compulsory_extension – Syria Report

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Destroying Daraa’s Real Estate Market

10-01-2023/in HLP, News /by Rand Shamaa

Since regime forces recaptured the area in 2018, properties in Daraa city’s commercial souk have undergone continuous demolition, despite the fighting there being over. Rubble recycling crews are behind some of the demolitions, while the real estate owners themselves are demolishing other properties with the aim of removing the occupants and old tenants.

The souk occupies a large part of central Daraa, from the old western garage bus stop to the newer eastern one, and passes through Busra Square. It contains a number of different souks and shopping complexes within it, such as the consumers’ complex, Khan Al-Harir, Souk Al-Hamed, Souk Al-Rahmeh, Souk Al-Khodar and Souk Al-Hal. In addition to these shops, the souk is also home to lawyers’ offices, doctors’ clinics, X-ray and other medical laboratories, schools, government departments and trade syndicate offices.

The souk faced extensive damage during the fighting in 2012-2018 and emptied out. After the reconciliation agreement between opposition and regime forces in 2018, the regime set up military and security checkpoints at the entrances to the souk, according to The Syria Report’s correspondent in the area. The souk has only seen small, individual-level renovation work since then, in the area near the western garage bus stop. In exchange for SYP 100,000-200,000 daily fees, the checkpoints allowed local groups of rubble recyclers, known as tafteesh crews, or looting crews, to enter and demolish parts of the damaged buildings such as columns and ceilings in order to extract iron they could recycle and sell. According to our correspondent, each looting crew could extract enough iron per day from the rubble to sell at a minimum value of SYP 1 million, equivalent to around USD 2,100 dollars in 2018 when this looting first occurred.

Since mid-2020, the regime checkpoints have been removed and replaced by police patrols. However, those patrols still take bribes to turn a blind eye to the tafteesh crews. Throughout 2022, the tafteesh crews changed their methods and began to demolish entire buildings in the Daraa souk using heavy machinery.

Meanwhile, the owners of some damaged properties in the souk have obtained security approvals and demolition permits from the city council in order to demolish their properties and remove the rubble, our correspondent reported. Other owners, whose properties were partially damaged but who could not obtain demolition permits, allowed the tafteesh crews to extract the iron, thereby making their properties completely damaged and allowing them to obtain demolition permits.

Some owners seeking to demolish their properties in the souk are doing so in order to evade the furoogh tenancy system. A furoogh contract is a lease contract made for a commercial property for an indefinite period of time and signed before the issuance of Tenancy Law No. 10 of 2006. It is also subject to the compulsory extension system, which is an extension of the lease regardless of whether the lessor desires it. Under this system, tenants pay the property owner rent, usually a small amount that cannot be increased–for a shop in the Daraa commercial souk, this amount ranges between SYP 10,000 to SYP 15,000 per year. Meanwhile, the tenant has the right to sublease the shop, with all its tangible and intangible features, to another tenant in exchange for what is known as a furoogh payment, sometimes equivalent to the property’s current market value. Should the property owner wish to evict the tenant, they must pay them a furoogh payment.

According to an article published in the state-run Tishreen newspaper in October 2022, complete destruction of a leased building means, legally, complete loss of the rental. This permits the owner to cancel the lease contract because the property has become non-existent, allowing the land to return to its original owner.

Still, a property owner hoping to conceal their lease contract with an occupant or tenant must file a total property loss claim before the court. This means that cancellation of the tenancy relationship lies only within the judiciary, thereby ensuring that the lessor compensate the tenant. The city council also must issue a demolition permit for the property in question. In order to issue the permit, the property owner should pledge before the notary public on preservation of the occupants’ rights. Tishreen explained in its article that demolishing buildings with the aim of causing harm to the tenants is an abuse of rights, and that tenants may seek judicial recourse.

Aleppo City Council Lists Some of its Properties For Public Benefit

01-11-2022/in HLP, News /by Rand Shamaa

The Aleppo City Council issued a set of decisions in early September. It considered some of the real estate properties it owns to be subjected to the Investment Law No. 106 of 1958 and for public benefit.

Decisions No. 9177-9818, as well as No. 9183, 9185 and 9187, issued on September 1, 2022, and Decision No. 9275, issued on September 6, 2022, were all published within the first part of Official Gazette Issue No. 38 on October 12, 2022. These properties are located within the neighbourhoods of Old Hamdaniyeh, Hamdaniyeh Two and Three, the tourism district, Al-Assad Suburb project, Al-Assad Suburb Villas project, and the commercial district in the city of Hanano.

Tenancy Law No. 111

The properties mentioned above were originally leased under the old Tenancy Law No. 111 of 1952 and its subsequent amendments. Under the 1952 law, tenants of these properties may not be evicted as long as they are committed to paying rent. That is because these properties were subject to compulsory extension, meaning that their lease contracts were legally extended regardless of whether the lessor – in this case, the local administrative unit – wanted to do so.

