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23 August 2017

Parliament approves new Real Estate Organisational Law

In the latest real-estate shake up in the Kingdom of Bahrain, Parliament has approved the new Real Estate Organisational Law (the “Law”). The approved legislation, consisting of a comprehensive 109 articles, is set to replace the 32 articles of the 2014 Real Estate Development Law (the “2014 Law”) and the 1976 Brokers Law.

The purpose of the new Law is to impose stricter guidelines and standards for real estate developers, which includes a penalty of two years in prison and a fine up to BHD 100,000 for any and all individuals involved in real estate shams.  The Law prohibits individuals entering into agreements based on a ‘gentleman’s promise’, as the court will now refuse to uphold any verbal agreement made between parties and will only recognise written and officially documented contracts.  In addition, under the new Law, it is considered mandatory for property owners to insure property against damage, which includes fire or structural defects. 

The Law is seen as more of a sophisticated guideline for the real estate market in Bahrain and addresses any ambiguity that could be found in the 2014 Law. In its time, the 2014 Law helped in creating a more honest approach to real estate transactions. However the 2014 Law was a simple 32 article legislation which, though it was effective, left many questions unanswered.

The enacting of the new Law is an attempt by the legislators to address that particular issue. Parliament and Shura Council Affairs Minister, Ghanim Al Buainian clarifies that “We are trying to fix existing problems that we are being faced with due to many things missing from existing legislation related to the real estate sector”. 

Within legal circles, this Law is viewed as being a significant step in luring investors back to the Kingdom (thus increasing investment in Bahraini real estate) and is a major step forward in terms of revolutionising the real estate sector in Bahrain.

This article was first published in the LexisNexis MENA Business Law Review in the 2nd quarter of 2017.


This article was written by Unkar Chanian and Yara Aldhaen. For more information, please contact Unkar on +973 17 133202 or at unkar.chanian@crsblaw.com, or Yara on +973 17 133261 or yara.aldhaen@crsblaw.com.

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