Real estate in Morocco: Towards the end of reservation contracts?

For Mohamed Lazrak, a notary in Rabat and former secretary general of the National Council of the Order of Notaries of Morocco, the toughening of sanctions against developers concluding reservation contracts, provided for in the new text, remains insufficient. "With this new draft law, we will move from financial penalties to criminal penalties, including a prison sentence of one to 5 years. However, developers proceed gradually with the realization of subdivisions, to the conclusion of reservation contracts for the benefit of future buyers. This is now, by virtue of the new draft law, a criminal penalty," he explains to Médias24.

According to him, the initiative is certainly good, "but it does not take into account the difficulty of financing subdivisions. Bank loans only allow developers to cover 70% of their financing needs. Apart from personal funds, developers rely on advances of 10% to 15%, paid by future buyers, in exchange for subdivision reservation contracts. He will add: "We will remain in anarchy since even with the current law which, it, provides for financial penalties for this type of contract (fine of 100,000 DH to 1 million DH), the reservation of subdivision remains a common practice on the ground. 99% of developers would engage in this practice."

While the new text will punish those who reserve fictitious subdivisions, it should not, however, "be generalized to all operators," says the notary, believing that "it would be wise to rather regulate the reservations of subdivisions under construction instead of banning them. We can for example limit the amount of the advance, require a bank guarantee or grant mortgages to the benefit of future buyers of subdivisions." The amending law also provides for an increase from 3 to 5 years of the deadline for the authorization to create a subdivision, with the possibility of suspending the deadline in the event of unforeseen circumstances. The developer will also be required to provide a financial guarantee to cover the costs of any repairs one year after the provisional acceptance. This guarantee will be returned to him after the final acceptance of the work.