Regulation of Promotion and Sale of Real Estate Projects

This law regulates the promotion of, and subscription in, real estate projects licensed under the Real Estate Development and Investment Law (Law No. 15 of 2008).

Law No. 25 of 2011
Real Estate Projects Law

The President of the Republic,
In accordance with the provisions of the Constitution,
Pursuant to what has been approved by the People’s Council in its session held on 15-1-1433 Hijri, corresponding to 11-12-2011 Gregorian,
Promulgates the following:

Chapter One

Article 1
For the purpose of this Law, the following terms and expressions shall have the meanings as set out there with:

The Minister: The Minister of Housing and Urban Development.

The Commission: The General Commission for Development and Real Estate Investment.

The General Manager: The General Manager of the Commission.

The Register: The register of real estate developers at the Commission.

The Project: Any real estate development project licenced in accordance with the provisions of Law 15/2008.

Escrow Account: The bank account for the Project which contains the amounts paid by the purchasers in accordance with sales contracts or promise of sale contracts or from the Project’s funders.

Real Estate Developer: A natural or legal person licenced to engage in real estate development and investment activities in accordance with the provisions of Law 15/2008. This includes both master developer and the contractor.

Account Trustee: A bank licenced to operate in Syria and approved by the Commission to manage Escrow Accounts.

The Property: Anything stable in a fixed space, which cannot be moved without damage.

(Real Estate) Unit: The divided part of the Property that the Real Estate Developer sells to another party.

Engineering Consultant: An engineer registered with the Engineers Syndicate with the rank of expert engineer who has been authorised by the Commission to supervise the Project.

Accounts Auditor: An auditor of accounts registered in the stock companies’ registry in accordance with the provisions of Law 33/2009 and its amendments.

Escrow Agreement: A contract between the Real Estate Developer and the purchaser of the Real Estate Unit and the Account Trustee to open one Escrow Account for each Project separately to regulate the relationship between them, including payments due to the purchaser, their dates, and the conditions for payment of the Real Estate Developer’s earnings from the Escrow Account.

Article 2

No natural or legal person may tender any Real Estate Project for a public offering except in accordance with the provisions of this Law.
Every invitation to the public to subscribe to a Real Estate Project shall be considered a public subscription offer, whether directly or through the media or any other means specified by the executive instructions and decisions of the Commission.
No natural or legal person may offer any real estate parcel for private subscription through use of the media.

Article 3
The provisions of this Law shall apply to the Real Estate Developer or any person who sells Units on the map in Real Estate Development Projects and receives payments from purchasers or from funders in exchange for this, under a promise of sale in accordance with the certified plans.

Article 4

No public subscription in a Real Estate Project may be announced in the media without obtaining prior approval from the Commission.
All media (visual, audio, written) are prohibited from publishing any announcements pertaining to the sale of Real Estate Units unless the Real Estate Developer has obtained prior authorisation for the announcement from the Commission.

Chapter Two
Establishing an Escrow Account

Article 5
The Real Estate Developer who wishes to sell off plan Units or arrange promise of sale contracts in accordance with the provisions of Law 15/2008 must apply to open an Escrow Account in accordance with the documents provided for in the executive instructions.

Article 6

The Escrow Account shall be established in accordance with a written agreement between the Developer, the Account Trustee, and the purchasers, whereby amounts paid by the purchasers for Units on the map or by funders will be deposited. This will be a private account opened with the Account Trustee in the name of the Real Estate Project.
The agreement shall specify the account management terms, rights, and obligations of the contracting parties.
A copy of the agreement shall be deposited with the Commission.
All funds obtained by the Project from the banks shall be deposited in the Escrow Account.

Article 7
A reference shall be placed in the property registry under a promise of sale, and a copy of the property registry information indicating this reference has been placed must be submitted to the Account Trustee.

Chapter Three
Escrow Account Management

Article 8

The Escrow Account shall be opened in the Project’s name and shall be dedicated exclusively to purposes of establishing the Real Estate Project. The amounts deposited therein may not be frozen for the benefit of the Developer’s creditors, and the balance of the Escrow Account shall not be entered into the Real Estate Developer’s funds in the event that he becomes bankrupt.
If the Developer implements multiple Projects, an independent Escrow Account must be opened for each Project separately.

Article 9
The Commission shall prepare a special registry, “Account Trustees Registry” in which the names of the Account Trustees are registered.

