Real estate: The noose is tightening around promises to sell

From now on, promises to sell in the real estate sector must be drawn up by a professional in the form of an authentic deed or a deed with a date certain. The former is the responsibility of the notary or adoul, while the latter is the prerogative of lawyers registered with the Cour de Cassation.), failing which the promise to sell will have no legal effect.

Promise to sell contracts will therefore be subject to the same treatment as all other types of deeds transferring ownership, or establishing, modifying, or cancelling other real rights. Powers of attorney are also affected by the new provisions. Article 4 of the law on real rights also specifies that a promise to sell drawn up in accordance with the new procedure must be signed, and all its pages stamped by both contracting parties, as well as by the drafter of the deed. The signatures of the parties involved in the transaction must be authenticated. In addition, the lawyer’s signature must be certified by the Chief Clerk of the Court of First Instance to enable deeds relating to the transfer of ownership to be authenticated – in short, the same treatment as other categories of documents relating to the transfer of real estate ownership. The aim is to make transactions more secure.

In addition to being drawn up by qualified professionals, promises to sell are subject to the same registration formalities as other property transfer documents. “It is a formality linked to the legal act, regardless of the quality of the drafter. It is an obligation and a prerequisite”, said Khalid Laaouane, Esq., a business lawyer in Rabat. One practitioner warned that otherwise, in the event of a dispute, the purchaser cannot preserve his rights before the courts.

 “Many developers prefer the option of a reservation contract with an advance payment. But what happens in some cases is that the purchaser who had paid the developer an advance may withdraw a few months later in favor of another customer, in return for a capital gain, as part of a planned speculation operation. The transaction may involve several units, with the theoretical buyer paying neither registration duty nor income tax on the capital gain. This gives an idea of the financial stakes involved”, explained lawyer Mourad Zidouh. In some cases, this is referred to as a reservation order.

Hassan EL ARIF