Thursday, August 7, 2014

lebanon's new 2014 law on low rents

Low rents in Lebanon, in light of the new 2014 law

Zouhair Ghazzal
Loyola University Chicago

Concepts of property and contractual obligations in contemporary Lebanon, as for the rest of eastern Mediterranean societies, have been marked by a paradigmatic shift whose time framework coincided with the dismemberment of the Ottoman Empire and the creation of new nation-states by the French and British colonial powers. Even though the land law of 1858 required the registration in newly designed ṭāpū registers of all agrarian properties that were taxed, there were no cadastral registers per se in the Ottoman Empire, nor did the law admit “ownership” to the concerned parties. The prime reason for such a lack was indeed the non-existence of proper modern cadastral methods for delineating the space of a property. In effect, in Ottoman times, as witnessed in sharia court records, properties were delineated through their adjacent properties, in their north, south, east and west directions, hence the system lacked proper measurements and modern topographic tools. It was only in 1926, when Syria and Lebanon were under the French mandate, that a cadastral register, known as the sijill ᶜaqārī, was finally institutionalized. From now on each property would have a cadastral “record” of its own, known as ṣaḥīfa ᶜaqāriyya, and which consists of the totality of documents that would mark the property as unique in terms of location, topography, modifications, clearances, sale or tenancy contracts, lawsuits and so on, as set within a specific region, be it a village or town or city.[1] The prime purpose behind such renovation was obviously to delimit properties and register them based on a scientific method to make visible the surface area, value, and ownership of land for legal and taxation purposes, or else to receive a permit of construction. But the other aspect of such rationalization was to render such knowledge “public” (ᶜalanī), that is, not simply to the state and tax authorities, but also to common individuals.[2] Thus, if I decide to sell one of my properties to an unknown individual, and if I feel uncertain as to whether he or she would be able to deliver, one way to solve such dilemma would be to request their ṣaḥīfa ᶜaqāriyya, which is available for public viewing to private individuals like myself. The latter behaves like a U.S. “credit report,” which would mark a borrower as legible for further borrowing. The main difference, however, between a ṣaḥīfa ᶜaqāriyya and a credit report is that the former is solely based on the property as ᶜayn, that is, as the tangible object ready for exchange as commodity (res in commercio), while the latter is based on the performance of the debtor and his or her success at servicing their debt (bank accounts, mortgages, loans, credit cards, and bills). Perceiving an individual owner solely in terms of his or her ownership of tangible properties rather than debt points to a worldview where what matters is what the individual fully possesses (māl), which in itself acts as a source for capital. As we will see in the second section below, things have not changed much since the mandate, considering that it is still the tangible object as ʿayn that matters: to win a lawsuit of property recuperation, I must prove against my opponent-tenant that I do not own anything in full but the leased property; hence the necessity (ḍarūra) for recuperating the property for my personal (family) use is a must from a legal perspective; the only other necessity in the eyes of the law is that of demolition (hadm) either for safety reasons, or else for the purpose of a new project.

Unsurprisingly, the law that organizes property as such came four years later in 1930; that is to say: first the properties had to be demarcated in a cadastral register, then the law at defining property was promulgated. Besides distinguishing between movable and immovable properties, another category is that of “incorporeal properties,” that is, all the rights, obligations, insurances, and lawsuits concerning a tangible property. But the surprising element in these new regulations was that when it came to the categories of properties the mandate did not differ much from its Ottoman predecessor in acknowledging the three broad categories of mīrī, milk, and waqf. Acknowledging the mīrī was indeed a bit of an anachronism, considering that mīrī state-owned lands historically served as tax prebends for an urban élite serving an imperial state. Now that they are defined as “those properties whose raqaba (“neck”) is for the state, but whose usufruct (taṣarruf) goes for individuals,”[3] what purpose does the mīrī has still to offer in a world devoid of sultanic power? In a country like Syria, where large ownership was and still is predominant, and where the Ottoman ex-élite “old classes,” which survived out of state prebends, de facto “inherited” their prebends, the mīrī–milk opposition only created a gross confusion which still survives until this day (but more so in Syria than in Lebanon, where the mīrī category proves superfluous at best). Suffice it to say for our purposes here that the Ottoman mīrī became de facto (private or public state-owned) milk under the mandate, even though still legally inscribed as mīrī, which nonetheless enjoyed inheritance rules different from sharia law: men and women would in this instance inherit equally. Therein lies the true aim of the new 1930 law: to demarcate mīrī lands as a category that would not follow the precepts of sharia law of unequal inheritance. By contrast neighboring Lebanon, which since late Ottoman times had a more aggressive mercantile and liberal culture than Syria, the mīrī–milk distinction did not matter that much, as properties were either de jure private, or else they were state-owned and public.

By the time the Second World War was nearing its end and the French had granted Lebanon and Syria their independence in 1943, the economies of both countries were, by eastern Mediterranean standards, quite good, which led to an abundance of a much needed cheap labor for the cities. That was probably even more so in Lebanon than Syria, considering how much the potential for agriculture was reduced. By 1943–46 the surplus of agrarian labor migrated to the coastal cities in flocks (the second such wave, following the great migration from the mountains to the cities in the late Ottoman period), creating a need for leased apartments at affordable prices, in particular for the capital Beirut. In an attempt to create a local industry, new manufacturing plants were established in the suburbs of the capital, thus areas like Dekwāneh and Shuwayfāt which were traditionally satellite villages with large property holdings became epicenters of manufacturing plants which were serviced by labor migrating from the north, east and south of the country. When the new tenancy laws were therefore promulgated in the post-mandate period, it was precisely this new labor force, seeking affordable rents over long periods, that jurists and lawmakers had in mind. (In the U.S. similar laws were enacted by the Supreme Court during World War II, what ultimately became known as “rent control,” to serve the state bureaucracy contributing in the nascent war effort and its massive industrial and military projects; and in spite of lawsuits initiated until this day by private individuals arguing that “rent control” is nothing but a “seizure of private property under a different name,” the low rents still survive in certain crowded and expensive areas, such as the San Francisco Bay Area and Manhattan in New York.)

The majority of tenancy contracts in the world are normally set for a specific time period, usually for one year, with a clause permitting the tenant for a renewal for an additional year, but only if the landlord wishes to do so. That is to say, the landlord would not need to provide any excuse, personal or otherwise, to reject the one-year renewal offer by his or her tenant. Such limited renewals share many benefits, irrespective of the society or the time period in question. First of all, the market would not get clogged with old rents, which would have to be renewed on special terms, forcing for new legislation every once and a while to fix the rent value and update it on inflation. Second, the lease market would remain competitive, as landlords would not live in fear of having their properties occupied on long terms, if not permanently, creating a shadow-landlord in the name of a quasi-permanent tenant. Third, rents would receive an automatic yearly update that would mark them in par with the current inflation rate. One could add that when the lease market does not get clogged with old rents, the parallel sale of properties would not get artificially inflated either; nor would there be pressures on landlords to pay monetary “compensations” for tenants who decided to leave on their own amid a prolonged lease.

