Buying a house in Morocco

Jos Deuling,  Sunday, 1 May 2011

In this post, I list some things you have to consider when buying a home in . The first part "Before the sale" provides information on mortgages, the role of the notary, the lawyer and the agent. The second and final part is a description of the sales process.

Before the sale

Financing & Mortgage

If you are planning to buy a home or apartment in Morocco, then you might consider a mortgage with a . The maximum amount you can borrow is 70% of the value of the property. The maximum length is 20 years. In determining the maximum loan amount, Moroccan banks will go no further than 40% of your net income.

A Moroccan mortgage is nearly always a mortgage with a variable amount of interest which you pay off monthly. A mortgage with a fixed interest rate is not common. Interest-only mortgages are also not familiar. The mortgage in Morocco is linked to the so-called Taux. This means that mortgage rates will be revised twice a year. Mortgage rates in recent years were between 5.5% and 10%.

Sand 
dunes
in the Moroccan desert Sanddunes in the Moroccan desert 

Foreigners and mortgages

Some Moroccan banks won't give foreigners a mortgage. If they do business with you, you can usually only get a mortgage with monthly debt repayments. An interest-only mortgage is not possible.

Foreigners who already own a home in their own country should consider getting a second mortgage. The mortgage rates are currently low, and you have a wider range of mortgage products in your own country.

Lawyer

It is wise to hire an independent . The lawyer finds out if there are no debts on the house. In Morocco, the debt will go along with the property and not with the owner. The lawyer also makes sure that the seller owns the property. There may be multiple owners. All owners must sign the purchase contract.

The lawyer will also advise you on the terms of the contract. You should always have a ‘subject to finance’ paragraph in the sales contract. Everything should be legally well put together. As a foreigner, you can also consider hiring a lawyer in your own country. That is a little more expensive.

The agent or developer will probably recommend a lawyer, but as a foreigner, it is much better hiring an independent Moroccan lawyer. Make sure to get a price quote in advance.

The Notary

The role of the notary in Morocco is similar to the role of the notary in France or Spain. Morocco was in the last century a French and Spanish protectorate and in that period elements of the French and Spanish legal system were adopted.

The notary checks if any debts rest on the property. He also arranges the paperwork: agreement for sale, binding sales contract and mortgage deed. All documents are in French.

Another important task of the notary is collecting the taxes. The notary fee seem high because many people do not realize that most of the costs include government taxes (for example transfer tax) and registration (cadastre, mortgage). The notary fee is between 0.5 and 1%. The percentage depends on the difficulty of the case. If he has to spend more time on sorting things out, than the percentage will be higher.

The notary also plays a prominent role in buying 'off-plan'. 'off-plan' means that you buy the house based on the plan of the architect. When buying an off-plan property the developer requires a deposit. In order to protect the consumer from failure of the project, a law called the ‘Vente en l'Etat Futur d'Achevement’ (VEFA) is effective since November 2003. Project developers are required to include a bank guarantee issue. Some developers evade this law. You can deposit the money into the bank account of the notary. The notary will pay the developer only if the project meets its commitments.

In general, never pay directly to the agent or seller. Allways put your money on a deposit account of the notary.

The notary is independent. That is how it should be. I read somewhere that because of the corruption it is wise to hire an independent lawyer. As a foreigner, you can also hire a lawyer in your own country to assist you in the buying process.

Agent

Many homeowners in Morocco try to sell their homes through word of mouth. It saves them 2.5% agency commission. If you are in Morocco and meet people, ask them if they know people who want to sell their homes. You are not obliged to use an agent.

If you look for a villa or apartment in one of the many new resorts, then it is best to hire a foreign agent or get in touch with the developer.

You can also hire a local agent, called a simsaar. Most simsaars do not speak English or French. Simsaars know the local market and can figure out the owner of the property so that the potential for legal problems is relatively small. A simsaar will asks a fee of 2.5% of the sale price which you have to pay if the deal is closed. Most simsaars work exclusively on a commission basis. Some ask a small deposit. If you take your time finding a home and want to see many properties, then it will cost him much time to give you advice. It is a excellent idea paying a fixed amount per day. Withheld on the commission of 2.5%. This keeps the simsaar highly motivated.

A few practical tips:

Make sure the agent knows exactly what type of property you want. If the agency still comes with a different type just go to another agent.

Do not tell the agent your maximum budget. Let him look for a house that is 25% -35% below your budget. You will get an idea what’s on the market for that price. Moreover, you do not run the risk that the price of a lovely house fast increases and matches your budget.

Always ask for the price before you go to see a house.

Inspection and survey.

It is useful to have a structural survey carried out by an architect or contractor. It costs between 500 and 700 Dirhams. That is about 60 euros.


The buying process

Verbal Agreement

If you have a verbal agreement with the seller, then you make a deposit, an "Arbon". However, if the seller gets a better offer, he may still decide to sell the property to another buyer. You get the deposit back. If you do not want to run the risk that the property is being sold to another buyer, you have to sign a preliminary contract as soon as possible.

Preliminary Contract

If both parties agree to sell, then a preliminary contract will be drawn up. This contract specifies the price, conditions precedent and possibly a penalty clause. 'Subject to finance' is, like in the UK, the main condition precedent. You can also add that the sale is only to be continued if your lawyer has checked the sales contract. The result of an inspection should also be a condition precedent. All the conditions precedent are to be explicitly included in the preliminary contract. It is, therefore, advisable to bring your own lawyer.

When buying an existing home, you need to make a down payment of 10% of the sale. With off-planyou have to make a 40% deposit.

After signing the preliminary contract, you have three days to forgo the purchase without giving a reason. You do not have to pay a fine.

You do not need to be present at the signing of the preliminary contract. Your lawyer can be your proxy.

Definitive Purchase Agreement

After you have signed the definitive purchase agreement, the notary will do all the paperwork. This could be time consuming because the notary must identify all owners. As in Portugal, in Morocco all the family members must sign the sales contract. The notary also provides the mortgage deed.

Approximately 4 weeks before the transfer you will receive a draft of the final sales agreement. You have to sign and return the draft. The notary then sends you an invitation to sign the final contract of sale. Visit the house for a last inspection just before you sign the agreement.

When signing the final purchase contract you can be represented by your lawyer. After signing the sales contract, you have to pay the rest of the price, the notary fee and transfer tax.


Conclusion

While writing this post, I have visited a lot of different websites. The most common advice on all these websites was to hire an independent lawyer. If you buy an existing property, the legal ownership has to be 100% clear. You do not want end up in legal proceedings.


Tile with flower motif  mosaic from Casablanca, Morocco
Search for Moroccan property and real estate for sale. New apartments, houses, old riads. Properties in Marrakech and Tangier. Real estate adverts from private sellers and agencies. 
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