Tuesday, September 10, 2013

Real Estate Brokerage

The definition of real estate brokerage under Omani law is sufficiently wide to encompass any activities relating to dealing in real estate property of any type for a fee.

In addition to the conventional scope of acting as the intermediary for facilitating property transactions between two parties, real estate brokerage business could span a whole gamut of services such as the following:

  • Facilitating property sale or purchase
  • Property leasing
  • Property appraisal
  • Property management
  • Real estate marketing
  • Property inspection
  • Relocation services
  • Property development

Each service could further focus on a particular type of real estate, such as, residential, commercial, or industrial property.

Under the legal framework, a property broker may be a natural or juridical person licensed by the Ministry of Commerce and Industry to engage in brokerage business. If a company, at least 80% of the company’s dedicated workforce to brokerage business must be Omani nationals with the minimum educational qualification of diploma or its equivalent in any discipline. Individuals may be entitled to a brokerage business licence only if they complete a training course in the specialised field. It is also obligatory for a licensed broker to register with the Ministry of Housing.

Brokers are obliged to maintain record of all the transactions brokered by them. All related contracts and documents must be retained by a broker for at least five years from the date of last entry in respect of each transaction. A brokerage contract has to be in writing and, as a bare minimum, must contain details of the contracting parties, underlying property, brokerage terms, and the brokerage payable.

Brokers are entitled to commission in respect of a transaction only if the transaction is actually effected. Furthermore, if a transaction is subject to a condition, brokerage will be payable only if such condition is satisfied. A brokerage is payable by the party engaging the broker, however, if a broker is engaged by both parties then the parties will have to divvy up the broker’s costs. If there is disagreement on the quantum of commission payable then 3% of transaction value in the case of transfer of property or any intangible rights and 5% of the lease value in the case of lease contracts will be determined as rate of commission payable to the broker. Brokers may not claim mediation expenses in addition to brokerage unless it is priorly agreed with the relevant parties.

Brokers are obliged to provide true and accurate information that has come to their knowledge about the underlying property to both parties even if they are engaged by only one party. A broker will be liable for any misrepresentation, mistake or negligence in relation to the property. Brokers are also responsible for holding the documents and other related materials entrusted to them in safe custody and for compensating the owners in the event of loss or damage to the documents unless it is provable that such loss or damage was inevitable despite the reasonable measures taken for their protection.