The Lebanese market would have been in that category of open competitive leases were it not for the tenancy law of 1944 which institutionalized the distinction between leases that were “renewed” (tajdīd) amid an explicit joint willingness from both landlord and tenant, on the one hand, and others that were “prolonged” (tamdīd) beyond what the contract had originally stipulated, which is usually one year, on the other.[4] It is indeed that kind of opening towards a legalized “prolongation” that would ultimately spell the well known crisis of low rents, but only at the beginning of the 1980s, once the lira fell apart, amid the Israeli occupation of Lebanon in 1982 and the expulsion of the Palestine Liberation Organization to Tunis; hence even in the early stages of the civil war in 1975–76 “prolongation” of contractual leases did not seem to have created the much anticipated widespread shortages on the market. What Lebanese legislation harnessed on in three decades, in the 1944–74 interim, was precisely the kind of link between “renewal” and “prolongation,” providing ample reasons to go for the latter. In those prosperous decades, up to the early 1980s, the economy was doing reasonably well with acceptable inflation, low unemployment, cheap and abundant local labor, affordable housing, and a strong lira in respect to the dollar and other robust currencies. So why not opt for yearly tenancy contracts? Why legalize “prolongation”? It is usually assumed that with the end of the French mandate, a larger than expected rural or mountainous population moved to the cities, in particular Beirut, which formed the backbone of manufacturing and industries. Being unfamiliar with city life and its risks, the law sought to mitigate that uncertainty by legalizing the prolongation of contracts whenever the tenant felt legible to do so. At the time neither landlords nor tenants had much to complain about, considering the economy’s good standing.

To see what had happened in the interim, one need go no further than the tenancy law of 1974, which was the outcome of small incremental modifications and amendments to the original 1944 text, and which unwittingly served as the adopted blueprint text for the yet to come 15-year civil war (1975–1990). The broad rule established invariably in the texts of 1944–1974 is that “the end of the period of the lease contract would not ipso facto imply that the tenancy is over and done with,” which means that the tenant has every right to renew, if he or she wishes to do so. A corollary rule which was also a norm on the eve of the civil war was that prolongation was not solely the tenant’s right, but also, in case of his or her death, that of the spouse and their children. Moreover, even “relatives” who were “associated” with the deceased and were occupying the property had their rights maintained in case they opted for prolongation. Hence the “family” spectrum was fairly broad as to who enjoyed that right of prolongation: what legislators had in mind was not to reduce tenants to the one person who signed the lease, but expand it to all family members who were simultaneously occupying the property; hence to protect them in their totality from the risks of the market. Prolongation prompted legislators to regularly update the tenancy laws every few years, as they had to adjust old rents to inflation. The other side effect of prolongation is that the law stipulated that proprietors have the right to “recuperate” (istirdād) their leased properties whenever there is an urgent need to do so, and in such instances the tenant would have to be “compensated” (taᶜwīḍ) for having all of a sudden lost his or her contract. Lawsuits became therefore normative whenever the proprietor would demand his property back from his tenant on the basis of an absolute necessity, and if successful thanks to a judge’s ruling, as was the case in the recent litigation that we’ll document below, then the court would summon the landlord-plaintiff to “indemnify” his tenant for a cash payment in installments agreed upon in court. (Over the years, different methods of calculation were adopted to assess the value of the property, its rent, and the compensation itself, which we need not get into here, but which will be addressed shortly in relation to the recuperation-compensation scheme below.) Lawyers tend to agree that it is indeed such lawsuits, whose numbers have dramatically sprawled since the sudden end of the civil war in the early 1990s, which have contributed to the overall decline of old rents from their 50 percent highs in the 1980s to their current 25–30 percent rate.[5]

What is of interest to us is the notion of recuperation (istirdād) and the lawsuit that would be needed to recuperate a property from the tenant. In effect, even though the property-owner and tenant may amiably settle without court action, the majority of proprietors would only settle in court. Post-mandate tenancy laws have regularly appended stipulations that would render recuperation approved by a judge with the proviso that a compensation would be paid to the tenant. Chief among such conditions is the notion of “family necessity” (ḍarūra ᶜāᵓiliyya). The landlord must successfully argue that he needs his property back because he has no other place to go, that is, he possesses no other property but the one under litigation as his own place of residency. For example, he may argue that he has been for years living in a rented apartment, paid hefty rents, and that it’s now time to recuperate his own apartment, considering that its rent is running low, much lower than the cost of his rented apartment; or that he has been living with his parents since he graduated from college, and now that he got his first full-time job he needs to be on his own; or that as an outcome of the civil war he has lived abroad for many years, and he badly needs to get back home; or that he is now a married man with a family, and his apartment fits better with his current needs. Several factors could be at play here: anything from the respective ages of the proprietor and tenant; their employment status; whether they have families; whether they live in Lebanon or abroad; and if they do, how often do they come back to Lebanon. As is fairly obvious, a lot is left to the judge’s discretionary powers, beginning with that ability to discern individual situations, favoring one variable against another. For example, it could be hard for a landlord who is young, single, and a college graduate who just landed on his first job, and lives with his parents to save money, to displace a tenant who is much older and a father of four. Considering how much kinship is important in such societies, it is customary for young men and women to live with their parents even after graduating from college; since a bachelor is not considered someone responsible of a family, there is no urgency for single people to live on their own. As all such family matters are factored by the judge in his verdict, what remains in the final analysis is that notion of “necessity”: is it that indispensable for the landlord to evict his tenant, even in the aftermath of an equitable indemnification? What presumably plays a preponderant role in such litigations is nothing else but the “cadastral record” (ṣaḥīfa ᶜaqāriyya) which respectively lists all the properties owned by landlord and tenant. Considering that the “cadastral record” plays the role of a U.S. “credit report”—even though the two are essentially dissimilar (the former is rooted in tangible properties, while the latter is into credit and debt)—what would tilt the verdict in favor of either proprietor or tenant is whether any of them has a single property owned in toto. The cadastral report is open for inspection and made public for any person who wishes to do so: if I need to inquire about my tenant’s properties, all I have to do is request his personal report at the General Directorate of Cadastral Affairs for a minimal fee. The report would list all my tenant’s properties (at times the confusion of names and birth dates brings more properties than needed which are later corrected and dropped), their number, location, and the percentage of the owned shares (ashum; s. sahm). The latter would prove the crucial denominator in a lawsuit: as the totality of a property constitutes 2,400 shares, if either landlord or tenant possess any property in toto, they may lose the verdict. Obviously, the nature of the property is of prime importance: if I am suing to recuperate an apartment that I own, and my cadastral report indicates that I also own a 100 percent share in a land in the same city which is used as a parking lot and out of which I am generating profit, the two properties that I own in toto are so dissimilar that one would not compensate for the other. Put simply, I won’t be able to live in a parking lot, and that’s enough evidence that I badly need my apartment, assuming that other prerequisites set by the court are met. In sum, a lot is at stake regarding both the landlord and tenant “needs,” “necessities,” and “familial obligations,” in conjunction with what they fully or partially own on the market. The partiality of ownership is a common trait in middle eastern and Islamicate societies, considering how much the Islamic rules of inheritance are adamant at dividing properties among male and female heirs (wills that would favor an heir over another are not permitted). Hence it is not that uncommon to find proprietors and tenants with dozens of properties listed in their records but without a single one fully owned. Obviously, in preparation for the lawsuit, both sides might artificially work out a reshuffling of their properties among family members: I register part of a property that I fully own under my wife’s or daughter’s name to avoid a negative verdict. As such practices are fairly common, councils and judges tend to look closely at the cadastral report in search of faked fragmentations, potential inconsistencies, or last-moment shuffles, even though such tasks are no easy matter.

