Draft Amendment of Lands Registration Fees Law, Rules and Laws Related Thereto

1. Draft Amendment of Lands Registration Fees Law, Rules and Laws Related Thereto Osama Karam Imseeh

2. Preamble The renaissance and urban development that took place during the past decades in the Kingdom could be concealed by no one, especially the development that took place in the most recent decade when the highest rate of development was scored in such domain whether in terms of quantity or quality, as the Kingdom witnessed the early stage and emergence of many of these projects and the existence of huge number of real-estate developers who are willing to set up a large number of huge real-estate projects whether at housing, trading, commercial, industrial or tourism levels. Seeing that the Kingdom went through real-estate renaissance at various levels which increased the treasury proceeds attained by various collected fees payable for such activities including sale fees, partition, licensing, or organization revenues.. etc together with taxes and fees accrued in this field; as such proceeds are weighty in supporting the state’s insufficient and limited revenues .

3. However, such development and the sharp rise of lands prices, especially in the inhabited areas and occupied organized places, was accompanied with the emergence of many new problems that impede such development and activity holding back their progress, and so, restricting the revenues attained to the state; according to which, many investors and real-estate developers are to escape in view of that, and the urban development shall be delayed accordingly. consequently, great pressure will be imposed on various departments of the State as well as a great stress on the budget as a logical result for the need for development and for getting remote areas/outlands inhabited, so as to facilitate taking in such huge activity in case the investor has interest to invest in such new areas.

4. As we are all well aware, the vast majority of the area in our country enjoys the climate and environment of a desert, which makes it even harder to develop the same in order to have a room for new and massive housing or tourism projects avoiding the high cost that we might face if we think about developing such areas or having them suitable to be inhabited and ready to receiving such projects.

5. Desert territories

6. Therefore, and depending on the forgoing facts, many drawbacks and passive aspects have cropped up in many of Laws that deal with this very significant, strategic and vital field; such passive aspects have not been arisen before as result of the accelerating and growing activities of such sector, which in turn, caused the emergence of many justifications to think, develop and amend several laws, rules, regulations and instructions in order to bring them into line and make them fit with this growth and diversity in this activity.

7. In this proposal, we present a new difficulty in the new real-estate world that has not been noticed before as much as it is insisting and imperative nowadays; as previously such difficulties were easily disregarded, yet, under this great progress and accelerating development in this field, this difficulty becomes imperative and needs practical and prompt solutions in order not to form a main obstacle against this rise and development.

8. The problem that we are facing is the joint ownership lands or what is also known in this sector as the Common Lands/ Commonage. In view of that, this problem will evolve and the seriousness of resulted risks will be more critical as time passes; as such passage of time will never resolve it, on the contrary, the number of joint Ownership Partners will increase, which will cause the impossibility of solving the same over time. So, the best choice to be adopted is to take on a solution for the question at this instant.

9. Joint ownership lands

10. Joint ownership lands

11. To facilitate simplifying this problem in other detailed manner, let us for example suppose that there is a common land (a lot in joint ownership) owned by many partners related by blood or merely related in partnership of this lot, when an investor proposes investment project to be erected on such a lot, the problem will be arisen in case a partner or majority of partners agrees to sell while having one of them objecting to the same not considering the smallness of his share

12. which will definitely lead to the failure of the sale and the loss of such investor as a predictable result for lack of mechanism to force the objected partner to complete the sale agreement. This trouble hindrance is likely to reoccur in case the partners agree to have the project implemented while one of them objects to the same. Hence, the importance of amending the laws handling lands registration fees or laws and regulations dealing with lands registration for the following grounds:

13. Ground 1 • The Real-Estate activity put into action in the Hashemite Kingdom of Jordan that is also still been taking place hitherto, or the future Real-Estate projects and urban renaissance occurred in the Kingdom in the previous era, shall be considered one of the most important justifications and good reasons to demand for such amendment. So that, the Laws shall meet and fit with such renaissance instead of being hindrance against the progress of such renaissance. Noting that the population in Amman is expected to be increased from 2.2 million into 6.5 in 2025.

14. Ground 2 • The existence of large number of unexploited lands and unutilized areas under the Greater Amman Municipality and other Municipalities (40% of the GAM as in the former condition) as a result of lack of agreement between partners on development, sale or building whether such partnership is brought about inheritance or sale and purchase processes.

15. Ground 3 • Without exploitation of such vacant areas forms a great pressure on municipalities and the Greater Amman Municipality as such authorities are forced to increase the services provided by them as people will leave such organized and served areas to other remoter and un-served areas, which cause pressure on the departments that provide such services and become concerned about serving, organizing, paving roads, etc.. For such areas; which causes but a great economic load and heavy burden that has to be endured by such authorities.

16. Ground 4 • The difficulty of dividing such areas into lots either because of their smallness or because of the inaccessibility of partition among partners due to some moral hindrances between partners such as siblings or blood relationships.

