The New Bahrain Law Governing Real Estate Developments

Bahrain has issued Law No. 28 of 2014 in relation to governing real estate developments in Bahrain (New Law).

The New Law was published in Issue No. 3168 of the Bahrain Legal Gazette dated 7 August 2014.

Real estate developments are defined in the New Law as "property development works or projects which are licensed in accordance with the provisions of the New Law irrelevant of its nature (infrastructure or construction of buildings) or objects thereof (commercial, industrial, residential private or public) or method of financing (off plan sales, lease to own, Musataha arrangements, or BOT ("Build, Operate and Transfer) or the person undertaking them (natural or corporate) (Development). For the purposes of this article, any entity or person who carries out such an activity in accordance with the provisions of the New Law will be referred to as a developer (Developer).

The New Law applies to any Developer undertaking Development activities and selling property units off plan and receiving payments from purchasers of those units.

We have summarised the key provisions of the New Law in relation to Developers below.

Licence for Developments and Developers

The New Law prescribes that Developers will be required to obtain a licence (Developer's Licence) from the designated authority within the relevant Ministry (Authority). The Authority will issue an implementation regulation, which will set out the criteria and scope of the Developer's Licence as well as a number of other provisions to support and enhance the New Law (Implementation Regulations).

A Developer is required to obtain a licence from the Authority with respect to each Development it intends to carry out prior to commencing the relevant Development (Development Licence). The Authority will determine the length of validity in respect of the Development Licence on a case by case basis but it will not exceed more than 3 years.

In order to obtain a Development Licence, the Developer must submit to the Authority a master plan of the Development together with the following:

The title deed or instrument relating to the Development which evidences that it is free of any rights in-kind or benefits from the approval of the title holders to develop and sell the Development; A permit to execute the Development's master plan and building permit in accordance with the construction guidelines regulations; An undertaking from both the Developer and sub-developer to commence works in relation to the...