Explained: New Judicial Fees Law Adds Financial Burden to Real Estate Lawsuits
In April, Syrian President Bashar al-Assad issued Law No. 6 of 2023 regarding court fees, insurances and litigation expenses, replacing the old court fees law, No. 1 of 2012, and its amendments, which were released in Law No. 38 of 2014. The provisions of Law No. 6 2023 were put into force starting May 1, 2023.
Law No. 6 raises the fees imposed on legal transactions in general, and real estate-related lawsuits in particular. These fees remained constant under the previous Law No. 1 of 2012, despite the depreciation of the Syrian pound in recent years. However, the new law came with numerous complexities concerning housing, land and property rights. It also imposed additional financial burdens on citizens amidst Syria’s deteriorating economic conditions.
Court transaction fees are those collected by the public treasury for the tasks performed by various judicial departments, including registering a lawsuit, extracting a judgment and executing it. Judicial insurance fees are those paid by people who challenge a judgment, including fees for appeal and cassation. Litigation expenses are all costs paid by the parties during the lawsuit, including expert fees, court travel expenses and legal fees.
Article 24 of Law No. 6 stipulates that fees are to be calculated based on the current value of the property at the financial departments, in all matters related to real estate ownership lawsuits, as well as when dealing with Amiri lands, and usufruct and ownership lawsuits.
Real estate ownership lawsuits are those that focus on property ownership, including lawsuits confirming real estate ownership in which the seller acknowledges the sale of the property to the buyer, so the buyer may obtain a judicial ruling confirming their property ownership. There are also lawsuits concerning property disputes, initiated when a conflict arises over property ownership. Each party presents its evidence and defences before the court supporting their ownership.
Lawsuits over Amiri lands are cases filed by someone in possession of such property who takes over a piece of Amiri agricultural land and cultivates it. After 10 years, they then have the right to confirm their ability to dispose of the property.
Usufruct and ownership lawsuits, on the other hand, occur when someone transfers the usufruct, or the right to use and profit from a property, to another person while the seller retains the actual ownership.
Article 24 of Law No. 6 sets the fee rate at 0.01 of the property’s current value for all the above types of lawsuits, without distinguishing between them. This is contrary to the older, nullified law, which imposed a half set fee for lawsuits concerning acknowledgment of ownership and lawsuits concerning usufruct and reversion, compared to real estate dispute lawsuits and Amiri land handling lawsuits.
The new 0.01 rate is a considerable sum, considering the increase in property values. Thus, the new law’s imposition of high fees on real estate ownership lawsuits, regardless of the lawsuit type, may deter some people from resorting to the judiciary to establish property ownership.
Financial departments now rely solely on the current values of properties, with the assistance of committees, following the issuance of the Real Estate Sales Law No. 15 of 2021. The current value was not applied in the old court fees law, which calculated fees for real estate ownership lawsuits based on the value set for the property in the financial departments, a fixed sum that does not reflect the property’s actual value.
The new law requires half of the set fee (or 0.005 percent the property’s current value) to be paid when registering the lawsuit, and the other half when the judgment becomes final. This is also a new step not previously stipulated in the old law, which stipulated that the fee be paid upon the issuance of a ruling by the court of first instance. This new amendment may delay the registration of real estate ownership lawsuits, potentially opening the door for manipulation through committees and loss of owners’ rights.
Since the current values of properties in many real estate areas are yet to be appraised, this new measure requires a preliminary Real Estate Appraisal Committee in the financial departments to assess the property value based on the land area statement and the subdivision plan kept in the Land Registry, as well as physical inspection of the property to note any changes in its characteristics. Therefore, a long time might pass between the registration of the lawsuit and the issuance of the judgment, which could mean a change in the prevailing property value between the two steps and, as a result, a discrepancy in fees.
The fees imposed on property lawsuits under the new law increases the financial burdens on property owners in general. This is on top of the tax imposed by the Real Estate Sales Law No. 15 of 2021 on property ownership transactions. It also includes the annual tax on all properties and constructions of different types, whether fully or partially constructed, for residential, commercial or industrial purposes, as imposed by Real Estate and Building Plots Income Tax Law No. 53 of 2006.
Here it is essential to differentiate between court fees and property taxes. The tax is imposed on the taxpayer as a final obligation without receiving something in return, unlike the fee, which incurs some benefit onto the payer. Furthermore, the objective of imposing the tax is to achieve certain economic, social and financial goals, whereas the fee aims to generate revenue for the treasury.