Payment of the initial deposit, final payment and additional expenses is usually made via a Moroccan bank account. So you will need to transfer funds from your home country bank to an account that you’ll open in Morocco.
Make sure to make these transfer some time in advance for this type of international transfers make take up to a couple of weeks. The payment of a 10% of the final price is usually made at the time of signing the preliminary contract, and the payment of the remaining 90% plus the additional expenses at the time of signing the final contract.
Once the money is on a Moroccan bank account, the payment method preferred by notaries are the certified checks issued by your Moroccan bank in the name of the notary. This method is the safest to them as your bank office will only issue it after verifying that there are enough funds in your account. Your bank will be used to issue this type of check and will do so rapidly and free of charge.
The notary will transfer these funds into his escrow bank account and will only transfer them to the seller’s account when every formality of conveyance is completed. This is safest for you than any other mean of paying for your property.
The additional expenses are all other payments other than the property payment that need to be made by the buyer of a house. These include mainly the taxes, the administrative expenses and the fees of the estate agent and notary.
Note that the following list of expenses relates only to titled properties, melkia properties have some different (and lower) additional expenses.
These is a list of all the additional expenses involved in buying a residence or piece of land in Morocco (percentages refer to the full sales price of the property):
– 4% registration tax (known as “droits d’enregistrement”)
– 1% notary fees (plus 10% VAT)
– 1% Land Registry tax of title deed transfer
– 2.5% estate agent fees (plus 20% VAT)
– 3520 DH for administrative expenses
– 150 DH for the certificate of property
– 75 DH for official stamps
In short, a property on urban land that is to be used as a private residence will entail additional expenses of about 8.5% of the property price. A rural property or a commercial urban property will require extra expenses of 10% of the property price.
All the additional expenses are paid at once by the seller into the notary’s escrow bank account at the time of signing the final contract together with the payment proper for the property.
A “melkia” is an archaic title deed that is still in use for properties that are not registered in the Land Registry. Still today, most dars and riads in the medinas and many pieces of land are transferred via these melkias.
However, at any point, a melkia property may be registered with the Land Registry and become a titled property.
Melkias are drawn up in Arabic handwriting and many are more than a century old, so they may take a while to decipher the old fashioned language even more the specialized aduls.
The title deed (“titre de propriété” in French) is the only absolute guarantee that a property indeed belongs to a particular person.
That is why, in theory, one should only buy properties with a title. In practice, titled medina properties are extremely rare (usually the few ones which are titled were melkia properties bought by Europeans as melkia properties and then registered by them with the Land Registry) and so people interested in medina dars and riads need to buy melkia properties.
Buying melkia properties in the medinas is common practice and present very low risk if done properly. This means finding a reliable adul that is recommended by your estate agency or by a knowledgeable friend. A good adul will ensure that all the owners (as many heirs usually share ownership) are identified and that they all agree with the sale. This is the only pitfall of buying melkia properties, the possibility that one of the heirs was not informed of the sale and challenges the sale afterwards. Fortunately, the sociological characteristics of the medinas (more like villages where everyone knows each other) makes easy to rule out the possibility of any “surprises” like the last-minute heir.
In the case of buying a melkia piece of land it is important to register it in the register as soon as possible. The reason is that after you have built a house on the plot, it is very difficult to get the so-called “living authorization” (“permis d’habitation” in French) if the land is not titled. And this “living authorization” is required in order to get a water, energy and telephone supply contract.
After buying a melkia property, you may want to get it converted into a titled property by registering it in the Land Registry. This process is slow and laborious and you will need the services of a notary. Count at least one year.
You may also have agreed with the person who is selling to register the property before buying it. In this case you and not the owner will be paying the notary fee and other expenses unless you have made a special deal with the owner.
During the process, the notary will have to trace all the owners of the property and made them sign an authorization of registration with the Land Registry. After the request has been made, the Land Registry must send an expert to measure up the exact boundaries of the property and then make a public announcement for a “période d’opposition”: a 4-month period during which any person who has something to claim may do it. If after this period nobody made any claims, the definitive title deed will be issued to you.
In Morocco, both notaries and lawyers can undertake the conveyancing process. This is so since 2002, when lawyers were authorized to carry out a process that was before a realm exclusive to notaries. Although notaries are the preferred law professional in property transactions, both have some pros and cons to consider.
- They are specialized in conveyancing and always know property law in great detail.
- They possess escrow bank accounts that ease and make safer the payment for the property.
- They are not supposed to provide any special legal advice to any of the parts.
- They usually draw up generic contracts, in opposition to more tailored ones.
- One of their roles is to provide personalized legal advice to the client (in this case, you).
- There is no notary tax to pay (0.5% of the property value).
- They can draw up contracts that are tailored to the needs of the client.
- Few lawyers are as specialized in property law as notaries.
- They don’t possess escrow bank accounts.
An “adul” is the Islamic equivalent to the notary. The legal system regarding property in Morocco is mixed: titled properties (properties registered in the Land Registry) are dealt with by notaries and lawyers (whose working language is French) and all melkia properties are dealt with by aduls (whose working language is Arabic).
Most old houses in the medinas are melkia properties, so if you are interested in this kind of ancient residences you will require the services of an adul. But don’t worry, seek advice regarding recommended aduls and you won’t be having any problems. A professional adul won’t allow the buying process to continue if they detect any legal risks involving a particular property.
Many properties (especially in medinas) are rented to large families who may be difficult to make move out. If you are going to buy a property that currently has tenants, you must make sure that the owner will take the necessary measures in order to get the tenants out before the signing of the final contract. In cases the owner claims that he will be needing the money from the sale to compensate the leaving tenants, then you must request the notary to include a clause stating that the payment of part of the house price will only take effect after the current tenants have left the house and returned the keys.
Although for many goods Morocco is the country of bargaining, when it comes to buying a house the situation is much more similar to what happens in Europe, that is, it is very difficult to persuade the owner to reduce his price. In the rare cases where you can get a reduction it will be just a small rounding down and it is likely that the owner had already thought about offering this rounding down from the beginning. Consider that in the very best of cases you won’t get more than a 10% discount.
What does happen, again like in Europe, is that the owner himself decides to bring down the price of his property after a while. Often, house owners are too optimistic about their property, and ignorant of the market reality, set up a price too high. In these cases, after a number of unsuccessful negotiations with potential buyers, the owner will end up reducing the price.
It is very common practice in Morocco to declare that a property has been sold by a price less than the real amount paid. That is, part of the price is declared and part does not recorded anywhere (usually paid in cash the same day of signing the final contract). This benefits the seller who will need to pay less capital gain tax on the transaction, and both parties in the lesser fees they will need to pay.
Although officially illegal, this practice is so spread that it is often not possible to avoid. Some sellers may be persuaded to declare the whole sales price, but most of them won’t give in to the request.