Real Estate Companies Scamming Clients and Failing to Fulfill Contracts | How the Law Protects Buyers' Rights
The real estate market in Egypt has seen significant growth in residential and investment projects in recent years, and purchasing units from companies has become one of the most common ways to obtain housing or invest.
By: Counselor Mohamed Farouk Mahmoud El-Khatib
Real Estate Companies Scamming Clients and Failing to Fulfill Contracts | How the Law Protects Buyers' Rights
The real estate market in Egypt has seen significant growth in residential and investment projects in recent years, and purchasing units from companies has become one of the most common ways to obtain housing or invest.
However, many legal disputes have arisen between clients and real estate companies, especially in cases of failure to execute contract terms or manipulation to avoid contract termination after large payments.
Many clients face problems such as delayed unit delivery, changes in property specifications, or refusal by the company to refund money upon contract termination, raising questions about the legal rights of buyers and how they can recover their funds.
In this article, Legal Consultant Mohamed Farouk Mahmoud El-Khatib – Lawyer at the Court of Cassation and Supreme Constitutional Court explains the legal aspects related to these issues and the steps clients can take to protect their rights.
What Is Real Estate Fraud?
Real estate fraud occurs when a company or entity sells units or contracts with clients in a way that involves deception or misrepresentation to obtain money without fulfilling agreed obligations.
Examples of real estate fraud clients may face include:
- Selling non-existent or unlicensed units
- Contracting for a project without actual implementation on the ground
- Changing the specifications of the agreed-upon unit
- Collecting installments from clients without adhering to execution or delivery schedules
- In some cases, collecting money from a large number of clients without a real project
Failure to Fulfill Contract Terms in Real Estate Projects
The contract is the legal foundation that governs the relationship between the buyer and the real estate company, outlining the rights and obligations of each party. Usually, the contract includes key terms such as:
- Unit delivery date
- Unit specifications and size
- Installment value and payment method
- Penalties for delay
When a company fails to execute these terms or breaches them, it constitutes a contractual violation, giving the client the right to take legal action.
Common forms of breach include:
- Long delays in unit delivery
- Delivery of a unit with specifications different from what was agreed
- Change in unit size or location
- Project suspension for a long period without justification
Companies Manipulating Contract Termination
In some cases, when a client requests contract termination due to company non-compliance, some companies may attempt to avoid refunding money.
Methods used may include:
- Including exaggerated penalty clauses in the contract
- Delaying responses to client requests
- Attempting to modify contract terms after signing
- Refusing to return payments citing contractual conditions
However, contractual clauses cannot deprive the client of the legal right to terminate the contract if the company breaches its obligations.
When Can a Client Terminate the Contract and Recover Funds?
A buyer can request contract termination under several legal situations, including:
- Delay in unit delivery – If the company delays delivery for a period exceeding the contract duration without a legitimate reason.
- Change in unit specifications – Such as alterations in size, finishing level, or unit location within the project.
- Project suspension – If the project halts for a long period without visible progress.
- Serious contract breach – Any clear violation of agreed contract terms.
In these cases, the client can file a lawsuit to terminate the contract, recover payments made, and claim compensation.
Can These Cases Be Considered Fraud?
In some situations, the issue may escalate from a civil dispute to a fraud crime if it is proven that the company contracted with clients with intent to defraud or without a real project.
Legal actions may include:
- Filing a criminal complaint for fraud
- Claiming the recovery of funds
- Seeking compensation for financial damages
The approach depends on the facts and evidence available in each case.
Legal Steps Clients Can Take
If facing issues with a real estate company, it is advised to take clear legal steps to protect rights, including:
- Carefully reviewing the contract and all clauses
- Keeping all receipts and documents
- Sending a formal notice to the company to fulfill its obligations
- Filing a contract termination lawsuit in the competent court
- Claiming refund of payments made and compensation
- Having a specialized lawyer helps choose the correct legal path and speeds up recovery
The Role of Lawyers in Real Estate Fraud Cases
A lawyer specializing in real estate disputes plays an important role, including:
- Studying and analyzing the contract clauses
- Identifying violations committed by the company
- Issuing legal notices
- Filing lawsuits
- Representing the client in court
- This ensures protection of client rights and recovery of funds according to the law
When Should You Consult a Lawyer?
It is recommended to consult a lawyer in cases such as:
- Long delays in unit delivery
- Discovering violations in the project
- Company refusal to fulfill contract terms
- Company attempts to evade contract termination
- The earlier the legal action, the higher the chances of protecting rights
Contact Legal Consultant Mohamed Farouk Mahmoud El-Khatib
If you are facing a legal issue with a real estate company, or have experienced real estate fraud, delivery delays, failure to execute contract terms, or manipulation of contract termination, you can contact:
Legal Consultant Mohamed Farouk Mahmoud El-Khatib
Lawyer at the Court of Cassation and Supreme Constitutional Court
Al-Khatib Legal Consultancy
📞 Phone: 01113054308
📧 Email: [email protected]
Services include:
- Real estate disputes
- Contract termination
- Funds recovery
- Civil and criminal cases
Conclusion
Fraud by real estate companies is not limited to taking money; it can also appear as delivery delays, changing specifications, or manipulation of contractual obligations.
Therefore, every client should:
- Carefully review the contract
- Keep all documents
- Take legal action immediately upon any violation
- With the assistance of a specialized lawyer, take the correct steps to protect rights, terminate contracts, recover payments, and claim compensation when legally justified
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