Through Law No. 111, lessors of those properties meant for commercial and industrial purposes could waive their investment in the properties to someone else through a system known as furoogh. Under this system, the tenant has the right to hand over the property, its material, and other intangible components to another tenant in exchange for a furoogh payment equivalent to the property’s real market value. The new tenant then pays rent to the original lessor, which in this case is the local administrative unit. According to Law No. 111, the administrative unit has the right to re-appraise these rental payments every three years through a court-appointed committee.

Investment Law No. 106

Investment Law No. 106 of 1958 entitled administrative units to allocate their properties for investment to perform a service of public benefit–that is, the properties provide some benefit to the public sector.

The 1958 law also allows administrative units to evict any resulting investors within two months of the eviction notice. The eviction decision may not be appealed. Subjecting the properties to Law No. 106 also aims to raise the rent value, thus increasing local councils’ financial revenues.

Public benefit

Previously, according to State Council Opinion No. 364 of 1971, the Minister of Agriculture was tasked with determining which properties could be considered to be in the public benefit after consulting with the public institutions where the properties were located. However, this task was later given to the executive offices of governorate councils under Minister of Local Administration Decision No. 48 of 1972.

From leasing to investment

Minister of Local Administration Decision No. 200 of 1983 gave governorate councils the authority to change the legal designation of lease contracts to investment contracts. This change meant that the contracts would be subject to Law No. 106 rather than the previous Law No. 111. However, changing the legal designation of these contracts contradicts the terms that the two parties originally agreed on.

Why Investment Law No. 106 of 1958?

It bears mentioning that the above properties in Aleppo remain subject to Law No. 106 of 1958 despite a new Investment Law No. 18 of 2021. Article 3, paragraph B of Law No. 18 says that publicly-owned properties offered by public institutions for investment are subject to the law’s provisions. The 2021 law also allows investors to transfer ownership of the investment project to others with the same rights and obligations.

In reviving Law No. 106 of 1958, the city council appears to be attempting to restrict the rights of beneficiaries and not grant them any of the advantages stipulated in the newer 2021 law.

Tenant Leases in Old City of Aleppo Renewed

01-11-2022/in HLP, News /by Rand Shamaa

The Aleppo City Council in October issued decision No. 586, renewing the leases of more than 1,000 tenants of shops and other municipally owned properties in the Bahastiya neighbourhood, according to the state-run Tishreen newspaper. Bahastiya is located in Aleppo’s seventh real estate zone.

Bahastiya Street, the neighbourhood’s main thoroughfare, dates to the 14th century and is named after the Mamluk-era Bahastiya Mosque. The area sits within the larger Bab Al-Faraj district, part of the Old City of Aleppo. It underwent modernisation towards the end of the Ottoman era and became famous for its bars and brothels, which were licensed by Ottoman authorities in the early 1900s. After independence, Syrian authorities cancelled those licenses, but the brothels continued operating into the 1970s.

The neighbourhood was also home to many Jewish families since the 1400s, though they emigrated gradually in the 1940s. Most of the properties owned by the Aleppo City Council in Bahastiya originally belonged to those Jewish residents. However, it is unclear how the state expropriated those properties or whether it compensated the owners.

The city council leased these shops and other properties under the old Tenancy Law No. 111 of 1952 and its amendments. According to Law No. 11, tenants of such properties may not be evicted as long as they are committed to paying rent, which is usually very low. These properties are also subject to compulsory extension, meaning that their lease contracts may be extended whether or not the lessor — in this case, the local administrative unit — wants to do so. Law No. 111 grants administrative units the right to re-appraise the values of these lease contracts every three years through a court-appointed committee.

However, under decision No. 78 of 2018, issued by Aleppo City Council’s executive office, the council ended this tenancy relationship unilaterally. Decision No. 78 considered the tenants to have “placed a hand” on the properties and demanded that they “make the equivalent payment” – meaning that the council saw these properties as being under the control of their current occupants – and then they must pay rents comparable to those typical of the area. In addition, the termination of the tenancy relationship was unilateral, meaning that decision No. 78 was issued without accounting for the tenants’ opinions in revoking their contracts.

Then the city executive office issued decision No. 69 in 2020, which ended all tenancy relationships between the city council and owners or occupants of expropriated real estate. According to decision No. 69, this did not mean the eviction of those occupants but rather that they would now be obliged to pay rents comparable to typical rental payments in the area.

Several of these tenants subsequently filed lawsuits against the city council in which they objected to the unilateral cancellation of their tenancy relationship and said the council’s decision to raise their rents was illegal.

Most recently, decision No. 586 of 2022 cancelled the previous decisions No. 78 and 69. It called on the properties in question to be re-appraised so long as the tenants drop their lawsuits against the city council. Since Tenancy Law No. 111 of 1952 has not been in effect since 2011, it is not clear what the legal basis was for Decision No. 586 to renew the leasing relationship with tenants.

The Aleppo City Council’s executive office member told Tishreen that decision No. 586 corrected the previous decisions and straightened matters out. The move was based on Decree No. 13 of 2022, which granted tax exemptions and other wide-ranging concessions within old city centres in Aleppo, Homs and Deir-ez-Zor governorates, including within historic souk districts. However, the exact relationship between Resolution No. 586 and Decree No. 13 for the leased properties in Aleppo remains unclear, except for some tax exemptions enacted in recent years.