Real Estate Acquisition by Foreigners in Morocco

By Zakaria Korte, Korte Law in association with Amereller

Real Estate Acquisition by Foreigners in Morocco

Morocco remains a compelling destination for real estate investment, combining macroeconomic stability, proximity to Europe, and a maturing legal and financial infrastructure. Foreign investors can acquire real property in Morocco, subject to sectoral restrictions and compliance with a registration system that strongly protects registered titles. This article provides a practitioner-oriented overview of the legal framework, the types of property and associated restrictions, the acquisition process, due diligence requirements, registration with the conservation foncière, tax aspects, financing options, common pitfalls, and practical recommendations for foreign buyers.

Legal Framework for Foreign Ownership

Moroccan law generally permits foreign individuals and foreign-owned companies to acquire real estate, especially urban property and premises intended for commercial or industrial use. The legal framework is rooted in statutory texts governing property rights, land registration, and notarial practice, complemented by foreign exchange regulations that affect how non-residents fund acquisitions and repatriate proceeds.

The central institutional actor for land rights is the Agence Nationale de la Conservation Foncière, du Cadastre et de la Cartographie (ANCFCC), which maintains the land registry (conservation foncière) and cadastre. For registered property, the land title (titre foncier) reflects definitive rights, subject to the inscriptions noted on the title. Notaries (notaires) are public officers who draft and authenticate transfer deeds, collect taxes, and complete registration formalities.

Foreign exchange rules are an integral part of the framework for non-resident investors. Morocco operates a convertibility regime that allows non-residents who bring funds in foreign currency through authorized banks and comply with documentary requirements to repatriate sale proceeds and capital gains. Evidence of foreign currency funding—typically via an exchange certificate issued by the bank—is essential to preserve repatriation rights.

Types of Property and Sectoral Restrictions

Urban Property

Foreign buyers can freely acquire apartments, villas, offices, retail premises, and industrial buildings in urban zones. Urban plots intended for construction are also generally eligible for acquisition, subject to zoning and planning constraints. Co-ownership properties are governed by specific statutes and a co-ownership regulation (règlement de copropriété), which impose rules on shared areas, maintenance charges, and usage.

Agricultural Land

A long-standing restriction prohibits foreign ownership of agricultural land and land deemed to be of agricultural character. This restriction applies irrespective of the buyer’s residency. However, two practical pathways exist:

• Conversion of agricultural land to non-agricultural use through an administrative process that reclassifies the land for urban or industrial purposes. The conversion requires authorizations from the competent authorities (often at regional or provincial level), and the feasibility depends on zoning, planning instruments, and public policy.

• Long-term use rights—such as long-term leases, emphyteusis, or usufruct—can be granted to foreigners over agricultural land, enabling operational control without transferring full ownership.

Investors should carefully verify the current classification of any peri-urban or outlying plot marketed as “buildable” and make conversion a condition precedent if applicable.

Other Categories: Collective, Religious, and Public Domain Lands

Certain assets are outside the ordinary commerce of private parties:

• Collective lands (terres collectives) are subject to a special regime and administrative oversight.

• Religious endowment properties (habous/waqf) and public domain assets are tightly regulated and not freely alienable.

• “Non-immatriculated” lands may rely on traditional evidence of ownership and can present elevated title risks unless and until they are registered.

Special diligence and structuring are required if any of these categories are implicated.

Step-by-Step Acquisition Process

1. Early Scoping and Term Sheet

The process usually begins with an indicative offer and acceptance of principal terms—price, timing, conditions precedent, and allocation of taxes and fees. Parties may sign a reservation agreement or a preliminary promise of sale (promesse de vente/compromis de vente). A modest deposit may be lodged with a notary or law firm trust account, coupled with clear refund mechanics tied to due diligence outcomes and conditions precedent.

2. Appointment of a Notary and Legal Counsel

While not mandatory for all pre-contractual phases, a Moroccan notary is required to formalize the transfer deed for registered property and to complete registration and tax filings. Foreign buyers commonly retain local counsel to conduct legal due diligence and coordinate with the notary, especially in transactions involving corporate sellers, development projects, or complex title histories.

3. Due Diligence Period

The buyer’s counsel performs legal and technical diligence, including title verification, encumbrance checks, corporate capacity, planning compliance, and tax/charges clearance. Technical surveys (structural, environmental, and utilities) are advisable for buildings and industrial assets.

4. Conditions Precedent and Financing

If the acquisition is financed, the buyer secures loan approval and the lender completes its own diligence. If conversion of land use, waivers of preemption rights, building permits, or co-ownership waivers are required, these are framed as conditions precedent to closing.

5. Execution of the Authentic Deed

The notary prepares the authentic deed of sale, confirms the parties’ identities and capacities, collects funds, ensures required taxes and duties are paid, and files the deed and related documents with the conservation foncière. If a mortgage is involved, it is drafted and registered concomitantly.