Besides “familial obligations” which remains the most lucrative feature in the recuperation lawsuits, owners could bring other matters to the court: the right to recuperate a property that is adjacent to another owned by the same owner; the owner’s desire to tear down the property in question for the sake of a new construction project; the tenant has failed to pay his rent for at least two months; and so on. Once the court approves the recuperation, the tenant is given a grace period of 2 to 6 months to vacate the property; but the owner has no right, once the vacation is complete either to sell or sell the property for a three-year period, during which he must only use it for his personal matters, as he indicated in his lawsuit (if he does not follow the court order, the tenant may come back to him and request more compensations).

For those familiar with Beirut’s topography, the sight of dilapidated buildings, elevators that don’t work, tenants at war with one another, and building committees that only make decisions on paper without any follow up, have become all too familiar, all of which are the outcome of low rent policies which have accumulated and been protected by law since the 1940s, only to reach their climax in the 1980s. It was indeed the sudden fall of the lira in 1982, amid the Israeli occupation of the South, the Sabra–Shatila massacres, and the bombing of the Marines compound and the building housing the U.S. embassy in Beirut, which made all of a sudden the old rents look really low in value, with losses exceeding the 100 percent margin for the owners. Needless to say, such scenarios have become so common that the press devotes weekly interviews with disenchanted proprietors and tenants, while the parliament has for more than a decade attempted to draft a new law that would be generally consensual, to no avail. The only breakthrough came in 1992 with the Free Contract Law.[6] Article 1 of the new Law revokes art. 543 of the Law of Contracts and Obligations (which stands as the Civil Code in Lebanon) which stipulated that “if the period of lease is more than 3 years, it cannot be beneficial for a third person unless the lease contract has been registered in the cadastral register. The renewal would assume the same rule.”[7] The ability to renew beyond the initial 3 years, which became normative since 1944, has been withdrawn in favor of “open contracts,” albeit still assuming 3 years of lease (at least at the signing of the new lease) rather than one or two only, hence the law is not that far from the one-year leases common in many countries.[8] The 1992 law constitutes therefore a bold attempt to regain the confidence of owners which in the 1980s have shied away from either investing in residential or commercial properties (unless the intention is forthrightly to sell), or else have sought for their residential properties non-Lebanese tenants, or tenants that are known “not to last that long.” That said, the Law would not solve the problem of leased properties prior to 1992, whose “real rents,” once inflation and the value of the lira have been factored off, are at dismal lows. (A Law approved by parliament in 2014, which we’ll discuss below, forcefully addresses the issue of low rents.) Moreover, there seems to be a contradiction between “the freedom to contract” (ḥurriyat al-taᶜāqud) and forcing landlords to de facto approve 3 years for any lease, residential or otherwise, stipulating that even if contracts were initially set for one year only, they must nonetheless be approved for up to 3 years, if the tenant wishes to go that long; there is even no requirement that the value of the rent should be readjusted in those 3 years, or that the landlord has any right to recuperate his or her property, whatever the “necessity” may be.[9] The law has nonetheless been extolled, in particular by landowners and venture capitalists, for limiting post-1992 leases to 3 years.

We are now ready to proceed with a prototype of a recuperation lawsuit. The four-bedroom apartment, located in an upper middle class neighborhood in west Beirut, was originally leased in 1971 upon the completion of the building for L.P.11,860 ($4,000) a year.[10] By 2007, on the eve of the lawsuit, the lease amounted to no more than L.P.1,929,585 ($1,282),[11] which besides the obvious loss vis-à-vis the dollar does not account for inflation and for how much valuable $4,000-a-year could do at the time in the 1970s. When the 2011 verdict came through, denying the defendant-tenant any right to renew the contract, the latter received as indemnity a large cash sum (more on that later), but he also privately settled with the proprietor for a one-year extension of his lease as an “open contract,” that is to say, based indirectly on the 1992 Law discussed above. Strictly speaking, the old pre-1992 laws require that if the verdict summons the tenant to vacate the premises within 2–3 months, he may request, at the landlord’s discretion, an extension, which remains undefined by the law. Moreover, the landlord has no right to make use of the property except for his own personal use for 3 years, after which he may lease or sell it or continue using it. Nonetheless, legalities aside, with the excuse that “I need some time to settle in my new apartment,” which the tenant alleged he had already purchased but still needed a lot of work (even though he provided no evidence of that), the tenant went for the price of $32,000-a-year, which is fair to say represents the “real price” as evidenced by the apartment right below his which carried the same new price tag. In other words, the proprietor was with the “old rent” renting his property at a price 25 times below its “real” current market value. It is indeed such discrepancies between old and new that make owners eager for a new law that would accommodate their wishes, to say the least.

The special arrangement between owner (lessor) and tenant (lessee) is now (summer 2014) in its third year. Initially based on the court ruling in 2011, the tenant was supposed to vacate the property in February 2012, once the compensation payment would have been fully completed. The special arrangement gave him an additional two years of lease, which he indirectly paid through the indemnity: that is to say, the new $32,000 annual rent was deducted on two counts from the compensation that the owner owed him. It was, indeed, only in the third year of the specially extended rent, since February 2014, that the tenant began monthly payments (rent and assessments) outside the compensation. He even requested that, starting 2014, all leases be subjected to the 1992 law of “open contracts.”

In the first year of the extension, 2012–13, the ruling of 11 February 2011 was acknowledged by both parties, on the proviso that the owner would pay his tenant an indemnity worth $355,250, which roughly amounts to one-third of the apartment’s value, as estimated by the court’s expert.

