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New Real Estate Law-A Glimpse

November 2016 - Real Estate & Property. Legal Developments by Ghada M. Darwish Law Firm.

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In Qatar, a new law on Real Estate Property registration and ownership is underway to replace the existing old law.

In the past, the ownership of property in Qatar was restricted to Qatari nationals. However, this changed in 2006 and now an expatriate person is able to possess and pass on the rights to their heirs.

Another Law, Qatar Real Estate Development Law No (6) of 2014 which came into force in May 2014 is the first law in Qatar that regulate the construction of commercial and residential buildings for the purpose of selling units off-plan. The Real Estate Development Law is intended to provide a legislative protection for purchasers who buy off-plan units.

Now a draft law, ‘Real Estate Property registration and ownership’ is being prepared, which proposes strict penalties like imprisonment for up to three years and fines of up to QAR 500,000 for obtaining real estate documents in an illegal way. There would a fine of QAR 10,000 for anyone who was found guilty of forging a real estate ownership document.

By the new law all real estate owners are invited to register properties. It will specify the limits of real estate ownership for Qataris, the terms of registration and fines as well as imprisonment for violation of law.

The new law will create a balance and will safeguard the rights of Qataris as well as GCC citizens and foreigners simultaneously. Legal evidences will be mandatory for registration and it should satisfy legal requirements. There should be proper ownership documents according to the law.

It is expected that the 52 year old existing law will have a makeover without affecting the beneficial provisions, in order to meet the needs of the current developments and fast expansion of buildings.

As per the existing law the real estate ownership is limited to Qataris with some exceptions mentioned in other laws which allow expatriates to own properties and land in some designated areas like ‘Lusail’, and ‘Pearl-Qatar’.

In the draft law ‘usufruct rights’ are granted in some other areas.

The law would be stipulating the establishment of a Real Estate Registration Committee at the Ministry of Justice through a ministerial decision. The Minister will specify the committee’s obligation, duties and responsibilities.

The committee will consider applications of registration of real estate properties located within the towns and villages that are not registered and will consider complaints related to real estate evaluation and fees.

More terms and conditions of the law are yet to be revealed.

When coming back to the Real Estate Development Law issued in 2014, there are stringent penalties of fine and imprisonment for failure to comply with the provisions.

A Real Estate Development Dispute Committee is established to settle related disputes and the Court of Appeal only can set aside the committee’s decisions.

Proper license should be obtained by developers for selling off-plan units from the concerned department of the Ministry of Economy and Trade and to be registered on the Real Estate Developer’s Register at the Ministry in addition to other requirements of ordinary commercial registration as per other relevant laws. The licensee should be a Qatari if he is a natural person and devoid of any criminal background and bankruptcy, and should be registered on the Commercial Register and should have 3 years’ experience in the same field. Similar and more requirements are there for the registration of licence for juridical persons as Qatari companies.

The above law states that a non-Qatari company can carry out such Real Estate Development works after taking proper license, only in areas where they can own property, further, the company should have been properly established outside Qatar and must have 10 years’ experience in construction and real estate development works and have finished such projects and should be duly registered in Qatar.

Licenses are granted for 3 years and can be renewed for further periods of 3 years. Licensed developers will be included in a real estate developers’ register at the Ministry.

Developers must start within 6 months of receiving approval from the Ministry for off-plan sales and the developer is required to submit progress reports as required by the Ministry.

A maximum of 50% of the works can be given to the subcontractors with prior approval from the Ministry.

An escrow account should be maintained for individual units to be sold off-plan to ensure that the money in the account are used only for the purpose of the development.

Controls on financing multi-unit construction projects have also been introduced in the law to ensure there is enough capital in the project to support borrowing.

The developer must first obtain the approval of the Ministry for selling off-plan units. There are certain requirements for getting such approval. Any selling and other acts in respect of unapproved units will be considered void.

In addition to that, the Developer must register the units in accordance with the Real Estate Registration Law in the main Real Estate Register within 60 days after the Building Completion Certificate is issued to prevent any double-selling.

There is Interim Real Estate Register for the registration of the units to be sold off-plan and all rights and subsequent dealings in them. Interim title deeds will be issued for each registered unit. Registered units can be freely sold and mortgaged. The Law stated that Developers must comply with the required status by the Law within 6 months of issuance, or such later date as determined by Ministerial Decision.

While the Law is an important move towards the right direction, it needs more enforcement methods and should be adequate to face challenges and complexities.