Article 10

The Account Trustee must provide the Commission with periodic reports on the income and payments of the Escrow Account. The Commission may also request at any time that the Account Trustee provide it with information and statements that it considers necessary to view. The Commission may in all cases seek assistance it deems appropriate to audit these reports and statements.
If the Commission establishes that the Account Trustee has carried out any violation of the provisions of this Law, it must inform it in writing and give a deadline to remove the violation.

In the event that the violation is not removed within the specified period, the Commission may undertake the necessary procedures to remove it, charge the offender with moral and material liability, and transfer him to the judiciary.

Article 11
The General Commission for Development and Real Estate Investment and the Commission for Monitoring of Real Estate Financing may review the Project’s accounting records and request a copy of them.

Article 12

If the Real Estate Developer mortgages the Project in order to obtain a loan from financing institutions or companies, these institutions and companies must deposit the loan amount in the Escrow Account to be disposed of in accordance with the provisions of this Law.
A precautionary hold reference shall be placed with the property registry for the benefit of the Escrow Account holders equal to the amounts paid to the Real Estate Developer.
The amounts paid to the Real Estate Developer from the Escrow Account shall have the right of lien on the Real Estate Project.

Article 13

If the purchaser defaults on three instalments of the sale instalments according to the Escrow Account agreement, the Developer may sell the Unit subject to the agreement at a public auction after warning the purchaser, in accordance with the procedures stipulated by the executive instructions.
The purchaser shall bear all expenses of the public auction sale, and the proceeds of the sale shall be returned to him after deducting these expenses.

Article 14
The Commission shall develop a model Escrow Account agreement to guide Real Estate Developers and Account Trustees.

Article 15
The Real Estate Developer shall maintain a separate special record for the purchasers of each Project, in which will be noted the statements specified by the executive instructions.

Article 16
The Account Trustee shall maintain 5 percent of the total value of the Escrow Account after issuing the receipt record, and these amounts shall not be disbursed to the Developer until one year has passed from the date the Units were registered in the names of the purchasers and the implementation of the public and joint facilities for the Project.

Article 17

Without prejudice to stronger punishments stipulated in the applicable laws, and without prejudice to the right to civil compensation, a punishment of three to six years and a fine of 500,000 to 1,000,000 Syrian pounds shall be applied to the following:
1. A Real Estate Developer who tenders a Real Estate Project for public subscription without obtaining prior approval of the Commission.
2. A Real Estate Developer who sells a residential apartment off plan in violation of the provisions of this Law, taking into account the provisions of Article 209 of the General Penal Code.
3. A consultant who knowingly certifies false documents to obtain payments for a Real Estate Project.
4. An Accounts Auditor who intentionally certifies financial statements which do not reflect the actual financial position of the Real Estate Developer or which are used to obtain payments for implementation of a Real Estate Project contrary to the truth or deliberately concealing material facts in his report.
5. Whoever offers Units for sale in fake Real Estate Projects.
6. Whoever embezzles or unlawfully obtains payments made to him to establish Real Estate Projects and is judicially prosecuted.
7. Whoever displays incorrect documents or statements in order to obtain a Real Estate Developer licence or to open an Escrow Account.
The Account Trustee or owner of the advertising medium who violates the provisions of the law shall be punished with a fine of 500,000 to 1,000,000 Syrian pounds.
A punishment of a fine of 100,000 to 200,000 Syrian pounds shall be applied to all those who fail to provide the Commission with required information in accordance with the provisions of this Law.

Article 18
The Engineering Consultant shall be liable, jointly and severally, with the Real Estate Developer, for any amount disbursed in violation of the conditions of the contract if this is accomplished by using a certificate contrary to the facts.

Article 19
In the event of any emergency circumstance that prevents the completion of the Real Estate Project, the Account Trustee of this Project must, after consultation with the Commission, take the necessary measures to preserve the rights of the depositors so as to ensure the completion of the Real Estate Project or return the amounts paid by the depositors.

Article 20
A fee shall be imposed on the Escrow Account agreements at a rate of 0.1 percent of the amounts deposited in the account, collected by the Account Trustees once for the agreement and supplied to the Commission within a period of at most three months from the date of the deposit on behalf of the Commission.

Article 21
The executive instructions shall be issued by a decision from the Minister based on the proposal of the Commission.

Article 22
This Law shall be published in the Official Gazette and considered in effect from the date it is issued.

Damascus on 18/01/1433 Hijri, to 14/12/2011 Gregorian

President of the Republic
Bashar Al-Assad

Post Views: 4