17. Small areas

18. Ground 5 The hindrances to the implementation of the large real-estate development projects and/ or the vital projects because of the big number of disagreeing partners who have conflicts on the subject of accepting the idea of development or sale to the real-estate developer.

19. Suggested solutions to solve this problem • by Submitting this proposal for amendment purposes, we have focused on one problem in the Lands Registration and Lands Registration fees Laws, regulations and instructions related thereto, which is Common Lands or (lands in joint ownership) jointly owned by partners who are related by blood or those who are associated in no relationship but such partnership. The mechanism to be adopted as a solution is based on finding legal mechanism to manage such properties in a manner that achieves fairness and equality among all parties; meanwhile, we contribute to the process of real-estate development and instruction renaissance in our beloved Kingdom. The idea of amendment is to be implemented depending mainly on:

20. Suggested solutions to solve this problem • Forming Board of Directors to handle such properties by transferring those properties to Private Shareholding Companies registered in the Companies Registry at the Ministry of Industry and Trade as any private shareholding company under the same terms and condition subject to all laws and rules related thereto accordingly. The BOD of such Company has to be elected; shares have to be allotted according to each Partner’s share in the Land, while such Board shall be the authorized entity to handle all managerial, financial, and legal matters and shall also have the powers entrusted to the Board of Directors of any Private Joint-Stock Company. According to which, the ownership of the (joint estate) shall be transferred to the new Corporate Body (Legal Entity).

21. Suggested solutions to solve this problem • So far, the procedures seem to be simple and practical, yet, when implementing such process on ground, the importance of making amendment in the Lands Registration Law and other Laws related thereto becomes clearer as exempting the Transferring Property from Sale and Waiver Fees, shall encourage the partners in the land to progressfrom the individual property to the Collective Ownership and the Joint Management for real-estates as the BOD in this Company is the entity authorized to act in dealing with sale, partition, or development and shall be the authorized to negotiate with real-estate developers and sign contracts related to this field.

22. Suggested solutions to solve this problem • Such exemption shall be applied only in the process of initial sale, i.e. the initial waiver from the name of the Partners in the Land to the name of a private joint-stock company. After such waiver, any sale conducted in this land shall be liable to legal fees no matter how many times the sale reoccurrence. • In order for such amendment to achieve its desired purposes, specific implementation mechanism shall be developed through implementing such amendment whether compulsoryor optionally as the owners of the land become obliged by Law in the following cases:

23. Suggested solutions to solve this problem • In case of death. • In case the Partition of lots contradicts the whole organization. • Being unable to be divided. • In case 5 years (or more) pass over Partnership without any development or change of transferring the ownership of their real-estate from their personal names into private joint-stock Partnership that they set up during a certain period as stipulated in the Law, contrary to this, fines will be imposed on delay, • Or optionally as the door remains open for the owners to shift to such pattern of ownership whenever they deemed appropriate, reserving their rights to exemption from fees at the first time. .

24. Features of amendment project • Saving hundreds of millions yearly that are imposed on the state budget that are required to provide services to new areas that are jointed to the organization – such services exceed the infrastructure into paving streets, asphalting the same, installing sewage systems, electricity and water services, pavements, bridges, high voltage /high-tension systems, communications nets, fibers, networks, the requisites necessary for building viable areas to be inhabited including health care centers, hospitals, police stations, traffic police, traffic lights, municipalities, providing security and governmental departments for the Ministries to facilitate official procedures for citizens. The cost of asphalting the roads in the new areas joining Greater Amman Municipality For example, exceeds 3.5 billion Dinars.

25. Asphalting roads

26. Features of amendment project • Activation of urban development to become incomparable renaissance in Jordan, that will be focused in Amman and City Centers – as the lands are unexploited (which equals 40% of the GAM area according to the Municipality’s statistics) and are required to be built and invested because of being in the housing and commercial areas.

27. Unused lands

28. Features of amendment project • Creating commercial, industrial and urban renaissance lead by the owners of such frozen lands – as they are now capable to invest, rent or sell them severally or jointly with a strategic partner (B.O.T).

29. Features of amendment project 4. Activating Banks to lend such successful projects because of their strategic well-studied location, as Bank refuse to give loans for any Part of a lot (any share of a Partner in co-ownership property)and stipulate a full and undivided lot which will be accessible once implementing the new project, that will lead to: • Increasing the profits of the Banks. • Creating liquidity for investors. • Solving the problem of too much liquidity in Banks and invest them in productive, housing, and utility projects by developing the joint ownership lands .

30. Features of amendment project 5. Diminishing the oil invoice payable by the Kingdom that is probable to be increased in urban growth spread away from the cities centers because of the length of lines of communication /transportation.

31. lines of communication 5. تقليص الفاتورة النفطية للمملكة المرشحة للازدياد إذا انتشر النمو العمراني بعيدا عن مراكز المدن بسبب طول خطوط المواصلات.

