A guarantee system for real estate projects — escrow account – will be implemented from May this year, said a top official at the Ministry of Housing (MoH).
The escrow account mandates real estate developers to register at the Directorate General for Real Estate Development and attend to people involved in the sale of realty projects, said Saeed bin Yousef al Zakwani, Director of Development and Evaluation of Real Estate Development Projects at the MoH.
It makes developers open a bank account for buyers to deposit money in the name of the project.
The system is based on a Royal Decree 30/2018 that instructed the Minister of Housing to issue necessary bylaw/regulation and decisions in consultation with the Ministry of Tourism and the Central Bank of Oman (CBO).
Provisions of the law apply to developers licensed by the ministry for real estate projects that cover all aspects, including establishment, development and sale of units before or during implementation of project.
Projects could be for residential, commercial, industrial purposes, also in Integrated Tourism Complexes (ITCs) or elsewhere.
An earlier report by the Observer citing a top official of Oman Real Estate Association (ORA) said, “When one develops a real estate project, all the receivables such as advance payments and instalments should be deposited in an escrow account, thereby ensuring funds are utilized for the project in question, and not diverted.”
The law authorizes Directorate General for Real Estate Development to review the sales contracts, evaluate real estate developers, follow up on escrow account and other matters related to the sale to protect developers, investors, citizens and expatriates.
The system requires real estate developer be a natural Omani citizen who is not less than 23 years old and that the project is wholly owned by Omani or GCC nationals.
For GCC nationals or joint stock company or closed Omani company, the share of Omanis shall not be less than 30 per cent at the time of incorporation.
The system also requires the developer to submit his financial ability by submitting a bank statement of previous six months along with other documents required for registration, including CR papers and tax certificate, copy of lease agreement or ownership, among others.
As for the terms of license for a real estate development project, the law obliges the developer to submit a feasibility report for the project approved by a licensed consultant.