The Civil Law (14/2002).
- The Real Estate Registry Law (39/1991);
- The Law on Non-Yemenis’ Ownership of Real Estate (23/2009); and
- The Investment Law (15/2010).
There are two types of ownership rights in real estate under the Civil Law:
- bare ownership (in-kind right); and
- usufructuary ownership (in-kind right subdivided from bare ownership).
Local partnerships and corporations frequently prefer to buy real estate for their businesses. However, foreign corporations and their branches prefer long-term tenancies.
Restrictions on real estate ownership apply to foreigners. Under the Law on Non-Yemenis’ Ownership of Real Estate, foreigners can own real estate by means of bare ownership, provided that the following requirements are met:
- The real estate to be owned is located within a city or is covered by an investment licensed project, and the construction plans have been approved;
- The requisite licence to carry out the relevant activity has been obtained; and
- The real estate conforms (in size and number) with the activity to be carried out.
Pursuant to the Real Estate Registry Law, for the purposes of registration, the land together with the buildings constructed thereon are legally deemed to be one real estate unit. However, it is legally possible for the building on the land to be owned by a different owner from the land owner.
Based on the rules regulating security on real estate, as stated in the Civil Law, a security interest is attached on the basis of an agreement of real estate security, which must be registered with the Real Estate Registry Authority. Once the registration has been duly effected, the security interest will have priority over other security interests.
Pursuant to the Real Estate Registry Law, the body that administers the Land Register is the Real Estate Registry Authority.
Yes, registration is mandatory under the Real Estate Registry Law. In case of failure to register, the real estate rights may be subject to dispute before courts.
The agreement of sale or mortgage must be legalised by a notary public and submitted to the Real Estate Registry. The Real Estate Registry Authority will appoint an engineer to conduct a survey of the land to be registered, taking aerial photographs to confirm the size and borders of the land.
See question 3.3.
No.
The Law Regulating the Relationship Between Lessor and Lessee (22/2006) sets out specific rules on commercial leases. In other words, commercial leases are governed by the general rules on leases set out in this law.
The terms of a commercial lease are freely negotiable. They cover the typical issues, such as duration, security deposit, rent, sub-leasing and termination.
Under Yemeni law, commercial lease agreements are deemed a kind of consensual agreement that does not require a formal procedure.
See question 4.3.
The respective obligations and liabilities of landlord and tenant under a commercial lease are the same as those under a non-commercial lease – that is, the general rules set out in the Law Regulating the Relationship Between Lessor and Lessee. For example, they enable the lessee to use the leased property.
This depends on the agreement concluded between the parties.
Under the Income Tax law, tax is levied on the landlord on the basis of one month’s rent for each year of lease.
The elements of triple net – namely rental income tax, insurance and maintenance of the lease – are regulated by the law, which makes them obligatory for the landlord, except for insurance.
If an amicable resolution cannot be reached, disputes are resolved by the courts or by the Commercial Court in the case of a commercial lease.
The only form of guarantee is a money deposit (normally a payment of between one and three months’ rent).
Real estate transactions involving sale and mortgage are concluded on the basis of formal contracts – that is, they are concluded and legalised before a notary public in court. However, lease contracts are consensual agreements that require no formalities.
- The notary public;
- The court;
- The Real Estate Registry Authority; and
- The tax authorities.
The seller is not bound by a duty to disclose under the law. The buyer, on the other hand, is bound to observe the sale of the real estate itself and state this in the agreement of sale, with the exception of any legal guarantees that are binding on the landlord.
The due diligence typically involves investigating whether there are any outstanding disputes involving ownership of the real estate. Only a small portion of the payment will be handed over until it has been determined that there are no problems or disputes regarding the real estate.
See question 5.1.
The main cost to be taken into account is the cost of registering the real estate with the Real Estate Registry Authority, which is calculated as a certain percentage of the total value of the real estate.
The respective obligations and liabilities of buyer and seller are the typical obligations as per the general rules set out in the Civil Law. In case of breach, the court will decide on the appropriate remedies.
Under the Income Tax Law, a tax on conveyance, which is levied on the seller as a one-off payment.
Banks are the most common providers of real estate finance. Restrictions take the form of guarantees.
Bank loans.
Guarantees and securities in any satisfactory form.
Commercial guarantees; mortgages of moveable or immoveable property.
The procedure is the same as that for obtaining a loan.
This depends on the form of security. If it is a commercial guarantee, the lender can enforce the security by filing an action against the guarantor before court. If it is a mortgage, based on a mortgage agreement which is registered with the Real Estate Registry Authority, the lender can enforce the security by selling the mortgaged real estate.
Individual merchants. No clear restrictions apply.
No such vehicles are typically used in Yemen and there is no stock market in Yemen.
See question 7.2
Land use is regulated by the General Authority for Lands, Areas and Construction Plans.
This will depend on the project and will thus vary on a case-by-case basis.
Yes, it can be appealed before the competent administrative court in the form of a claim for the annulment of an administrative decision.
This affects obtaining the permission of the activity.
This is possible as an exception only for purposes in the public interest, based on certain very limited conditions that are rarely applied as per the applicable laws.
See question 8.5.
The Law on the Protection of the Environment (26/1995).
The owner of the project or entity.
Whether there are potential sources of environmental contamination.
Personal initiatives and unofficial initiatives.
A statement of environmental effect, issued by the Environment Protection Council.
The local real estate market is growing fast, despite the current war in the country and the low rate of the local currency. Once the war is over, the real estate market is expected to boom.
Parties that intend to conclude a real estate transaction in Yemen should familiarise themselves with the legal procedures and local practices, in particular by engaging experienced advisers and real estate offices.