6. Registration and Title Update

Following filing, the ANCFCC updates the land title folio to record the buyer as owner and to inscribe any mortgage or easements. The buyer obtains a current property certificate (certificat de propriété) evidencing ownership.

Due Diligence Requirements

Title Verification and Encumbrances

The core of legal diligence is the updated extract from the land registry showing the title number, current owner, area, and registered rights: mortgages (hypothèques), privileges, easements (servitudes), leases noted on title, and any seizures or court annotations. For registered property, title information is authoritative, but counsel should reconcile it with the cadastral plan, the physical boundaries, and the seller’s possession.

For non-registered property, diligence is more complex, often involving traditional deeds and witness attestations. Buyers should strongly prefer registered titles or require registration as a condition precedent to closing.

Corporate and Personal Capacity

Where a corporate seller or buyer is involved, corporate documents, signatory powers, and resolutions authorizing the transaction are verified. For individual sellers, marital status and matrimonial regime are relevant, as spousal consent may be needed. Powers of attorney must be notarized and, if executed abroad, may require legalization or apostille and certified translation.

Urban Planning and Construction Compliance

Buyers should obtain and review:

• Zoning and planning instruments to verify permitted uses, building rights, and density.

• Building permits, completion certificates, and occupancy permits (permis d’habiter) for constructed property.

• Any preemption rights applicable to the municipality or public bodies in designated urban zones and whether waivers or confirmations are required.

• Environmental clearances where applicable, especially for industrial or coastal properties.

Co-Ownership and Lease Matters

For apartments and mixed-use buildings, the co-ownership regulation, annual and extraordinary charges, minutes of recent general meetings, and statements from the property manager (syndic) regarding arrears should be reviewed. For income-producing assets, lease audits cover term, rent, indexation, renewal rights, termination provisions, and security deposits, with attention to the mandatory rules protecting commercial leases.

Taxes and Utilities

Counsel should confirm that the seller has paid property-related taxes and utilities to closing, and secure a clear allocation of prorations. Evidence of settlement of any developer charges or connection fees should be obtained for new or recently delivered projects.

Foreign Exchange Documentation

Where the buyer is non-resident, funds should be transferred through an authorized Moroccan bank with appropriate documentation to evidence the foreign currency inflow. This enables later repatriation of sale proceeds and capital gains under the convertibility regime.

Registration and the Land Title System (Conservation Foncière)

Morocco’s registration system is designed to provide legal certainty for registered property:

• The land title (titre foncier) is conclusive evidence of rights, subject to the inscriptions appearing on it. Once a right is registered, it is opposable to third parties.

• The cadastre defines parcel boundaries. The alignment between cadastral maps and physical boundaries should be verified, particularly for large parcels.

• Notaries submit deeds and supporting documents for registration. Once the conservation foncière records the transfer, the buyer’s ownership is perfected and enforceable.

• Mortgages and easements must be registered to be effective against third parties. Failure to register can leave rights vulnerable.

Buyers should distinguish between registered and non-registered property. Transactions for non-registered property require heightened caution and often entail prior registration (immatriculation foncière) to eliminate hidden claims.

Tax Implications

Taxation in Moroccan real estate transactions has multiple layers. Specific rates and exemptions may vary by asset type, status of the parties, and legislative updates, so parties should confirm current schedules with the tax administration and their notary.

Transfer Taxes and Fees at Acquisition

• Registration duties typically apply upon the transfer of ownership and are calculated on the purchase price or assessed value. Rates differ based on property type (e.g., residential, land, commercial).

• Land registry (conservation foncière) fees are due for recording the transfer and any mortgage.

• Notarial fees are charged on a statutory or customary sliding scale and cover drafting, authentication, and filings.

• Stamp duties or fixed fees may apply to certain documents annexed to the deed.

Annual Property Taxes

• An annual property tax may be levied on built property, with relief available for a principal residence under specified conditions and timeframes.

• A communal services tax often applies to urban properties, supporting local services and infrastructure.

• Separate taxes can affect undeveloped urban land, designed to incentivize construction within zoning parameters.

Owners should ensure proper declarations are made after acquisition to claim any applicable reliefs and avoid penalties.

Capital Gains Tax and Withholding

• On disposal, capital gains derived from Moroccan real estate are generally taxable, with exemptions or reliefs possibly available for a principal residence held for a qualifying period.

• Non-resident sellers may be subject to specific withholding or self-assessment mechanisms at the time of sale. Documentation of acquisition cost, improvements, and selling expenses supports basis calculations.

• Double tax treaty considerations may affect the residence state’s taxation; however, Morocco typically asserts source-based taxation on immovable property gains.

Rental Income

If the property is rented, Moroccan-source rental income is generally taxable in Morocco, with potential deductions for certain charges. Registration or filing obligations apply to lease agreements in practice and should be coordinated with tax advisers.