2011 original compensation
2011 adjusted compensation
18 July 2011 signature of the agreement
$200,000 paid
18 August 2011
remaining sum to be paid upon the delivery of the apartment on 28 February 2012
$32,000 deducted as “new special lease” for one year only, ending effectively on February 2013
$32,000 deducted for a second special lease, until February 2014

Originally the compensation, as required by the judge’s ruling, was set at $355,250. However, the landlord, acting on his own behalf in order to avoid the routinized process of appeals and counter-appeals, proposed to his tenant a minimal “raise” in the compensation, up to $375,000. The agreement between the two, signed in Beirut at the tenant’s office on 18 July 2011, admitted that kind of quid pro quo: “The two parties have agreed that the leased property should be vacated on time and given to the owner without going through the specialized tribunals in order to present an appeal to the judge’s ruling, and without vacating the property through the auspices of Bureau of Execution in Beirut (Dāʾirat al-Tanfīdh).”

As the date of delivery was set for 28 February 2012, extra late days would be penalized for $300 each. The tenant agreed not to request for renewal anymore.

The following document was signed on 27 February 2012, just when the lease was over, amid the tenant’s demand for a “special extension.” The owner still owed his tenant $75,000 as the final installment of the compensation package, as required by the July 2011 agreement. Obviously, in order to avoid legal hassles that would look in violation of the July 2011 agreement, the new agreement was signed as “a modification of a previous contract.” The new arrangement stipulates that considering that the tenant had encountered difficulties at vacating his apartment at the requested time, a special one-year extension was accorded by the owner until the 3rd of March 2013. The amount would be deducted from the remaining $75,000 that the owner owes his tenant as part of the settlement-compensation. Interestingly, no specific sum was mentioned as value for the “new rent”—the document even avoids all such overt language. Instead, a close notes that what is left of the indemnity—$43,000—would be delivered by the owner once the tenant vacates on March 2013. A second special agreement was signed then, claiming this time that the final installment of $11,000 would be delivered on March 2014. Since then the two parties have opted for an official lease, in conformity with Law 160/1992.

Strictly speaking, from a legal point of view, and in light of the court ruling in 2011, what owner and tenant indulged into in the last couple of years, is “illegal.” What does that mean? The whole court proceedings, initiated by the owner in 2007, when the lawsuit was filed, were conducted on the basis that the owner urgently needed his apartment for the “family reasons” that he pleaded for (more on that below). Suffice it to say that, in light of the special arrangements between owner and tenant, such pleas de facto, if not de jure, become “bogus,” as they lose all their rationale, with a tenant that still occupies the same apartment but with a much higher rent at the established competitive street price. However, the “illegality” in this instance proves meaningless as owner and tenant are indulging into a consensual arrangement that fits them both. Moreover, such arrangement would not need stricto sensu any court endorsement. To wit, the court may declare it “illegal” only if it becomes “informed” of the modalities of the special arrangement. But who is going to “inform” the court, and on which basis exactly? Certainly not the owner–lessor: there is nothing to gain on his part through another court action. The only party that may indulge at informing the court of the “illegality” of the special arrangement is certainly the tenant. He may, for instance, argue that he “tricked” his landlord into that kind of arrangement to “prove” to the court that there was no “family necessity,” as was initially claimed by the owner.

Here comes the rub. Both owner and tenant take the risk regarding the “illegal” side of things simply because it is worth taking, and, more importantly, the special arrangement fits them both. On the side of the tenant, it is true that he is given a new lease with a price tag much higher than the old one he had been accustomed to, but then, price notwithstanding, he likes where he is, and he seems to find the arrangement “fair” enough for his purposes; and obviously he can afford the new revamped rent; he probably looked for other alternatives, but found the new modern apartments out of reach. On the owner’s side, had he requested the immediate vacation of the property in February 2012, as required by the ruling, he would have had—a basic law requirement—to occupy it himself for at least three years. That would have constituted in itself the “proof” that he “badly” needed it for the most urgent “family necessity” that he claimed for when he filed for the lawsuit. So, in short, what were the benefits for going “illegal”? Without indulging into much unwarranted speculation, the owner, as he informed me in summer 2014, had not much interest in occupying his own apartment back in 2012. First of all, he would have incurred the price of renovating an apartment that had been occupied since the early 1970s, a price that he estimated at nearly $50,000. Second of all, he would have had lost two years of rent, at $32,000 each. In sum, the three-year court requirement, in addition to the renovation, would have amounted to a hefty $150,000. He therefore opted for the “risk” of going “illegal” by granting his tenant a special treatment, on the near-certainty that he would not betray him through another round of court action. To be sure, the tenant could have tricked his landlord into another court procedure. He could, for instance, claim that, contrary to what the owner had argued for in his initial suit, he only renovated and furnished the apartment, but, otherwise, he was still living abroad for most of the year. But why would he do so, considering that he “benefited,” as his landowner did, from the two-year-plus extension?

It goes without saying that the arrangement between the landowner and his tenant is based on a mutual risk: either one knows damn well that they could be harmed by the other party going to court and risking a lawsuit that would place the opponent in an uncomfortable situation, where more claims for compensation would be at stake. What is really at stake in such situation are indeed the transaction costs, whether landowner and tenant accept their new mutual arrangement for the years to come, or whether one of them decides that it time to break up the entente. Herein lies the “successes” of such ententes: the court system is used in phase one, whereby landowner and tenant ferociously fought in court their respective viewpoints. Pre-trial negotiations did not work all too well at this stage, as both parties surmised that the court ruling would be beneficial to them. It was only once the court ruling finally materialized in 2011 that owner and tenant negotiated at the margins of the law, and, one should add, by bypassing what the law explicitly states. Once the verdict was enunciated, the tenant took note of the fact that vacating a property that he has been occupying for decades became all of a sudden a certainty, to be reckoned with. He realized that it would be perhaps more affordable, and more realistic, to indulge into an extension of the same rent, albeit at a more competitive price, than shopping for a new apartment. He therefore approached his landlord for a solution to their problems in that direction: let’s renew the lease, but with a price tag that you determine. The owner could have refused the offer, but refrained from doing so: it was for him, like for his tenant, a question of transaction costs. Sure, the court verdict was what he exactly expected and wanted, but it was also costly: it required him to occupy the vacated apartment for three years, before deciding on any further action. On both sides, therefore, there are incurring costs for breaking the current status quo, which has been at works since the early 1970s. They’ve both opted to persevere with the status quo, with all the legal risks that such measure would entail, in order to minimize all transaction costs.

