Real estate ownershipi Planning
The Real Estate Development Law places certain restrictions on real estate developers, including the licensing requirements outlined above. Under the Real Estate Development Law, developers may only sell off-plan units after obtaining the consent of the Real Estate Registration and Authentication Department. Developers are required to submit to the Real Estate Registration and Authentication Department an application to create strata title for the project being developed before selling any off-plan units in the project. The application should be accompanied with the relevant architectural plans, engineering drawings and a certified copy of the building permit. A strata title will then be issued in collaboration with the Ministry of Municipality and Urban Planning.
The Real Estate Registration and Authentication Department maintains an interim register for recording details of the strata title and all details related to transactions in respect of the off-plan units. Once the project has been completed, the interim title deeds are converted into permanent title deeds. Off-plan units approved and registered in the interim register can be subject to all legal actions, including the mortgaging and selling of the units. The Real Estate Registration and Authentication Department is required to issue interim title deeds to be converted to regular title deeds once a project is completed.ii Environment
There is no particular law in Qatar that deals explicitly with contaminated lands. However, the Environment Law and its executive regulations place certain compliance obligations on owners of land and projects to protect the environment. There is no legal requirement to conduct investigations for potential contamination in connection with the sale of property.
The sale of real property is subject to the general provisions of the Civil Law regulating the parties' rights and obligations in any sale contract. Pursuant to Article 455 of the Civil Law, a seller remains liable to the purchaser where the subject of the sale, at the time of delivery, is defective in a way that would diminish the sale value or render the sale unfit for the purpose of its use. The seller would be liable for such a defect even if the seller was unaware of the defect's existence. However, if the purchaser was aware of such a defect at the time of the sale, or if the purchaser could have reasonably expected such a defect, the seller would not be liable towards the purchaser unless the purchaser has relied on the seller's assurance that such a defect does not exist or in the event that the seller intentionally did not disclose the defect to the purchaser.iii Tax
Pursuant to the Income Tax Law of 2009, income and capital gains derived by investors in Qatar who are Qatari nationals or legal entities that are wholly owned by Qatari nationals are not subject to tax. GCC nationals and all businesses owned by GCC persons are also exempted from paying tax in Qatar. Pursuant to the Income Tax Law and Regulations issued in relation to the Law, profits derived from sources in Qatar would be subject to tax at a rate of 10 per cent. In practice, to determine the tax payable by a corporate entity in Qatar, the Tax Department of the Ministry of Economy and Commerce looks at the underlying interest in the same. Where the underlying interest lies with GCC persons, no tax will be payable. Where the underlying interest lies with other foreigners, tax will be levied at the 10 per cent rate applied to profits. Where there is a mix of GCC and other foreign ownership, the Tax Department exempts a percentage of profit from the imposition of tax pro-rated with the GCC ownership. For example, if profits of a company are 100,000 Qatari riyals and GCC ownership of the company is 60 per cent, then 60 per cent of the profit will be exempt from tax. Accordingly, applying the tax rate to 40 per cent of the profit (i.e., 40,000 Qatari riyals) results in a tax of 4,000 Qatari riyals.iv Finance and security
The Civil Law and the Commercial Law recognise various categories of securities based on the type of property to be secured (movable and immovable properties). In respect of real estate, the creation of security is mostly seen in the form of mortgages or assignments of rights (conditional assignment).
Mortgages are generally the most common form of security whereby under a mortgage agreement, the mortgagor charges its interest in real property as security to a creditor (mortgagee). The mortgagee acquires the right to sell the real property in the event that the mortgagor is unable to satisfy its indebtedness. A mortgage agreement will have to be officially registered at the Ministry of Justice to give the creditor priority rights over the mortgaged property. In the event of default, the mortgagee shall have the right to request the court to sell the property subject to the mortgage provided that:
- an official notice has been given to the debtor;
- seven days have elapsed since the debtor's notification date;
- a court decision to sell the property has been notified to the debtor; and
- a five-day period has elapsed since the debtor was notified of the same.
An assignment of rights or conditional assignment is an inferior form of security to a registered mortgage as it is a contractual agreement that does not entitle the creditor to sell the property in the event of the debtor's default. To enforce an assignment of rights, a claim must be filed before a court to evidence the debt that is the subject of the assignment.
Under the Civil Law, an assignment of rights is only effective towards the debtor or a third party if the debtor has acknowledged such an assignment. Such an acknowledgement must be date certified. Date certification is carried out by the Real Estate Registration and Authentication Department. The authentication of the assignment grants the assignment an official date, so the priority of the creditor is established from the date of the authentication. An assignment of rights is commonly used in respect of non-official sale contracts where title deeds have not been issued in the name of unit holders (e.g., mortgages on Pearl units where there is no title deed issued yet in the name of the purchasers).