The term "real estate" includes the following:
- Land
- Any buildings or structures on it which cannot be moved without damage or changing its form
Property law is primarily governed by the following laws:
- Civil Code (2001)
- Property and Land ownership by non-Bahrainis Decree (2001)
- Real Estate Registration Law (2013)
- Leasing Law (2014)
- Real Estate Sector Regulation Law (2017)
The Survey and Land Registration Bureau is responsible for the registration of land in the Kingdom of Bahrain. It maintains a land register in which each property, its description and legal status is entered. Facts and information recorded in the land register are considered final and conclusive proof as to the matters they describe, by virtue of their inclusion in the land register. Details in the land register cannot be altered except by order of the court or upon receipt of a notarized declaration from a party approved by the Minister of Justice and Islamic Affairs. Material errors in the land register may be corrected by the Director of the Survey and Land Registration Bureau according to the appropriate legal instruments of ownership or disposal.
Land registered in the land registry cannot be acquired through adverse possession or prescription.
Rights of others that encumber the land must be registered on the title to the land. Failure to affect such registration shall render such rights invalid, whether toward the parties concerned or toward third parties.
Title to land registered in the land register kept by the Survey and Land Registration Bureau is guaranteed by the King of Bahrain. Title is indefeasible and ownership is proved conclusively by the information recorded in the land register.
The Survey and Land Registration Bureau manages the registration of titles.
Rights in respect of real estate that are not registered may not be enforced. The law requires registration of the following:
- Transfers of title
- All rights arising from a disposal of land
- Gifts of land made by the King of Bahrain
- Mortgages
- Easements
- Restrictive Covenants
- Endowments
The original physical title deed issued to the owner by the Survey and Land Registration Bureau provides proof of ownership of real property.
Bahrain first began opening its land to foreign ownership in 1999 pursuant to Decree 40 of 1999 when citizens of countries in the Gulf Cooperative Council were allowed to own land and buildings in Bahrain.
In 2001, the King of Bahrain issued a Royal Decree allowing, in principle, foreign ownership on a freehold basis, of land and buildings in designated areas in the Kingdom of Bahrain. However, it was only in 2003 that enabling legislation was passed ratifying the 2001 Royal Decree, nominating designated areas and formalizing the legal mechanism by which foreigners of any nationality could own land in Bahrain on a freehold basis.
Legislative Decree no. 43 of 2003, as amended by Edict no. 67 of 2006 and Edict no. 38 of 2023, entitled “ownership of property and land by non-Bahrainis in the Kingdom of Bahrain”, provides for freehold land ownership in certain designated areas.
Edict no. 13 of 2011, which came into force on 31 March 2011, also allowed the ownership of property in the Kingdom of Bahrain by foreign banks, whether conventional or Islamic, in the context of financing transactions. Such ownership is subject to the following conditions:
- the bank must obtain the written consent of the Central Bank of Bahrain before entering into the relevant transaction;
- the bank must re-sell the property to a client in the context of real estate financing (further conditions apply where the client is a foreign client);
- the duration of the bank's ownership must be limited only to the period of the relevant financing; and
- in the event that the client defaults on its financial obligations under the relevant financing agreement and the bank seizes the property, the bank must dispose of the property within 1 year of the termination of the financing agreement, and the Central Bank of Bahrain may only extend this period for 1 more year.
Legislative Decree no. 39 of 2009, as supplemented by Edict no. 64 of 2021, authorizes the government of Bahrain or a municipality in Bahrain to compulsorily acquire privately held land when it is in the public interest to do so. Acquisitions may only take place for a public purpose and in accordance with this legislative decree.
Generally, an interest is held by any of the following means:
- Freehold
- Leasehold
- Strata title
- Usufruct
There are several forms that a business entity can take in the Kingdom of Bahrain. Of these forms, the limited liability company and the joint stock company are the more usual forms used for real estate investment.
Bahrain is an important banking center in the Middle East. Accordingly, there is a wide range of banks that offer financing to the real estate sector, both on a conventional and Islamic basis, using all manner of financing techniques.
Non-recourse, limited-recourse and full-recourse financing, and secured and unsecured financings have been used in various transactions in the past.
Equity is playing a greater role in the financing of real estate transactions, particularly through Islamic funds and Islamic bond (sukuk) issuances.
Bahrain has an active mortgage finance market, providing finance to both foreign and domestic purchasers of residential property.
Generally, the seller’s lawyer will prepare the initial draft of the purchase agreement.
There is no specific legislation in place to address remediation of contaminated land where contamination was caused by someone other than the current land owner.
At present, an owner or occupier of real estate cannot inherit liability for contamination caused to the land by previous owners, although we sometimes see new owners and occupiers seeking indemnities in respect of the same and in respect of any damage arising from contamination on the land.