32. Features of amendment project • Inevitably, Saving power at the kingdom’s level as the already existed power plants are to be exploited or expanded instead of building up new stations..

33. Features of amendment project 7. Reducing environmental pollution outside the cities.

34. Features of amendment project 8. Reducing the urgent need to speed up in building new lines of external communication and to orientate developing the same naturally and calmly as needed and according to the natural growth of the cities.

35. Features of amendment project 9. Saving the agricultural lands from urban scramble and so the Kingdom’s food basket – Jordan Valley-, wells and water basins from being destroyed by cement bricks and concrete blocks and pollution.

36. Features of amendment project 10. The possibility of developing a mechanism for utilizing and exploiting lands owned by minor orphans supervised by a committee from the Supreme Judge Department instead of being unexploited frozen lands.

37. Features of amendment project 11. To leave the door wide open for the Greater Amman Municipality as follows: • Reducing its expenses allocated for infrastructure in remote areas. • The possibility that the GAM may become the lessee, the investor or the investment manager for many of those lands as a solution for the Parking problem all over the Kingdom in the city Centers and crowded commercial areas e.g. Sweifieh, Shmeisani and Um Othaina… etc. • Exploiting the empty lands such as landscapes, Gardens, and playgrounds for kids by renting or being in possession of the same.   • Activating sports and encouraging Jordan talents by setting up playgrounds for unions and federations through investment and renting as well.

38. Features of amendment project 12. The accessibility of developing mechanisms to swap lands owned by the state Treasury or the Municipality and other lands located outside the City Centers with those relatively small area lands that are pretty important (taking into consideration logical, sensible and real values of such lands and that such an idea will be approved by many people).

39. Features of amendment project 13. The rise of Real-Estate trading volume when implementing the Law, which will be a great source of income for the Lands and Survey Department. Prima Facie, it may seems that the Draft Law will deprive the Lands Department from floors fees for the first time of registration when registering the same in the name of the Company, but, in actual fact, these fees were not meant to be refunded to the Department because those lands are totally frozen. For information only, trading volume in Real-Estate sector recessed at 38% during the first half of the current year. Noting that there are 1.5 million owners of real-estate, 3.5 million owners of lots, and 2 million owners of properties.

40. Features of amendment project 14. Solving the problem of ancient houses (antiquities) from the ottoman epoch – in Madaba for instance – and keeping the same from obliteration. Noting that in 2001, the Economic Consultative Council (ECC) and its adopted decision and in 2005, the National Agenda Committee in one of its Articles that handles common sectors initiatives in regards to infrastructures, referred to the important of (establishing a private Holding Company and giving special incentives to facilitate registering personal or family companies (self cooperation). Which leads to the same denotation.

41. The conclusion: before 2007, the area under the GAM sovereignty was 705 KM2, 282 KM2 of which are exploited; and that the urban development in the Capital since the establishment of the State took almost 70 years to build 60% from the current urban construction we have which cost hundreds of millions; and also that it is economically more advantageous and more profitable to exploit the remaining unoccupied 40% that are already served before providing services for the new 957 KM2 that have been recently affiliated to the GAM.

42. Eventually , • The City Development Plan of the Municipality is thoroughly and accurately studied. However, the proposal integrates with the plan as a whole- in a way that form a solution of the proposed scenario of the city manifested condensation. • In addition, the lands in the towers area and the airport road (which are under the anticipated future expansion of Amman city) face the problem of joint ownership in a large scale, and thus this project will be the best solution for such a case. • I am definite of your prevision and your wide knowledge of the economic, construction and financial reality and how this will develop and be revived in a great and organized way if this proposal is studied and have the required mechanism set up to be applied and brought into effect.

43. All the best Osama Karam Imseeh Cell: 0795477777 Tel: 5511120 Fax: 5511121 Email: osama@imseeh.com

44. Annex • As to the private company, the regular majority that equals 51% shall be the quorum prescribed for making any decision. • The rest of partners shall be informed in case of sale serving them with the proposed price. Noting that they have the right to object to the price and find a higher substitute option during 30 says. • Sale agreement has to be registered before the Notary Public where the price shall be declared so as to guarantee registering the real price, as the seller won’t take the risk of recording less price in order for him to reserve his rights and the purchaser won’t be obliged to pay any additional amounts rather than the registered one so that he will be also able to reserve his rights.  • The sale price shall be approved by a specialized committee from assessors at the Lands Department in presence of representatives of the (JAR) or from 3 various real-estate offices.  • Amounts have to be deposited in refundable safe deposit box at the Lands Department until the rest of sellers are given their rights

45. Continue – Annex • It is worth to mention the following: •  The US States of Texas, Florida and California has instructions that are similar to the proposal project (as I was told by H.E Engineer Kamel Mahadeen). • The idea of lands swap has been suggested by H.E Prince Mer’ed Ben Ra’ad • The idea of registration of the sale agreement at the Notary Public has been suggested by Abdoun Real Estate Office (Mr. Wael Jabari).