A Decision to Extend the Period of

On 8 March 2018, the Council of Ministers issued a decree extending the period allocated for submitting legalization requests to the competent authorities by the occupant/transgressor of State private property for a period of three months starting from 14 March 2018 (the "Decree”).[1]

Background

This Decree was issued in light of the issuance of the Law on Disposal of State Private Property (the "Law")[2] on 22 July 2017 to determine the procedures for legalizing the disposition of the state’s privately-owned lands that have been subject to transgressions. The Law laid out the general outline, leaving many details to the standards and conditions to be issued by the Council of Ministers. A period of three months (renewable for one term) was set for submitting requests for legalization. The Law also adopted a decentralized approach, leaving it up to each administrative authority to establish its own special committees for legalization, instead of assigning the task to a central committee. It should be noted that the Law applies only to cases of illegal possession (it does not apply to transfer of state private property in general), and that it only applies when the transfer or the legalization process is made in favour of the existing occupant/transgressor. The law also contained the procedures to be followed for the legalization process, in addition to the penalties to be applied in cases of violations and transgressions. Following the promulgation of the Law, the Executive Regulations was issued on 17 December 2017.[3] It stipulated that an owner wishing to dispose of their land should have built on it before the enactment of the Law. It also emphasized that the provisions of the Law shall not be applied to land that is merely surrounded by fences, or that violate defence, national security, or civil aviation requirements. The Executive Regulations also added that the Law will not apply to any other situation that is not based on serious grounds (this vague stipulation will definitely need further interpretation). The Executive Regulations included a very detailed description of all the provisions governing the legalization process. The process starts with a request that is submitted to a committee formed by representatives from the Ministry of Water Resources and Irrigation, the General Authority for Governmental Services, the Egyptian General Survey Authority, and the Real Estate Tax Authority. In all cases, the position of each representative is to be at least a ‘General Manager’ or its equivalent. The Executive Regulations also stipulated the competences of this committee in detail, in addition to the fees to be paid by the applicant throughout the process. It is worth noting that State private property is that property (usually land) which the State may dispose of by means of sale and transfer, either by way of divesting full property rights, or through the granting of leaseholds, usufruct or other partial property rights. The transfer or assignment of State private property is a very complex matter that is governed by an intricate web of legislation and supervised by multiple administrative bodies. For instance, there is a legal framework for State desert lands, one for agricultural land, and a third for land in Sinai. The legal framework also varies according to the purpose of use. Investment Law No. 72, issued in May 2017, gave the General Authority for Investment and Free Zones (“GAFI”) an important role in relation to the allocation of land for investment projects. It allowed investors to obtain approvals from GAFI directly (with the option of attaining them from other administrative bodies as well), and excluded said allocation from the application of the Bids and Tenders Law. As a reflection of this complex context, Article (1) of the recent Law on the Disposal of Private State Property defines the "competent administrative authority" in general terms as "the ministry, governorate, public body, state apparatus or other public corporate entity with the authority to manage, use, or dispose of, State private property that is under its jurisdiction". It is necessary to point out here that this recent Law is essentially a reflection of the State's reaction to transgressions on its own property or territory. Thus, contrary to the State Property Act of 1991, it does not apply to private property that the State decides to dispose of for the first time. In light of the above, the recently issued Decree has extended the time limit granted for legalizing transgressions on State private property for an additional three-months period that ends on 14 June 2018. This is the first and last renewal of that grace period in accordance to the Law and its Executive Regulations.

Conclusion

The promulgation of legislation to regulate the disposition of State property following statements by a several official authorities confirming the need to take quick and substantial measures to deal with the extensive transgressions on State owned land, and giving time and extending it for the legalization of these transgressions, is without doubt a positive development. However, in view of both the Law and its Executive Regulations, there are several obstacles that may face those wishing to legalize the status of their ownership. One of these is the risk of having existing transgressions (such as buildings and erections) over land removed at the expense of the transgressor. In addition, an agreement must be concluded with the transgressor/occupant by way of direct contracting, on the condition that the transgression has occurred prior to the enactment of the Law in July of 2017, and after obtaining an approval from the Ministry of Defence. The Law exempts said transactions from being subject to the Bids and Tenders Law, even though Article 31 of said law provides that real estate may be disposed of by direct agreement between the State and the person with adverse possession. The Law also fails to address the role of the land recovery committee and its relationship with other administrative bodies, neither did it provide the criteria to be met while concluding contracts between administrative bodies and the person in adverse possession. Moreover, the Law has not set out a timeline for the issuance of the standards and conditions by the Council of Ministers to ensure proper enforcement. With respect to challenges in Executive Regulation provisions, these include the fees that the applicant is required to pay, which could act as discouragement to those wishing to legalize their status from taking that step. This is since former transgressors who have already paid significantly to keep the land under their title, will now be required to pay large amounts to legalize the status of land they already possess. This is in addition to Real Estate Registry fees and land ownership taxes.   [1] Council of Ministers’ Decree No. 6/2018 extending the period allocated for submitting legalization requests to the competent authorities by the occupant/transgressor of State private property for a period of three months, Official Gazette, Issue No. 9 (bis) (w), 8 March 2018. [2] Law No. 144/2017 on the Rules and Procedures for the Disposal of State Property, Official Gazette, Issue No. 29 (bis), 22 July 2017. [3] Council of Ministers’ Decree No. 18/2017 enacting the Executive Regulations of Law No. 144/2017 on the Rules and Procedures for the Disposal of State Property, Official Gazette, Issue No. 50 (cont.), 14 December 2017.