When in 2008 the counsel of the plaintiff-owner pleaded in court on behalf of his client, he wrote to the district judge that “even though the plaintiff currently resides in the United States, he nonetheless has plans to return permanently to Lebanon and find work in his home country. Moreover, whenever he returns home he is forced to stay with his parents, which are kind enough to accommodate him with all his belongings; not to mention his personal library, composed of thousands of books, since my client is a professional writer and academic with many published books and articles on record. In spite of his parents’ generosity, my client does not feel anymore at home in such constrained space. Considering that my client needs a space of his own, so that he can create and produce by his own standards, we accordingly request the full recuperation of the apartment that is solely his.” The counsel quotes a section of Law 160/1992, which even though is restricted to “free contracts,” nonetheless reiterates the same rules as previous pre-1992 laws on recuperation: “The proprietor has the right to recuperate his property either for his own use or the use of one of his children for a family necessity, on the proviso that he does not own anything else that would be valid for residential occupation…We therefore demand that the apartment be recuperated due to a family necessity…”

The defense obviously rebuffed such claims, alleging that “the plaintiff only expressed his desire to return to Lebanon from the United States, where he currently holds a full-time position at an institution of higher learning, which is different from actually settling here. The mere desire to return is thus no evidence of a family necessity…” The counsel’s second target were the plaintiff’s properties. He argued that the proprietor did own three other apartments in the same building, albeit as the judge would later point out in his ruling, none of which were fully owned; none even had a 50 percent ownership. In his verdict in mid-2011 the judge noted that the crux of the matter from a legal standpoint is the notion of “family necessity,” which is not “hooked to everlasting notions,” “but it rather gives privilege for someone to use his rights in a natural and customary way without harming anyone else…” He thus rebuffed the defense claims of differences between the desire to return versus the act of returning to Lebanon from the U.S., adding that the plaintiff has every right to return, having expressed his desire to do so, but considering that none of the properties listed by the defense represent more than a 50-percent share, the plaintiff has no other option under such conditions but to stay with his parents. At this point, having been in favor of the plaintiff, the judge proceeded with an estimation of the value of the property in consideration for the indemnity to be paid to the tenant. The court expert had placed the value at $3,500 per square-meter in conformity with the prices in the neighborhood which he had examined in 2010, in disagreement with what the plaintiff’s counsel had estimated, namely $2,000 per square-meter. The judge, demanding the immediate evacuation of the property, once the lease is over, thus calculated that the property’s price tag was $1,015,000 (for 290 square-meters), placing the compensation at 35 percent of the total value for a price tag of $355,250.[12] Even though not a law requirement per se, but more of a practice than an official theory, the indexing of the compensation as one-third of the property’s value seems to be the adopted rule of thumb.

Even though it took three more years for the verdict to materialize, the structure of the case is fairly simple, and is representative of such lawsuits. It consists of the two counsels’ reports; the court expert who investigated the property, building, and neighborhood, setting a price based on the municipality’s estimates (which it routinely does for taxation purposes), and on interviews with neighbors and proprietors in the neighborhood; and the verdict, which took Law 160/92 as reference. The crux of the matter amounted at dissecting where “family necessity” lies: was there an absolute necessity for the owner to reclaim his property? And if so, on which grounds exactly? Did the owner own at least one other property that would have been suitable for his living conditions? The two conditions are fairly flexible, in particular the notion of “family necessity,” which evolves in time. In this case, the plaintiff was a mid-aged bachelor, a fact that was not even mentioned by the two counsels, and for good reason: not a long time ago, the defense counsel would have made a fuss about it; but the post-civil war mores of Lebanese society are moving slowly toward recognizing individual over family rights, hence everyone has a right to settle in his or her own property, assuming that the plaintiff only fully owns the one property under litigation. For that very reason owners tend to spread the ownership of properties among family members, at least until they settle through court action. With this in mind, Law 160/1992 proves a great breakthrough, albeit it left unresolved a 25–30 margin of low-rented properties, which the newly passed 2014 law may finally put at rest (see the following section); but it played favorably at encouraging proprietors to reclaim their properties through court action, even if that entails paying hefty compensations to tenants, which some have judged totally unjustified and uncompetitive for a liberal economy. Notwithstanding such grievances, coming from owners and their tenants, the Law has managed to reduce by a wide margin the crippling effects of low rents, first by opening the clause of “free” three-year non-renewable leases, and second, by promptly processing suits in favor of owners who wish to recuperate their properties.

What the new 2014 revamped law would bring, if approved

The text of the new rental law that was passed in parliament only recently, in April 2014, and which in principle should put permanently at rest the episode of old rents by 2025 at the latest, has been under the hood for many years, receiving many revisions prior to its publication in the Official Journal in early May 2014. But even though there is a constitutional probation period of six months, prior to the enactment of the law, which makes it eligible to be revoked by parliamentarians and Cabinet ministers, or the house speaker and president of the republic, the published text is worth our attention for its own sake, considering how much controversy it has already stirred.[13] For one thing, it highlights the problems that we have been addressing thus far regarding the differences in value between the old rents and their current street value. For another, even if the law would not make it to its final ultimate test, the text itself is serious enough in addressing the compelling issue of those old tenants who would not be able to afford the new competitive rents. Already the mixed reaction of the media points to the difficulties of such legal endeavor: on one side, the argument is that this is too little, too late; that the property owners, having been subjected to years of losses from rents far below their street value, have now to willy-nilly accommodate their tenants for nine more years, prior to breaking free the lease, if they wish to do so. On the other side, however, the alternative argument is that many of the old tenants would not afford the new rents, in particular past the nine-year period; to which some have already responded that such tenants have become over the years a tiny minority, whose issues need to be addressed separately (for instance through special funds) rather than to be limited to legal procedural matters. Well-to-do tenants, those same sources argue, represent another hefty minority, at least as important as struggling tenants from the lower classes. What is certain, however, is that assuming the rental law passes the “constitutional” (and political) test, rent control would finally become a thing of the past.[14]

What is new in the new law approved by parliament in April 2014 is article 15 which gives the possibility for the landowner to “win back” his property within a 9-year period, a strategy that would prove an alternate scenario from the one that we have explored above, in particular for owners who would be unable to afford the hefty compensation on behalf of their tenants. Each strategy comes with its own risks, perils, and costs. To wit, the strategy explored above, which generally requires court action, unless owner and tenant consensually agree on a compensation scheme, would normally take four years, from the filing of the suit to the verdict, but, due to the required compensation, the cost could be higher for the owner than what the new 2014 law would propose in this regard. For the tenants, however, the 2014 law is definitely a much better endeavor, as it gives them nine years to work out a new lease, either with the same owner or a different one, albeit the tenant would experience a progressive, but significant, rent increase in those 9 years. A special state-managed fund, with all kinds of demanding stipulations, is meant to assist tenants with low income. No accurate data on the number of needy tenants, nor on the size of the fund or how it will be funded are provided.

The tenant would pay the new full rent’s value, known as qīmat badal al-mithl, gradually over a six-year period; but only by the sixth year would the rent become complete, as a new rent which has been adjusted to the current configuration of rents, taking into consideration inflation and the competitiveness of the market. The legislation thus progressively increases pre-1992 rents over six years and eventually gives free access to property owners by the ninth year. Moreover, the value of the new rent should not exceed 5 percent of the value of the property itself “in its current condition,” once vacated. Needless to say, the badal al-mithl is the key component of the new law, as everything else gravitates around the value of this new rent, from the gradual yearly increase, to the indemnity to be accorded to the tenant in case the owner wishes to reclaim his or her property for a “family necessity.”

