Constitutional Court upholds Real Estate Agency Law, rejects appeal

The Constitutional Court has rejected an appeal challenging the constitutionality of Law No. 25 of 2023, which regulates real estate agency contracts in Kuwait, effectively reinforcing the legislation and rejecting claims that it infringes upon property rights and personal freedoms.

The appeal argued that the law undermined the right to ownership and the agent’s freedom of action, particularly with respect to irrevocable real estate agency contracts, which the appellant claimed formed part of the agent’s private property. However, the court ruled that the law serves a legitimate public interest and does not violate constitutional principles.

According to a copy of the verdict obtained by Al Jarida, the court found that the legislation was introduced to combat the misuse of irrevocable agency contracts in real estate transactions — specifically, to curb practices aimed at avoiding official registration and the payment of state fees, and to prevent abuse of housing care entitlements.

The law defines a real estate agency as a contract whereby a principal authorizes another person to execute a legal transaction transferring ownership of property, whether for the benefit of the agent or a third party. Crucially, the law prohibits making such agencies irrevocable and provides a one-year grace period from the law’s effective date for parties to rectify their legal standing.

The court emphasized that failure to regularize such agency agreements within the given timeframe would result in the agency being deemed a final sale contract, without infringing on rights acquired in good faith. It further clarified that the law does not restrict ownership rights or the agent’s right to act within the scope of the agreement.

Addressing additional claims, the court rejected the argument that the law violates the principle of equality, noting that real estate agencies differ significantly from other forms of agency due to their exploitation for tax evasion and registry avoidance. The court ruled that this distinction is based on legitimate and objective grounds tied to public interest.

On the issue of retroactive application, the court held that the law applies only to contracts still in effect at the time of enactment, and therefore does not constitute retroactive legislation.

Finding no merit in the appeal, the court dismissed the case and confiscated the appellant’s bail, declaring the challenge inadmissible.