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Explained: New Judicial Fees Law Adds Financial Burden to Real Estate Lawsuits

14-06-2023/in Analysis & Features, HLP /by Rand Shamaa

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.

https://hlp.syria-report.com/wp-content/uploads/2022/07/Logo-300x81.png 0 0 Rand Shamaa https://hlp.syria-report.com/wp-content/uploads/2022/07/Logo-300x81.png Rand Shamaa2023-06-14 14:08:402023-06-21 10:05:30Explained: New Judicial Fees Law Adds Financial Burden to Real Estate Lawsuits

Explained: Percentages Added on to Real Estate Taxes and Fees

31-01-2023/in Analysis & Features, HLP /by Rand Shamaa

The Ministry of Local Administration and Environment issued 14 decrees on December 6, 2022, approving 14 similar decisions by Syria’s 14 governorate councils to increase direct and indirect taxes for 2023. Real estate fees and taxes made up a large portion of these decisions. 

Governorate council decisions

The 14 governorates’ decisions, issued in November 2022, all resembled one another. They were largely based on the Financial Law of Administrative Units No. 37 of 2021 and its executive instructions regarding the regulation of taxes and fees that administrative units collect and the collection methods.

Under Law No. 37, administrative units fund themselves from two sources. First are direct fees the units collect in exchange for providing services and granting certain licences. Second are added taxes and fees, including those collected by public entities that are transferred to administrative units.

The decisions by the 14 governorates state that the rate of increase in these added taxes and fees will only apply to 2023, indicating that they may change in the future.

 The language in the decisions makes clear that the added taxes and fees constitute a source of independent funding for governorates. They will serve to implement projects and services planned in their budgets. The 14 decisions also laid out the methods for collecting these taxes and fees, including how to pay them. The decisions clarified that they would be similar to the original taxes and fees, meaning that failure to pay them on time results in additional financial penalties. 

All 14 governorate decisions contain the following three terms in their first article: 

  1. The percentages to be added to state and administrative unit taxes and fees:
    The 14 decisions stated that administrative units would take an additional 10 percent share from certain taxes and fees collected by the state – that is, from indirect taxes collected by public entities. This includes real estate income taxes, arsat taxes, and some fees stipulated in Real Estate Fees Law No. 17 of 2021. 

    Arsat are plots of land slated for construction. The Law on Arsat Construction No. 82 of 2010 imposed an annual 10-percent tax on arsat based on each of the property’s estimated value. Meanwhile, the real estate income tax is a yearly tax on any real estate or building, whether completed or still under construction, for residential, commercial, or industrial purposes. This tax is equal to the rental allowance estimated according to the provisions of Real Estate and Building Plots Income Tax Law No. 53 of 2006.   

    Similarly, administrative units will add 10 percent to the fees they collect directly and benefit from, including the rental contract registration fees, construction permit fees, and improvement fees. Under Law No. 37, administrative units charge improvement fees in exchange for public benefit projects implemented by public or private entities that increase property values. 


  2.  Revenues from specific transactions:

    The decisions also stated that administrative units may impose local “fees” on certain transactions within their localities and for their benefit. For example, a one-time fee of one percent of the annual rental payment for each property rented by official public institutions will be collected upon signing the contract. Likewise, a one-percent fee will be collected for each amount invoiced by the state-owned company OMRAN – General Establishment for Domestic Trade of Metals and Building Materials, as well as one percent of each amount invoiced by private sector companies selling iron and building materials.

  3. Third, local fees for violations of laws and regulations:

    Within their localities, administrative units also collect one percent of the fines for violations of laws and regulations. The 14 decisions did not clarify what might constitute these violations or whether they include unlicensed construction. 

https://hlp.syria-report.com/wp-content/uploads/2022/07/Logo-300x81.png 0 0 Rand Shamaa https://hlp.syria-report.com/wp-content/uploads/2022/07/Logo-300x81.png Rand Shamaa2023-01-31 19:17:562023-01-31 19:17:56Explained: Percentages Added on to Real Estate Taxes and Fees

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  • Explained: Easement Rights for Public Benefit
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