How is the “new rent value” to be addressed? Article 18 states that the “new rent” must be bargained either consensually or in court, raḍāʾ-an aw qaḍāʾ-an: that is to say, either tenant and landlord consensually agree on the new rent, or else they would seek court arbitration. Once the new rent has been agreed upon, it would be instated only gradually, within a six-year tenancy period, when it should reach its full value. In the sixth, seventh, and eighth years, therefore, the tenant would pay the new rent in full, which would have been agreed upon in year 1 (consensually or otherwise), and by the ninth year the contract would become “open” for the first time, as it would become subject to an open “free” negotiation for a new value, or else the owner may request from his tenant to vacate the premises, on the basis that he or she has opted for a non-renewal (no need to provide for any formal reason or excuse, familial necessity, demolition, new project, or otherwise). By the ninth year, the owner has a right not to renew the lease which had been imposed on him or her for decades.

Considering that the tenant has been sitting for decades—at the very least prior to 1992—on an old rent system, protected by the law, which is far below the current market value, how would then tenant and proprietor come to agree on the new rent? Suppose a tenant who is renting for $2,000 a year for a three-bedroom apartment in an upscale middle-class residential area of Beirut, which if it were to be competitively open would be worth no less than $30,000, based, say, on a new rent in the same residential complex. How would then the two agree on a new price in order to proceed with a lease based on the new law?

Article 15 makes possible the extension (renewal) of the old pre-1992 lease contracts for another 9 years on the proviso that the tenant would pay the so-called badal al-mithl with an incremental increase so as to reach no more than five percent of the property’s value, considered as the fair lease price, as follows:

15 percent for the first year;
30 percent for the second;
45 percent for the third;
60 percent for the fourth;
80 percent for the fifth;
100 percent—fair price—for the sixth;
100 percent for the seventh;
100 percent for the eighth.

The lease would then be open to negotiation in the ninth year, with the possibility of a closure or non-renewal. Only poor households would be able to extend their stay for 12 years.[15] So, suppose I am a tenant in an old pre-1992 lease which is worth $2,000 annually, what would the new law do to my lease, and in what way would it benefit me and my landlord? Either the “new updated rent” is assessed on the old existing one—$,2000—which means that six years from now it would reach its full “street value”—$4,000—a 100 percent increase; or else, the new value has nothing to do with the old one, hence must be assessed independently, and only then, the above percentages would become operative.

The first possibility seems a bit absurd, at least for the owners, considering that many of the old rents are now well worth above the $10,000 mark. In all likelihood, therefore, the second solution seems a bit more realistic: the value of the new rent is unrelated to the old, as its value would be marked on the most recent street price, to be jointly decided by landlord and tenant.

In this instance, a question begs itself: how would tenant and landlord “agree” on a new price? What if they disagree? What has the new law to say on this matter? Who is going to arbitrate in case of conflict, which would seem very much likely, considering the circumstances? What would the procedures of arbitration look like considering the circumstances?

If as an owner I have an apartment that is available, I would freely negotiate the rent with any potential tenant. The law would not impose any “market price” on us. The same would apply if the apartment is under a new post-1992 rent, which gives me the right either to not renew or else to negotiate for a new price past an initial three-year tenancy contract. A disagreement on price or on other matters would simply entail that the tenant would have to shop elsewhere.

If that scenario proves correct, and assuming that both owner and tenant agree on the new price (it remains to be seen what happens if they don’t), then proprietors, in addition to all the “losses” they would have incurred over the years, would still “subsidize” their tenants for six more years, until a “market price” becomes a reality. They would only be able to totally “free” their property—either for their own private use, or for a new tenant, or a new project—only in three more years—nine years after the new law of 2014 would have passed, assuming it would receive the final legal (and legalized) approval, which it partially did on August 6, 2014, when the Constitutional Council approved the law, safe for the articles that address the issue of the committee that would handle the value of the “new rent.” The parliament should therefore revise those articles, prior to the law becoming effective on 28 December 2014. Otherwise, the law would become inoperative, and proprietors and their tenants would have to litigate based on the more “general” law of contracts and obligations, which stands as Lebanon’s civil code.

At present, in summer 2014, the law has been published as a “special appendix” to the Journal Officiel on 8 May 2014, and then for a second time, because the Constitutional Council deemed the first publication unconstitutional. The then-president of the republic, Michel Suleiman, had opted for his constitutional rights in not appending his signature to the law, but also in not sending it back to parliament for review. There is nevertheless a period of appeal that in principle is 15 days from the date of publication: the president himself, the house speaker, ministers, and at least 10 parliamentarians could pose a challenge to the new law within the 15-day probation period from the date of publication. Otherwise the law would become operative six months as of its publication. There are, however, conflicting legal opinions as to what the Constitutional Council would consider as “probation period,” with some interpretations stretching it up to six months.[16] However, whatever the fate of the law, the preparatory work itself, not to mention the proposed text of the law, and the reverberations across the media (we’re turning old needy tenants into homeless people!) point towards a common no-nonsense mindset of issues regarding property.[17]

Article 18, whose section B–4 has been revoked by the Constitutional Council,[18] solves the mystery as to how the new rent (badal al-mithl) would be negotiated. It would be in principle “consensually” settled between tenant and landowner. In case of conflict, within three months of the law’s publication, the lessor should seek the expertise of two professionals accredited by the courts, which would help in determining the new rent. Once notified, if the lessee is unsatisfied of the proposal, he or she may in turn seek the appointment of two legal experts. If the two reports, the one initiated by the landowner and the other by the tenant, prove to be incompatible, then landlord and tenant could seek the expertise of the committee appointed for the muḥāfaẓa where the lease is at stake. Article 19 details how expertise reports should be drafted and the kind of information that ought to be detailed. (Notice that the expenses of the expertise reports are on the owner and/or tenant, whoever triggers the demand first.) The lease would be in the 5 percent of the value of the property in its current state, if empty (article 20). This article therefore plainly throws all evaluations on the value of the property itself in its current condition, that is, in light of having been used for many years, if not decades, without much renovation or repairs. This could be looked upon as a clause of unfairness for the landlord, considering that he could easily invest in the property, once empty, adding both to its value and to its rent.

