In-line with His Majesty King Hamad Bin Isa Al Khalifa’s commitment to strengthening non-oil sectors, the Real Estate Regulatory Authority (RERA) was officially formed with the issuance of Decree No. 69 of 2017 with respect to the organization of RERA. It began operations in March 2018, with a focus on licensing real estate service providers, professionals and off-plan sale projects. It’s aim is to create a professional and transparent business environment, and encourage investments in the real estate sector.
The RERA is authorized to exercise all tasks and powers necessary to regulate the real estate market in the Kingdom, as stipulated in Law No. 27 of 2017 Promulgating the Real Estate Sector Regulation Law. The objectives of the RERA are to:
- Work closely with the government and real estate stakeholders to meet international standards, and ensure that services are being delivered in a professional, transparent and cost-effective manner;
- Set effective rules and regulations to regulate the real estate market and facilitate real estate transactions for developers and investors;
- Create a new generation of knowledgeable, effective, transparent and professional real estate service providers, by providing essential training and assistance; and
- Educate real estate investors about their rights and secure a transparent regulatory environment.
The RERA also aims to safeguard the interests of consumers, investors, brokers, developers and all stakeholders, by undertaking the following measures:
- Providing a list of registered and licensed real estate individuals on the RERA website for customers to select reliable and trustworthy agents or brokerages;
- Applying a fair and steady pricing strategy; and
- Providing assistance to all developers.
Obligations and Mandates: All those working in the real estate sector are required to:
- Obtain a RERA license by 31 August 2018, in order to avoid being subject to penalties;
- Act in best interests of the client;
- Exercise duty of care, diligence, skill and adopt honesty in all dealings with the client and other persons involved;
- Disclose in writing all details with regards to their relation to the seller;
- Treat any information obtained while acting for a client that has not been made public as confidential;
- Act in accordance with the client’s reasonable instructions and deliver the service within a reasonable time;
- Refrain from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive as per the constitutional laws of Bahrain; and
- Comply with any obligation that may arise as result of any fiduciary relationship between a real estate professional/property developer and a client.
Guarantees & Protections: A developer of an off-plan sales development is required to open a specific bank account reserved exclusively for all financial receipts and valid development cost payments. This is known as an escrow account and is managed by an independent escrow account agent, or manager authorized by the Central Bank of Bahrain and approved by the RERA. All buyer deposits or contractual payments for off-plan sale contracts must be paid directly into the escrow account for that development only. Brokers cannot receive buyer payments for off-plan contracts. Loan or mortgage financing for the project must also be deposited directly into the escrow account. Development payments are paid from the escrow account and must be certified by a consulting engineer or qualified professional registered with the RERA. An escrow account is required to maintain a minimum escrow value, and the credit balance cannot fall below that value. Any remaining funds must be divided among the buyers, should the project be discontinued or disrupted.
(This article was published on Oxford Business Group The Report: Bahrain 2019 Edition)