Consumer Protection Law in Egypt
The application of Article 15 of the Consumer Protection Law No. 181 of 2018 and its effect thereof on Private Compounds:
Recently, the real estate development companies (the “Development Companies”) stated in their apartments and units’ sale contracts that the Development Companies shall be entitled to receive a percentage of 5% and up to 10% from the total purchase price of the resale of such apartments or units.
We will elaborate the legalities of such clause in the following:
Article 15 of the Consumer Protection Law No. 181 of 2018 stipulates:
“The Law prohibits real estate development companies from advertising any real estate projects or lands for sale without obtaining a construction license for the project first in accordance with the Construction Law No. 119 of 2008.
The real estate development companies’ contract shall not include any obligation on the seller or its successor to be charged with a percentage, fee or commission from the purchase price of the unit or for such disposal. Any obligation otherwise shall be null and void.”
According to Article 15, the law now prohibits prospectively the common practice of the Development Companies that related to imposing a percentage up to 10% in the event of reselling the relative unit from the total of the purchase price as a mean of making profits from their clients, even after they sold the property already. Any clause stipulating for such behavior shall be considered null and void.
It can be concluded that under Egyptian Consumer Law prohibits receiving a percentage or a profit from the proportion of post-sale operations.
The Economic courts have the jurisdiction to settle civil and commercial disputes arising from the application of the provisions of the said Law.
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