Article 22 states that in case the owner would like to recollect his or her property for a family necessity (ḍarūra ʿāʾiliyya) or demolition (other excuses could also be valid, if appropriate) in the first year of the special nine-year extension period, then the tenant would receive a compensation valued at a four-year rent for the family necessity excuse, based on the new street-based value of the tenancy contract; if, however, the property is reclaimed within the nine-year period for the purpose of demolition or whatever other reason, the indemnity should be calculated on the basis of a six-year rent (as calculated in article 15). However, whatever the case, if the tenants wish to leave after the seventh year, they will not be entitled to any indemnity. In our case history above, we’ve noted that the compensation was estimated at roughly one-third of the property’s value, as determined by the court’s expert. If the value of the new lease, in the 2014 law, is estimated at 5 percent of the value of the property in its current state, if empty, then a compensation worth a four-year rent would be at best in the range of 20 percent, while a six-year rent would be close to 30 percent, which is roughly similar to what the old law unofficially stipulates. That said, our landlord above would have probably saved 10 to 15 percent or more to reclaim his property under the family necessity rubric, assuming he sues immediately from the first year once the law became applicable, in order to avoid another five-year “loss” as outlined below. The law assumes that the reclaim could either happen consensually, or else through the court channels; as this possibility remains open in every settlement, it is difficult to assess whether the settlement outlined above in our large-compensation case history would in all certainty be better off in the new system.

In effect, once the new rent is set, the subvention plan, on behalf’s of the property’s owner, which translates as another five years of low payments, would run as follows, in reverse order than the tenant’s new mode of payment:

85 percent for the first year;
70 percent for the second year;
55 percent for the third year;
40 percent for the fourth year;
20 percent for the fifth year;
zero percent in the sixth year.

At the end of the sixth year the rent would become free, meaning open for negotiation at a new price, based on law 160 in 1992. Moreover, the owner would have to wait nine years to free the lease. In the meantime, he or she would be responsible for the maintenance and safety of the property (building, apartment, shop, or otherwise).

Article 3 claims that a credit fund (referred to as the ṣundūq)[19] that manages rents for disfavored lessees would be set to help the tenants whose income is less than three times the minimum monthly salary (currently $450, based on a decree from 2012 that regulates salary scales for public institutions and minimum wages in general). In case the tenants’ income is less than two times the minimum wage, the fund will pay on their behalf the difference between old and new rent. If the income is between two and three times the minimum wage ($900 to $1,350), the fund will cover the difference between the new rent and 30 percent of the income. But then nothing is envisaged to help property owners which have suffered from low rents for decades, as if they’re “wealthy” by definition. Moreover, article 8 gives the tenant the right to request a special aid from the account set for that purpose, which means that the rent increase is “frozen” until the committee decides on the request. No time framework is given as to how long that would take, although the tenant must pursue his request in the first year (out of nine) of the special “extension” within two months after a decision has been made on the badal al-mithl. Thus as soon as the value of the new rent has been agreed upon, either consensually or through court action, the tenant, if he wishes to do so, and assuming he is eligible, should apply to the credit fund within two months. He should pursue the same application, if he wishes, for every year of the nine years of “extension.” If approved, the fund would then subsidize the yearly increase that the tenant has been subjected to as detailed in the above table. To wit, the fund would pay the rent hike, recommended by the law, so that the tenant would still occupy the property with the same price. That could go on for nine years, after which he’ll have to debate a new rent with the landlord, without, however, any state assistance.

Article 10 states that the owner cannot use what is due from the credit fund as part of the rent that is due from his tenant. Since the fund would have to deliver the subsidy directly to the lessor, the latter has no right to claim the subsidy as an “unpaid due” on the part of the lessee. In short, the lessor would receive the “new rent” from two sources: the “original” rent would be delivered by his tenant as usual, as if nothing happened (say, on a monthly or bi-monthly basis), while the 15 to 20 percent yearly increase would be delivered by the fund. Besides the fact that the lessor would have to deal from now on with two different sources, delays created by state bureaucratic routine are another matter altogether.

Article 29 states that if the tenant dies, or leaves the leased property, the spouse or other relatives that may have lived with him may take over within the nine-year extension period, then negotiate a new lease after that, if both landowner and tenant desire so.

Some have argued that the whole “crisis” of low rents, which has preoccupied parliament since the end of the civil war in the 1990s, is overblown, hence does not merit the attention that is normally accorded to it. On the one hand, the argument goes, the 1992 Law of open contracts has de facto encouraged negotiations between landlords and tenants, whereby compensations were consensually agreed upon. For others, the road was open for court action, as was the case for our landlord above. On the other hand, and with the end of the civil war, between the sprawling of newly built apartment complexes, and the demolition of old ones that were too old or defective, the portion of old rents has been considerably marginalized, considering that new leases would be subject to the 1992 Law. Moreover, as the unofficial figures below from 2011 point out, even within the already marginalized sector of old rents, the tenants in dire conditions would not exceed an estimated 13,000 out of a total of 81,500:

13,000 of which are foreigners;
3,000 are considered wealthy;
5,000 are tenants are landowners at the same time;
18,000 are in the hostelries and tourist businesses;
6,000 are independent professionals;
13,000 are workers from the lower classes, the only category that needs to be subsidized under a new law.

It has been further estimated that by the end of 2011 Lebanon had a grand total of at least 422,000 built properties,[20] based on a work published by the Central Bureau of Statistics, and funded by the European Union. This is an increase of 13,485 units from 2004, when the built properties totaled 408,515. It is also estimated that 20,000 new apartments are completed each year, with an average of 10 apartments per building, which means on average 2,000 new buildings a year. That said, 21 percent of the buildings were completed after 1990, when the civil war was technically over; while 57 percent go back to the 1955–1989 period; and 22 percent are pre-1955. More specifically, in Beirut, 45 percent of the buildings are pre-1954; 38 percent were constructed between 1955 and 1987; 17 percent are post-1987; 11 percent in the 1990s, and only 6 percent are post-2000. There are therefore lots of old buildings in Beirut which the so-called “landed lobby” attempts to “systematically” erase by various legal or illegal means (the “protection” of “historical” buildings is practically non-existent).

For Joseph Zougheib, Chairman of the Syndicate of Owners of Leased Property, once the new law is approved, “There will be a cash flow injected into the economic cycle. The State will also make more money out of the taxes it will acquire from transactions, new rents, registrations for more residential units that were blocked before.” Some buildings will be demolished and replaced by new ones. “Many of the tenants who cash in their compensations might pay them as a down payment for owning a new apartment.” This would activate demand on residential units which is ailing nowadays. One of the advantages of this new law is that it liberates thousands of blocked properties. Owners can rehabilitate the property, if they have the means to do so. The Syndicate of Owners has based its numbers on a study conducted by the Ministry of Social Affairs, which showed that pre-1992 owners total 80,000, but with no further breakdown as to income.[21] Moreover, with the old rents becoming inoperative since 2012, and yet no new law in operation, some proprietors have initiated lawsuits based on the more general law of contracts and obligations, which stands as the country’s civil code. However, to my knowledge, such suits are still pending, probably with the hope that the new law would become operative by August 2014.

