Lebanon Property Ownership

Foreign acquisition of property is governed by Law No.
296 dated April 3, 2001, which amended a 1969 law (No.
11614). The new law eased legal limits on foreign
ownership of property to encourage investments in
industry and tourism, abolished discrimination for
property ownership between Arab and foreign nationals,
and lowered real estate registration fees from six
percent for Lebanese and 16 percent for foreigners to
five percent for both Lebanese and foreign investors.
The law permits foreigners to acquire up to 3,000 square
meters of real estate without a permit; foreigners can
acquire more than 3,000 square meters subject to a
Cabinet Decree. However, the law prohibits acquisition
of property by Palestinians for fear of implantation.

Lebanon Land Rights

A transfer tax is imposed on all real property devolving upon others by inheritance, wakf donation or any other mode with no return equivalent to its real value. This tax covers (1) all real property situated in Lebanon passing from a Lebanese or foreigner wheresoever he may be resident; (2) all property situated outside Lebanon and passing from a Lebanese residing in Lebanon; and (3) all property situated outside Lebanon passing from a foreigner residing in Lebanon. This tax may be avoided by international conventions.

Lebanon Forms of Ownership

Husband and wife have their separate estates. The wife has full control of her property and can manage it without any assistance or interference from her husband. She can sell it, lease it, mortgage it, or dispose of it in any manner she deems fit.

Lebanon Real Estate Info Summary

No alien can acquire real property or long term leases of over ten years, or very long term leases of over 20 years, without previous authorization granted by governmental decree. Every natural citizen may acquire realty of up to 10,000 square meters provided he starts to build on acquired property within a period of two years from the date of registration of land in the Registry.

Miri lands are state domains. Wakf is mortmain. In both classes, the dominium plenum is in the state, while the legal possession and use, together with the right to transmit to heirs, and to alienate inter vivos are in the tenant. These classes of land devolve on the heirs in the following order: (1) the children, male and female, share and share alike; (2) the grandchildren, male and female, share and share alike; (3) the father and mother; (4) brothers and sisters germane or of the whole blood; (5) brothers and sisters consanguine; (6) brothers and sisters uterine; (7) the surviving spouse.

The judiciary is nominally independent," reports the Economist Intelligence Unit, "but in reality often acquiesces to the demands of the security services and the police. Courts deal with civil and criminal cases, which are brought by a government-appointed prosecuting magistrate, who exerts considerable influence over judges, for example recommending verdict and sentence. Trials, particularly commercial cases, have nevertheless been known to drag on for many years." (Freedom Index, 2006).
Applicable law is agreed upon by parties, provided contract is not contrary to public policy of state.
If a contract contains no express agreement as to law applicable, court will seek to ascertain intention of parties, and will decide accordingly.

Normally, law applicable is that of country more closely connected with contract. Where contract is one for sale of real property, law applicable is law of situs of property.

Only contractors inscribed on List of "Accepted Contractors" are permitted to make offers for government contracts. For enterprises of a large magnitude, international bids are called for. With offer, contractors must deposit a sum equivalent to 3% of total amounts of work involved. Certified check on a recognized bank is acceptable. Force majeure; extinction of principal obligation entails extinction of accessory abligations and of mortgages given as guarantee; prescription; impossibility of execution.

Property Taxes:

A transfer tax is imposed on all real property devolving upon others by inheritance, testament, wakf donation or any other mode with no return equivalent to its real value. This tax covers (1) all real property situated in Lebanon passing from a Lebanese or foreigner wheresoever he may be resident; (2) all property situated outside Lebanon and passing from a Lebanese residing in Lebanon; and (3) all property situated outside Lebanon passing from a foreigner residing in Lebanon. This tax may be avoided by international conventions.

Land Use & Control:

On March 20, 2001, the Lebanese Parliament endorsed amendments on the legislation regarding the Foreign Acquisition of Property, which was proposed by the Cabinet on December 13, 2000. Law No. 296 is meant to provide incentives for foreign investment in industry and tourism through reactivating the real estate sector by (a) easing the legal limits on foreign ownership of property, and (b) lowering the estate registration fees to 5% for both Lebanese and foreign investors. The law stipulates the following:

Whereas the existing law limited the acquisition of land by foreigners to 5% in each Mohafaza, the new law allows foreigners to acquire 3% of the total area of Lebanon regardless of the geographic location subject to one condition: foreigners can acquire no more than 3% of the total area of a caza. One exception to this law is Beirut, where foreigners are allowed to acquire up to 10% of the total area of the capital.

Foreigners can now acquire 3,000 m² of land without the passage of a decree by the Council of Ministers. The authorization to acquire a plot of land for a specific project has to be executed within a period of five years (extended only once for an additional five years if requested). It is legally allowed for foreigners to buy more than 3,000 m² subject to a Council of Ministers’ decree (Lebanese Investment Agency).

Lebanon Mortgages & Financing

Mortgages are of three classes: (1) contractual; these may be created by an instrument formally executed before the Land Register, or his auxiliaries, (2) legal mortgages; such as those accorded by law to a minor against the property of his guardian; the married woman against the realty of her husband for the dower; the state, municipalities and other public administrations, against the property of their receivers and accountants; the vendor barterer, and the party to partition, against the realty sold, partitioned or bartered, when no contractual mortgage was made, for the price; the creditors and legatees of an estate; and (3) judicial; arising from a judgment against a debtor.

The property subject to mortgage and the amount due must be specifically mentioned in the instrument. Mortgages have priority according to the date of their registration at the Land Registry.

Lebanon is a financial hub for banking activities in the Middle East. It has one of the
more sophisticated banking sectors in the region. Bank secrecy is strictly enforced. The
Central Bank (CBL) regulates all financial institutions and money exchange houses. In
April 2001, Lebanon adopted Law No. 318 which created a framework for lifting bank
secrecy, mandating suspicious transaction reporting, requiring financial institutions to
obtain and maintain records of customer identification information, and facilitating access
to banking information and records by judicial authorities.
Foreigners can open accounts in banks operating in Lebanon and get credit on market
terms. The Banking Control Commission (BCC) closely monitors bank credits. All
credit transactions are subject to timely and accurate disclosure. The National Institute
for the Guarantee of Deposits insures up to LL 5 million (about $3,317) of Lebanese and
foreign currency deposits in commercial banks. Bank financial statements are in
compliance with international accounting standards. Independent auditors audit annual
accounts, and most banks utilize internationally recognized accounting firms.