Wednesday, June 25, 2008

The Oman Law Digest 2009 - PROPERTY

Ownership of real property is evidenced by the Mulkhiya or title deed. Real estate records of ownership, transfer, usufruct rights and legal mortgage are kept in the real estate register at the Ministry of Housing (MOH).

Land registration is maintained by MOH by virtue of Land Law [RD 5/80], MD 5/91 (issued by MOH) and Land Register Law [RD 2/98]. Legal provisions and supporting legislation set up a Real Estate Register which is designed to act as a record of land interests. An independent page in the Land Register should be assigned for each separate real estate unit which should include salient particulars of the property [MD 29/99]. The Real Estate Register is only available for inspection by parties with interest in land. Under MD 5/91, MOH has authority to levy fees for registration of interests in land.

Omani nationals are entitled to freehold and leasehold real estate rights. Wholly Omani owned companies and public joint stock companies with 51% Omani shareholding may own real estate. Pursuant to MD 43/98 issued by MOH, corporate ownership of real estate is restricted to holding it for administrative office, staff accommodation, warehouses, show rooms and similar special purpose premises in relation to achieving the company’s objectives and should not be for investment purposes unless it is a land development company with a specific land development object. Companies acquiring land for administrative and other purposes are prohibited from disposing of the real estate within two years of acquisition.

Pursuant to Law Regulating the Ownership of Real Estate by GCC Nationals [RD 21/04], the right to own land in Oman has been extended to GCC nationals and wholly GCC owned companies. Previous law issued by RD 20/00 restricted a GCC entity’s right to own land to not more than 3,000 square metres. This law entitles GCC natural persons and wholly GCC owned juridical entities to own land or construct property for the purposes of residence or investment in Oman in accordance with Omani law. This law seeks to give similar land ownership rights to GCC nationals as Omani nationals. However, a GCC national purchasing a vacant plot of land is legally obliged to develop within four years from registering it. If the land is not developed within the stipulated time, the Government may dispose of the property but with due compensation.

The Government may acquire land from owners for public use and pursuant to a Royal Decree. The owner of the land must be duly compensated for expropriation [RD 64/78].

Usufruct Law [RD 5/81 as amended] provides for usufruct rights that may be granted by the Government to a third party to utilise and develop real estate. Usufruct is a real right to exploit and benefit from the land granted pursuant to a written agreement. Usufruct of real estate may be held for an initial term of 50 years and may be renewed for additional terms. The beneficiary of usufruct is entitled to use land as its own for the term. Real estate reverts to owner upon termination or on expiry of usufruct agreement.

Usufruct rights over land are granted by the Government (MOHEW) to public utility and infrastructure projects that are considered as contributing to the development of the national economy.

It is also possible to sub-usufruct usufruct rights.

Owners may lease real estate which must be registered with the local municipality [RD 6/89]. A lease of over seven years must be registered with MOH also. This interest is strictly contractual and amounts to a tenancy agreement which is to be registered with the relevant municipality. A lease does not provide any actual real rights in real estate but it is a right granted by contract for payment of rental to occupy land and buildings built upon the land.

Law for ownership of real estate by foreigners in integrated tourist complexes was issued by RD 12/06. This law allows non-GCC foreign nationals and companies to own registered freehold title to Omani land provided that the land is situated in an area designated as an integrated tourist development area.

Specific rights that are granted to a development company over an area of project land are recorded in a development agreement. The development agreement sets out rights and obligations of the developer and obligations of the Government in relation to supporting the project.

Rights granted to property developers in these areas are heavily controlled by the Government. The developer has to satisfy the Government that its project is beneficial to the country and will deliver a good quality and successful project.

Issues relating to transfer of title, succession and applicable laws, permanent residence in Oman, etc., are addressed in recently issued MD 191/07 issuing the Executive Regulations to the Law.

Law regulating the Tenancy of Residential, Commercial & Industrial Premises [RD 6/89] was recently amended by RD 72/08 bringing about significant changes to curb rising rents.