Government Puts New Restrictions on the Sale of Real Estate

On March 24, the Government issued Decree No. 28, which specifies the minimum amount that must be deposited in the bank account of the seller of a real estate property for the documentation of the sales contracts and powers of attorneyto be considered acceptable. The powers of attorney are of particular importance for refugees and people living outside Syria.

Decree No. 28 of 2021 amends Decree No. 5, which was issued by the Government in January 2020. Decree No. 5 bans state institutions keeping records of real estate and vehicle ownership from documenting sales contracts or attorneys without attaching information on the payment of the deal, or part of it, to the bank account of the owner. The decree was effective from mid-February 2020.

The decree issued last week specifies the minimum amount that must be deposited -- a provision that was absent in Decree No. 5 For the sale of vehicles and both residential and commercial real estate at least SYP 5 million must be deposited for the contract to be recorded.  For plots of land, the amount is one million pounds. In addition, SYP 500,000  must be left in the bank account and frozen for a period of at least three months.

While Decree No. 28 does not say it explicitly, the amount is expected to be deposited by the buyer.

Decree No. 28 was issued immediately after the Parliament approved a new real estate sales law regulating the mechanism for calculating taxes due for transfers of real estate ownership, and setting prices according to market rates. The new law also prohibits registration of sales in real estate departments or by any authority authorised to do so, including the notary, before the concerned parties obtain financial clearance from their governorate’s finance directorate.

By determining that the sale of a property of a vehicle is worth at least SYP 5 million, the government is seeking to resolve the problem created by the underreporting of the value of sale contracts, which generate significant losses to the Treasury.

However, both Decrees No. 28 and No. 5 expressly violate Article 681, Paragraph 1 of the Syrian Civil Code, which regulates the sales process through powers of attorney. The Civil Code neither restricts nor places conditions on documenting the sale or transfer of ownership through an attorney, or on the processes of documenting changes of ownership contracts in the real estate registry.

Decrees No. 28 and No. 5 are, effectively, a restriction on the transfer of ownership, which is not required by the law in the first place. Article 825 of the Civil Code says that real estate rights are acquired and transferred by registering them in the real estate registry. As such, there are no legal restrictions on the process of transferring ownership, except for some procedures such as obtaining a statement from the financial directorate that includes the monetary value of the property and financial clearance for both the buyer and the seller. The buyer must also pay a sales tax as specified by the law, as well as an ownership transfer fee to the real estate registry to cover stamps and bonds.

However, since 2011 the Syrian government has imposed various conditions on transfer of ownership, such as a requirement to obtain security approval. Such restrictions violate the constitution and the law, as in the case of Decrees No. 5 and No. 28.

Executive bodies, such as the government, are entitled to issue administrative decrees or regulations for implementing laws that have been passed by the legislature. However, those executive bodies cannot add any terms that contradict the text of the constitution or the law in question--otherwise, such decrees are considered invalid as they go against authority higher up in the legislative hierarchy. The role of a law or decree’s executive regulations is limited to further explaining some ambiguous measures, or explaining how they shall be implemented, provided that such instructions do not themselves violate the text of the law. In the event of such contradictions, the regulations are considered void.

A law is considered to be of a higher rank than an administrative decree, and if the two contradict one another, the higher cancels out the lower. That said, Administrative Decrees No. 5 and No. 28 placed conditions that were not stipulated in the law regarding documentation and sales of property, which are not considered to be within the mandate of the Parliament.

Source: Pro-government media