1. Introduction

The Egyptian real estate sector is undergoing a potential regulatory shift in the nature of the relationship between real estate developers (the “Developer(s)”) and unit purchasers (the “Purchaser(s)”). As a matter of principle, the sale of real estate units (the “Units”) is treated as a civil matter governed by the Egyptian civil code no. 131 of 1948 (the “Egyptian Civil Code”); however, recently, the regulatory framework governing the relationship between Developers and Purchasers has evolved through the application of the Egyptian consumer protection law no. 181 of 2018 (the “CPL”) to such a relationship instead of relying exclusively on the Egyptian Civil Code.

This legal evolution was triggered by a growing trend of Purchasers submitting complaints against Developers before the Consumer Protection Agency and by the judicial interpretation of products (the “Product(s)”) and consumers (the “Consumer(s)”) by the Egyptian courts under the CPL.

The Egyptian Court of Cassation (the “Court”) has adopted two distinct judicial approaches in this respect. Accordingly, this article will be divided into three sections, which will cover:

1. an explanation and analysis of the judicial approaches;
2. the legal implications of applying the CPL to real estate sales; and
3. the unification of the judicial conflict.

2. The Judicial Conflict: Are Real Estate Units Classified as Products and Unit Purchasers as “Consumers”?

The CPL referred to the Units in only a limited number of provisions, namely:

1. the prohibition on advertising the reservation of the Units, contracting for their sale, or selling or dividing land designated for construction except after obtaining the building permits in accordance with the Egyptian Building Law No. 119 of 2008; and
2. the prohibition on including any term in the contract for which the seller or his successor shall receive a percentage, fees, or commission of the price of the Purchaser’s disposal of the real estate unit or of such disposal.

Accordingly, and in light of the absence of an express provision under the CPL classifying the Units as Products and the Purchasers as Consumers, uncertainty has arisen as to whether the Units fall within the scope of the CPL. In this regard, the Court has adopted two distinct judicial approaches through recent judgments issued in 2023, 2024, and 2025, as follows:

1. First Approach of the Court: Non-Applicability of the CPL to Real Estate Sales

In its judgments issued in 2023 and 2024[1], the Court adopted the approach that the sale of the Units is viewed as a purely civil matter that falls outside the scope of the CPL and is subject to the contractual arrangement between the parties. The Court built its rulings on the following grounds:

1. a Product under the CPL must inherently possess a consumable nature, be designed to satisfy personal or family needs, and can be damaged. Accordingly, the Unit is not of such a nature;
2. a Purchaser is not classified as a Consumer under the CPL as the real estate unit is not offered or contracted to satisfy the Purchaser’s personal or family needs; and
3. the relationship between a Developer and a Purchaser is contractual in nature and governed by the Egyptian Civil Code. Accordingly, any contractual breach, defect, or shortfall constitutes a purely civil dispute rather than a defective product or misleading conduct under the CPL's penal provisions, establishing civil rather than penal liability.

2. Second Approach of the Court: Applicability of the CPL to Real Estate Sales

Conversely, the Court adopted a contradictory approach in its judgments rendered in 2025[2], ruling that real estate sales contracts shall be governed by the provisions of the CPL rather than relying exclusively on the Egyptian Civil Code. The Court grounded its rulings on the following bases:

1. a Unit is classified as a Product and Purchaser is classified as a Consumer under the CPL, given that the statutory definitions of a Product and Consumer are general and absolute without restriction. Moreover, the definition of a Product is broad, encompassing all goods and services, with the sole exception of financial and banking services; and
2. the Court cited in its ruling a report of the Joint Committee of the Industry Committee and the Constitutional and Legislative Affairs Committee of the House of Representatives concerning the draft CPL. The Court noted that the said report explicitly aimed to introduce provisions governing unregulated real estate practices, without disputing the CPL’s applicability to the Units. Consequently, the Court concluded that the Units qualify as Products and the Purchasers as Consumers under the scope of the CPL.

3. Legal Implications of the Application of the CPL to Real Estate Sales

The application of the CPL to real estate sales contracts would introduce a number of fundamental legal implications, including, without limitation, the following:

1. any clause, term, or document in the contractual agreement between the Developer and Purchaser that limits or waives the Developer’s obligations under the CPL or its Executive Regulations may be null and void;
2. Developers must avoid practices that violate the CPL. These include failing to provide the Purchaser with a copy of the sale agreement or reservation form, and drafting the sale agreement and its related documents exclusively in a foreign language; all documentation must be in Arabic or a bilingual format that includes Arabic;
3. Developers must avoid any deceptive or misleading practices. This includes providing any misleading, inaccurate, or incorrect information about the nature, key characteristics, or specifications of the Unit, or the terms and conditions of the sale agreement, resulting in reduced property value, or preventing the Purchaser from fully or partially utilising the Unit as intended, for example, the delivery date of the Unit or the Unit’s square  meters;
4. Developers may face penal liability, including imprisonment and substantial financial fines, for the violation of certain CPL provisions; and
5. Developers may face severe financial exposure as fine thresholds under the CPL range up to EGP 2,000,000 (two million Egyptian pounds) or twice the total value of the subject Unit, whichever is higher. Given the high value of the Units, this exposure is significant.

4. Unification of the Judicial Conflict

The conflicting approaches adopted by the Court have resulted in legal uncertainty regarding the classification of the Units as Products and the Purchasers as Consumers. Consequently, we believe that these divergent precedents could be harmonised to safeguard the stability of the real estate market.

Such harmonisation can be achieved through either of the following mechanisms:

1. a legislative intervention by a statutory amendment is recommended to establish a clear and definitive legal framework governing the CPL’s applicability to real estate sales. It is recommended that this framework explicitly clarifies whether the Units constitute Products and whether the Purchasers qualify as Consumers. This can be accomplished either by amending the CPL or by incorporating express provisions into the long-awaited real estate development law; and
2. judicial unification by the General Assembly of the Court, whose role is to resolve and unify conflicting judicial principles, could unify the Court’s conflicting rulings into a single principle.

5. Conclusion

The lack of explicit classification for the Units under the CPL has led to questions regarding its application to real estate sales contracts, resulting in conflicting rulings from the Court. Although the recently issued judgments of the Court are widely followed and cited, they do not constitute legally binding precedent for future cases. Egyptian courts therefore retain discretion to adopt either of the approaches described above. Accordingly, legislative or judicial intervention is recommended, whether by amending the CPL, enacting a dedicated real estate development law, or issuing a unified ruling through the General Assembly of the Court.

The contributors to this article are Dr Mohamed Fathy, Partner – Head of Real Estate, Tourism and Hospitality; Shaimaa Abdelhakim, Senior Associate; Ahmed Yasser, Associate; and Ziad Nasr, Junior Associate.

[1] Court Judgement No. 12220 of 92 JY, Hearing Dated 18/12/2023 and Court Judgment No. 19491 of 92 JY, Hearing Dated 24/04/2024.

[2] Court Judgement No. 9018 of 94 JY, Hearing Dated 02/06/2025 and Court Judgment No. 18424 of 93 JY, Hearing Dated 07/04/2025.