represents the minimum amount attributed to the plot in question which shall be regarded if the sale agreement sets a lower price. Nonetheless, if the estimated value falls below the agreed sales price, the registration fee will be defined according to such price rather than the estimated value. It is also important to note that the Land Registry Officer has the power to decide on a higher plot value, at his sole discretion.
[6] including stamp duty fee, Lawyers’ bar fees, and fixed notary fee.
[7]Please refer to foot note 5.