A prominent trading hub, a pioneer in regulatory and legal reforms, and a gem amongst the GCC States. In tandem with Bahrain’s 50th national day celebrations, we are excited to introduce the latest edition of Law Update, where we explore the significant development that the Kingdom of Bahrain has achieved as a nation on the regional and international stage.
In this standout Bahrain Focus, our lawyers provide insights and expert commentary on pertinent legal updates within the country. From an interview with an industry leader discussing the Bahrain real estate market to an insightful overview around alternative working arrangements and its economic effect. In addition, you will find several general articles along with real-life judgments that provide context for the legal landscape across the entire region.Take a read of the edition
On 21 September 2021, H.H the Ruler of the Emirate of Ras Al Khaimah issued Law No. (11) of 2021 in respect of the real estate register in the Emirate of Ras Al Khaimah (the Real Estate Register Law) which came into effect on the date of its publication in the official gazette. This update provides a summary of the key provisions of the Real Estate Register Law and will be of interest to those operating in the real estate and financial sectors in the Emirate of Ras Al Khaimah (RAK).
As the name indicates, the Real Estate Register Law relates to the establishment and operation of a property register (the Real Estate Register) that will be maintained by the Real Estate Department (the Department) at the RAK Municipality for the purposes of recording the details of real estate properties in RAK and all rights and dispositions affecting them, including any subsequent changes. Whilst property rights were registered in RAK prior to the promulgation of the Real Estate Register Law as a matter of unwritten practice, it is the first time that a law is issued to formally address this aspect.
The Real Estate Register Law applies in respect of all real estate properties that are located in RAK, including off-plan properties.
A right that is registered on the Real Estate Register will be deemed a property right (right in rem) by contrast to a contractual right. The registration of the right at the Real Estate Register will operate as conclusive evidence as to the existence of such right and will allow the owner of such right to invoke it against all third parties (the erga omnes effect) rather than against a specific debtor.
In connection with the operation of the Real Estate Register, the Department will be assigned strategic tasks that include carrying out a survey for the purposes of updating existing records, preparing standard forms in respect of real estate dispositions in RAK, setting out the processes for electronic record keeping and issuing periodic studies and analysis relating to the dynamics of the real estate market.
The Real Estate Register Law recognizes the concept of jointly owned property and contains a number of articles dealing with this aspect, including the registration procedure to be observed where a property is subdivided into privately owned units.
The Real Estate Register Law imposes restrictions on the ownership of real estate and property rights in RAK. According to Article 12 of the Real Estate Law, a person who is not a citizen of the UAE or a citizen of a country that is a member of the Gulf Cooperation Council (GCC) shall be deemed a foreigner and as such cannot own real estate and other property rights in RAK. A body corporate will be deemed a foreign for the purposes of the Real Estate Register Law if less than 51% of its share capital is owned by UAE or GCC nationals. This is a less stringent restriction in comparison with the real estate foreign ownership restrictions that are imposed in other Emirates where, in general, a body corporate will be deemed foreign if any of its shares is ultimately owned by a non-UAE or non-GCC nationals.
As an exception to the foregoing, foreign persons will be permitted to own real estate and property rights in areas that are designated for this purpose by the Ruler of RAK. Additionally, foreign ownership will be permitted in instances where the property is used as the office of a foreign diplomatic mission or consulate, or as the residence of the president of the mission (subject to reciprocal treatment) or if the property is to be owned by foreign organizations.
Subject to the payment of the relevant fees, any person may inquire about the status of a real estate unit and may request a certificate of status from the real estate registration authority in RAK Municipality in this respect.
Pursuant to Article 23 of the Real Estate Register Law, all dealings relating to the creation of a property right, including any transfer, amendment or termination of such rights as well as any final judgments relating to the same must be registered in the Real Estate Register. If not registered, these rights will not be created, nor transferred or terminated and may not be invoked as between the parties or towards third parties. However, the Real Estate Register Law provides that non-registered dealings would have the effect of personal obligations between the concerned parties.
Where a lease or similar instrument relating to the use of a property is of a term that exceeds 10 years, it must be registered with the Real Estate Register. The term of a lease, however, must not exceed 99 years or otherwise that term will be deemed of 99 years only. In addition, if the lease is of a term of more than 50 years, it cannot be registered under the name of a foreigner, whether an individual or an entity that is deemed as one.
The Real Estate Register Law provides that an interim real estate register will be created for the purposes of recording dispositions that relate to off-plan units. Developers are required to register the units on the interim real estate register before conducting off-plan sales activity. Additionally, in relation to off-plan projects that have been launched prior to the entry into force of the Real Estate Register Law, the Real Estate Register Law requires that the developers regularize their situation and comply with the new provisions within the a period of 60 days. Failure to do so will result in the developers losing their right to sell units on an off-plan basis.
Dispositions in respect of real estate units that are registered on the interim register are expressly permitted, including sale and mortgage. The Real Estate Register Law prohibits developers from charging fees in relation to these dispositions unless such fees are approved by the Department.
Lawsuits that are related to property rights, to the validity of real estate dispositions, or to the pre-emption entitlement of an owner in a jointly owned property must include a request to record the modification in the status of the property on the Real Estate Register, and such lawsuits will not be accepted unless the evidence of registration of the same is provided.
The Real Estate Register Law is a step in the right direction and constitutes a significant development in RAK’s efforts to modernize its real estate framework. It provides increased clarity and certainty in respect of dispositions relating to real estate rights. It is, of course, yet to be seen how it will be applied in practice, and while some uncertainties remain, the introduction of the Real Estate Register Law, overall, is a much welcomed addition to RAK’s real estate landscape.