Attendance at the Notary Public's office is an integral part of any property transaction in the Kingdom of Bahrain as in order to actually execute the sale / purchase, the parties or their legal representatives are required to sign the prescribed form of transfer (Transfer) before the Notary Public (NP). Only then are the parties able to effect the registration process at the Survey and Land Registration Bureau in order to note the change in ownership in the title deed.
This step is often overshadowed by lengthy negotiations, detailed drafting of the contract, and the rush to satisfy any pre-completion conditions. However, ensuring that all the NP's requirements have been satisfied ahead of the proposed signing date requires careful planning and coordination given the complexities and nuances involved. Neglecting to do so may cause even the most straightforward of transactions to be delayed, result in an increase in costs, or at worst, potentially mean that the transaction is unable to complete. This article sets out the most common requirements and main considerations that we have come across during our extensive experience in Bahrain. It is important to note that the requirements of the NP may vary on a case by case basis, and as such, confirming these details with your legal representative / NP office is crucial.
This article sets out the main requirements of the Notary Public in Bahrain in relation to a typical commercial real estate sale and acquisition transaction and highlights some of the main issues which may need to be considered and / or avoided.
1. Timing it right
Depending on the nature of the transaction, obtaining and satisfying the relevant requirements may take 3-5 weeks. As such, we would recommend setting out a plan of anticipated milestone dates in which to achieve the various stages of the transaction. By doing so, the parties are able to assess when to begin compiling and fulfilling these requirements.
We have found, from our experience that there are 3 main circumstances which may require a visit to the NP's office.
At the start
For example, if the parties intend on appointing legal representatives to sign the Transfer (and other documents) by way of a power of attorney (POA), the parties will need to submit the corporate documents of the relevant entity (Corporate Documents) issuing the POA as indentified below as part of executing the POA at the NP. Pre-exchange
We would also advise clients to go through a 'trial run' with the NP to ascertain whether they have complied with all requirements or whether any additional requirements need to be met.
As part of the process, the parties will need to submit all the required documents (Required Documents) identified below. This may greatly expedite the Completion phase of the transaction and avoid having to deal with any last minute requirements.
The parties are required to execute the Transfer in order to effect the transaction. The parties must bring the transaction documents (Transaction Documents) identified below. However, they may be required to submit other documents depending on the circumstances of the transaction.
It is also worth pointing out that the NP have recently changed their procedures for executing documents and may now require all documents to be submitted ahead of the proposed signing date. This is to avoid the very frequent occurrence of attending the NP to sign documents only to be informed that they are not satisfied that all requirements have been complied with.
2. Required Documents
In order for the NP to execute the relevant document, the NP will require sight of certain items which include the documents below from all parties to a transaction.
The Notary will require that all documents submitted are in Arabic or are accompanied with a certified Arabic translation.
3. Legalising Foreign Documents
Any documents not originating in Bahrain must be notarised and legalised by both the authorities in the "home" country and Bahrain. This process is time consuming and may result in increased costs which may not have been budgeted for.
However, Bahrain has recently acceded to the Hague Convention of Abolishing the Requirement of Legalisation for Foreign Public Documents (Convention). Effective since 31 December 2013, the Convention significantly reduces the requirement of diplomatic or consular legalisation for foreign documents between member states (of which include the UK, it's Crown Dependencies and British Overseas Territories) and will now only require an apostille by the documents' "home country".
4. Ministry of Justice (MOJ) Approval Process
Article 1 of Edict No. 67 of 2006 which replaced Article 1 of Edict No. 43 of 2003 provides that foreign nationals or corporate entities are permitted to own property situated in certain parts of Bahrain such as tourism and investment projects of a private nature. Whilst these provisions continue to be in force, a recent additional requirement has been placed on foreign buyers by way of an internal circular to the NP whereby a foreign buyer must obtain approval from the MOJ in order to purchase property in those areas referred to above.
The NP will liaise with the MOJ directly in order to obtain the required foreign ownership approval. In order to do so, the parties must submit the Required Documents identified above to the NP. The NP will then issue a registration number which will enable the parties to track their application.
Once the NP has reviewed the Required Documents, it will submit the buyer's Corporate Documents as well as a copy of the draft Transfer to the MOJ for their consideration. It is anticipated that such a decision by the MOJ will take 3-5 weeks.
The transaction will not be able to complete until such time as the Approval has been obtained. Consequently, the Approval should be a condition precedent under the sale agreement if it has not been obtained prior to exchange of contracts.
This article has set out some of the main requirements and considerations of the NP in Bahrain in relation to a typical commercial real estate sale and acquisition transaction. Professional guidance and expertise should be sought at the outset of any transaction, ensuring that the transaction is runs smoothly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.