The Minister of Justice issued Circular No. 38 on December 13, 2021, to resolve disputes in the courts about how to calculate judicial fees for real estate cases. The circular affirmed that such fees are based on the appraised real estate value of a given property under the provisions of Judicial Fees Law No. 1 of 2012, rather than based on the “current value” as stipulated in Real Estate Sales Law No. 15 of 2021.
Judicial fees are collected by the court treasury to fund the work of the judicial departments. In real estate cases, the judicial fees are collected at a certain percentage of the value of the case in question.
However, some courts had started calculating fees based on Law No. 15 of 2021 rather than Judicial Fees Law No. 1 of 2012, imposing heavy costs on litigants. This disparity meant the Minister, who is the official responsible for issuing such notices to the courts in order to clarify or explain any contradictions surrounding the implementation of laws and decrees, was obliged to issue Circular No. 38.
Circular No. 38 states that the use of the current real estate price as stipulated in Law No. 15 of 2021 is restricted to determining the taxation and fees levied for real estate transactions such as sales, donations or rental agreements. On the other hand, the adoption of the appraisal value in calculating fees for real estate cases stems from the principle of equality between all litigants before the different types of courts, as well as from the standardisation of fees employed by the courts, the circular added.
The appraisal values for real estate properties are old, fixed values listed at the Ministry of Finance-affiliated finance departments. Most of these values date back to 1986, when financial commissioning began, and are usually listed according to certain financial records that cannot be circumvented. Article 41 in Law No. 1 of 2012 stipulates that fees in real estate cases would be calculated based on the specified financial value of the property under dispute, as listed in the financial departments. The jurisprudence of the Court of Cassation affirms this principle, as it considered the claimant to be the one to determine the value of the case according to the property’s value; upon any objection by the opponent, the property value is determined based on its value as listed in the financial directorate records.
Before Law No. 15 of 2021, the real estate sales tax was also determined as a percentage of the set estimated financial value of the property and codified within the financial departments. The Department of Cadastral Affairs adopted either that value or the value listed in the real estate sales contracts (whichever of the two turned out to be greater) in calculating the service fees for recording real estate instances.
Meanwhile, the current value of real estate was included in Law No. 15 of 2021 to calculate the value of fees owed for a certain property when selling, donating or leasing it. The current value is the financial value of real estate units approved by the Ministry of Finance in calculating the real estate sales tax under the executive instructions of Law No. 15, issued according to Finance Ministry Decree No. 850 on April 28, 2021. Law No. 17 of 2021, which concerns setting the fees for services provided by Cadastral Affairs, also adopted the current value of real estate as a basis for determining fees.