MLA’s Real Estate Practice Group provides comprehensive and highly diverse advice on all aspects of real estate law, including, but not limited to, acquisition, development, leasing, financing, compliance, entitlements, and disposition. MLA’s Real Estate Practice Group has a depth of experience in representing private entities, developers, lenders, borrowers, and investors, both domestic and foreign.
The Real Estate Practice Group is well versed in transactions involving land leases, including drafting, reviewing, and negotiating their terms. The group regularly assists clients in matters involving the incorporation of real estate companies, acquisition of property, due diligence on the immovable property to be acquired as part of real estate investment, negotiation of terms of transfer of land lease rights for real estate development, and, drafting and reviewing contracts of sale, servitude, and mortgages.
In cooperation with the Corporate & Commercial Practice Group, the Real Estate Practice Group has significant experience in assisting with orchestrating mutually-beneficial financial agreements on behalf of both lenders and borrowers surrounding the purchase, refinance of the property, and project finance transactions. Some of the transactions in which MLA has been involved in include hotel projects, luxury apartments, mega real estate projects, and in other sectors and industries.
The Real Estate Practice Group also assists several foreign and international missions and delegations in Ethiopia (bi- and multilateral) as well as non-governmental aid organizations by providing advice and counsel in all matters related to real estate and property acquisition and rental agreements.
Mehrteab Leul & Associates’ Quick Guide Related to Real Estate and Conveyancing in Ethiopia
- The Constitution of Ethiopia provides that land belongs to the state and the nations, nationalities, and peoples of Ethiopia. The Constitution similarly provides that the Government will ensure the right of private investors to use land on a leasehold basis.
- Ethiopia’s current investment policy not only encourages foreign investment in the real estate sector but it is 100% open and suitable for foreigners to enter the sector. Nonetheless, there are no duty-free privileges or any other incentives provided by the government to the sector.
- The 1960 Civil Code of Ethiopia, Investment Proclamation No. 769/2012 and its amendment, Ethiopian Building Proclamation No. 624/2009, Building Regulation No. 243/2011 and the Building Directive, Urban Land Lease Holding Proclamation No. 721/2011, Urban Land Lease Holding Regulation No. 49/2012 and the Urban Landholding Registration Proclamation No. 818/2014 are the principal laws that govern land and real estate matters in Ethiopia.
- However, real estate remains one of the under-regulated sectors in Ethiopia. Since there is no single law that specifically applies to the sector, there exists a huge gap in laws that govern the relationship between the real estate developer and prospective buyers. It is a recent development, however, that the government is designing and drafting such a law.
- The Urban Land Lease Holding Proclamation of 2011 gives investors the right to use of land on leasehold for periods of 15 years up to 99 years, depending upon the purpose for which the land is to be used. The period of urban land lease is currently 99 years for residential purposes and 60 years for land acquired for commercial purposes. The land cannot be mortgaged or sold, but the lease value of the land and the fixed assets thereon may be mortgaged or transferred to third parties. Regional governments and municipal administrations are authorized to allocate rural and urban land on lease in accordance with their respective laws.
- An investor who wants to develop real estate in Ethiopia must first secure an investment permit from the Ethiopian Investment Commission provided that it fulfil all requirements such as proof of a minimum capital of USD 200,000 for a wholly foreign owned investment and USD 150,000 for a joint investment of foreign and domestic investors, and payment of registration and permit fees. Any foreign real estate developer may acquire land in Ethiopia through lease from the government or through a private contract from a private landholder. An investor who acquires land under a lease has to enter into a land lease agreement with the Government and obtain a lease holding certificate/title issued in its name.
- Once the necessary permits, certificates and land for the investment have been acquired, an investor must then be issued with a construction permit from the competent office, on presentation of documents such as the proposed building plan and a title to the land.