Moreover, in the confusion that reigned in summer 2014, amid the law’s approval by parliament and its publication twice on purely procedural matters, and in the long wait for the Constitutional Council to say its final word by August 11, it became clear that a “confessional” division is at works. First of all, Christian parliamentarians from the Phalanges Party, the Free Nationals (Dory Chamoun), and the National Free Movement (Michel Aoun) were at best hesitant about the law, if not totally opposed. By contrast, the Hezbollah, Amal, and Mustaqbal Movement have adopted a hands-off approach (in spite of all their political divergences), supportive for the most part, leaving it open for individual decisions, with a tiny minority voting against the law. Which undeniably points to the fact that Christian constituencies in Beirut and elsewhere have benefited more than others from old rent practices, while in other neighborhoods this has been less the case. Surely, however, this is no indication that Christian neighborhoods and towns are poorer; quite the contrary. There is undeniably a tenaciousness, or a sense of solidarity and community, among the upper and lower Christian middle classes which makes it harder to vacate a tenant for the usual excuses (family necessity or demolition). It does seem, however, that in the other neighborhoods and towns where Christians do not form an absolute majority there is that tendency to act against “unprotected” tenants, hence many of the old rents in such areas have dissipated in the last 20 years either consensually or through lawsuits that would require indemnities. In the absence of detailed statistics, however, once can surmise that in such neighborhoods and towns, the number of old-rent tenants may still be high, but the relation of “solidarity” with their landlords may be absent here.

Ottoman and post-Ottoman societies are known for their suspicion towards a “culture of the self” when it comes to the possession of property under individual holdings. Thus, with the importance of kinship, and communal property in small localities in its various forms, known invariably as shuyūʿ or mushāʿ; not to mention the most venerable “family” institution of all, the waqf; the primacy was—and still is in many regards—of the group over the individual. To wit, Ottoman, colonial, and postwar systems, gave precedence to the “survival” of the group over the individual, which, when it came to property, it was not the “individual inalienable right” that mattered. This was fairly clear, for example, in the Syrian legislation of the mandate, the bulk of which was inherited from the Ottomans of the Tanzimat, and which, in particular since the takeover of the Baath in the mid-1960s, has, by and large, disfavored private ownership.[22] Strangely, however, Syria “solved” the issue of low rents, at least for residential properties, at least a decade before Lebanon did, while at the same time disfavoring private property ownership, at least the landed ones, for instance, by strongly limiting the purchase of land and property transfers, and through cheap confiscation of land for the purpose of the public good.

Lebanon’s laissez-faire liberalism implies that all properties, urban or rural, would be treated on an equal footing. Moreover, as agriculture does not constitute a prime sector of the economy, much less important than tourism, banking, and services in general, there is therefore no urgency to limit landowners, farmers and tenants with special legislation and regulations. When it comes to rent control, our sketch of its history points to the fact that there was no deliberate policy at harming either owners or tenants. As an unexpected outcome of the fifteen-year old civil war, the sudden and sharp decline of the lira in the early to mid 1980s has rendered the value of rents nearly worthless, creating that category of “old rents” which was more an outcome of unfortunate circumstances than of legislation. With the end of the civil war in the early 1990s, the state, overburdened by political and economic pressures, was unable to catch up. Ultimately, the “old rents” as a category, amid the freeing of rents thanks to the 1992 law, became gradually marginalized, once attempts of owners to “redeem” their properties through court action became more and more promising; not to mention the construction of new buildings and apartments and the demolition of units that were seen unworthy or unfit for safety reasons. It remains to be seen whether the new 2014 law would pass the final constitutional test by the end of the summer, and whether it would permanently close the chapter of rent control.

[1] Wasīm Ḥasan Wehbeh, Qawānīn al-ᶜaqārāt wa-l-mabānī, Beirut: Manshūrāt Zayn al-Ḥuqūqiyya, 2011, 59–99.
[2] Qawānīn, 61ff.
[3] Qawānīn, 170.
[4] Farid Joseph Ḥaddād, Majmūᶜat qawānīn al-ījārāt, 1944–1982, Beirut, 1982.
[5] My special thanks to judge ʿAfif Shamsuddin, in our numerous conversations in Beirut in July 2012, in helping me sort out such complex social, economic, and legal issues, which by and large have remained undocumented, even though Lebanese newspapers are regularly filled with accounts of dissatisfied tenants and landlords, amid the new tenancy laws which are routinely discussed in parliament. As usual, however, there is no convincing narrative that would historically account for the gross failure of the system.
[6] ʿAfif Shamsuddin, Qānūn al-ījārāt bayna al-aṣl wa-l-taᶜdīl, Beirut, 1994, which thoroughly documents Law 160/92.
[7] Shamsuddin, Qānūn, 265.
[8] It goes without saying that a tenant may opt for 1–2 years only.
[9] Shamsuddin, Qānūn, 267–8.
[10] In the 1970s the dollar was three liras, a rate that would be maintained until 1982.
[11] For a rate of 1,505 liras to the dollar, which is still the current rate.
[12] All amounts were in dollars in the original, in spite of the fact that the lira has been pretty much stable since the 1990s.
[13] “Qānūn al-ʾījārāt fi Lubnān,” Al-Shahriyya, Beirut, 127 (May 2014), 4–7: “the rental law is a new gate to waste public money.”
[14] The association of “Lebanese Landlords” has expressed fears and concerns on its website at A letter to Kofi Anan was addressed to him on behalf of the association when he was secretary general of the United Nations, urging for the “freedom of contract” in Lebanon, which is protected by the more general law of “contracts and obligations,” which stands as the civil code of the country.
[15] Yassmine Alieh, “New rental law passed by Parliament,” Lebanon Opportunities, May 2014, 74–77.
[16] An-Nahār, Beirut, 10 May 2014.
[17] As Michel Suleiman’s presidency was in its final week (May 25, 2014), with no successor in sight yet, the sitting president decided, based on article 19 of the constitution, to summon the Constitutional Court regarding the constitutionality of the new rental law approved by parliament and published on May 8th. For its part, the union of leased properties summoned all officials not to revoke the text of the new law, so as not to further extend the plight they’ve been going through for forty years: “We’ve been informed that 6 members of parliament have signed a petition on a memo that pretends to represent the interests of the tenants in order to revoke the new law… Such names would be for ever in the consciousness of the old landlords, and the memory of their sons and families, simply because such revocation, if applied, would constitute a serious attempt at confirming the illegalities of the illegitimate takeover of the old tenants of the properties of their landowners, so that they would be inherited by their grandsons and granddaughters…” (An-Nahār, Beirut, 20 May 2014).
[18] In its August 1st, 2014 meeting, in a 7 to 3 majority vote, as well as articles 7 and 13, which address the constitutionality of the committee that should revise the “new rent” in case of conflict between owner and tenant, see, An-Nahār, Beirut, August 7, 2014.
[19] The fund intended to assist the tenants with “limited income.”
[20] Al-Akhbār, Beirut, 16 May 2012.
[21] “New rental law,” 77; some of the figures come from the Central Administration of Statistics.
[22] Zouhair Ghazzal, “Droit et société,” in Baudouin Dupret and Zouhair Ghazzal, eds., La Syrie au présent, Paris: Actes Sud, 2007, 625–660.