Financing Options for Foreign Buyers

Local Bank Mortgages

Moroccan banks offer real estate financing to residents and, in some circumstances, to non-residents or Moroccan expatriates. Lending criteria typically include:

• Assessment of income and debt metrics, with documentation standards adapted for non-resident borrowers.

• Security by way of a registered mortgage (hypothèque) over the property and, at times, additional guarantees or life/household insurance.

• Disbursement mechanics aligned with notarial closing, with the bank often channeling funds directly to the notary for completion.

Foreign Currency Considerations

Non-resident buyers commonly fund acquisitions in foreign currency through an authorized Moroccan bank. Maintaining the banking documentation (exchange certificates and statements) is crucial to preserve the right to repatriate sale proceeds and capital gains in the same currency in the future. Some banks may also extend loans denominated in foreign currency, subject to regulatory constraints and internal risk policies.

Developer and Vendor Financing

In off-plan or newly completed developments, developers may offer staged payment plans or vendor financing. Such arrangements should be carefully vetted for compliance with consumer protection and guarantee requirements, and any deferred price obligations should be secured and properly reflected in the registered documentation.

Common Pitfalls for Foreign Buyers

Assuming Agricultural Land Is Freely Acquirable

Marketing materials can understate restrictions on agricultural land. Foreign buyers should not sign binding agreements or pay deposits for land with agricultural classification without a clear, documented pathway to conversion and conditions precedent.

Overlooking Title Registration Status

Non-registered property presents elevated risk. Buyers sometimes accept traditional deeds or possession as sufficient. A safer approach is to require registration or to limit acquisitions to fully registered property with a current title extract and cadastral plan.

Insufficient Planning Due Diligence

Permits and zoning compliance are occasionally assumed rather than proven. Buyers should insist on reviewing urban planning instruments, permits, and occupancy certificates, and verifying the absence of municipal preemption or public easements.

Inadequate Foreign Exchange Documentation

Failure to route acquisition funds through authorized banks with proper evidencing can complicate or jeopardize repatriation of proceeds upon resale. Early banking coordination prevents later issues.

Co-Ownership Surprises

Arrears in co-ownership fees, unexpected capital expenditure plans, or restrictive usage rules can upset investment assumptions. Review of the co-ownership regulation, recent minutes, and a clearance statement from the syndic helps manage these risks.

Off-Plan Purchases Without Statutory Safeguards

Off-plan sales are subject to a dedicated legal framework intended to protect buyers, including rules on payment schedules and guarantees of completion or refund. Buyers should verify that the developer’s scheme adheres to applicable rules and that buyer payments are safeguarded through escrow or statutory guarantees.

Practical Recommendations

Prioritize Registered Titles and Current Extracts

Focus on properties with a current land registry extract and cadastral plan from the ANCFCC. Cross-check physical boundaries, building footprints, and any easements. Require that all encumbrances be discharged or expressly assumed with a price adjustment.

Engage a Notary and Local Counsel Early

Early engagement helps shape the letter of intent, articulate conditions precedent, and align timelines with regulatory and financing steps. Notaries provide a critical compliance checkpoint for taxes and filings; counsel drives the diligence workstream and negotiation of representations, warranties, and indemnities.

Structure Conditions Precedent and Escrows

If the transaction hinges on conversion of land use, permits, financing, or waivers, state them as clear conditions precedent with documentable satisfaction tests. Use escrow arrangements for deposits and staged payments, with release mechanics tied to objective milestones.

Align Funding With Convertibility Rules

Coordinate with an authorized Moroccan bank to document foreign currency inflows, obtain exchange certificates, and open any necessary accounts. Ensure the notary receives funds via traceable channels that preserve repatriation rights.

Budget Realistically for Taxes and Fees

Obtain a comprehensive estimate from the notary for registration duties, land registry fees, notarial fees, stamp duties, and any mortgage registration costs. Consider ongoing property taxes and co-ownership charges in the investment model.

Verify Co-Ownership and Lease Compliance

For apartments and mixed-use assets, obtain co-ownership documents, charge statements, and meeting minutes. For leased assets, confirm registration or opposability of leases, rent payment status, and compliance with mandatory lease protections.

Preserve Evidence for Future Exit

Maintain a complete file of acquisition documents, tax receipts, bank exchange certificates, and records of capital improvements. These documents support basis calculations for capital gains tax and facilitate resale due diligence.

Conclusion

Morocco’s real estate market is accessible to foreign investors, offering a robust land registration system and well-established notarial practice. The principal constraint is the restriction on foreign ownership of agricultural land unless conversion is secured, a factor that requires early verification and careful conditioning of contracts. Successful acquisitions are built on disciplined due diligence, clear conditions precedent, rigorous documentation of foreign currency funding, and proactive tax and registration compliance. With these foundations in place, foreign buyers can navigate the Moroccan legal landscape confidently and secure durable, marketable titles aligned with their investment objectives.

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For expert guidance, contact Korte Law.

For expert guidance, contact Korte Law.