• Mortgages are created by way of registration in Oman. There are two types of mortgages relating to real estate: legal and commercial.
  • The type of mortgage is determined by the underlying land right, whether the property is situated in the mainland or in the freezone, and the financing facility agreements. There may be some practical aspects to keep in mind regarding the creation of a mortgage before the relevant authorities in Oman.
  • This Practice Note discusses key terms of the mortgage and the registration process in detail.


  • Encumbrance : A mortgage, other claim or lien on a real property. A definite tenancy or a usufruct is an encumbrance.
  • Foreclosure : The act of retrieving a mortgaged property upon failure to pay.
  • Freehold rights : It is defined under article 799 of Oman Sultani Decree No. 29/2013 Omani Civil Transactions Law as “a right on a property whereby the owner shall own everything of its elements to the extent it can't be separated therefrom without damage, destruction or change, what is over and under it to the extent beneficial for enjoyment thereof in height and depth.”
  • Mortgagor : The borrower whose properties are taken as security against the loan.
  • Mortgagee : The lender in whose favour the properties are secured.
  • Legal mortgage : A mortgage that is perfected by registration against a legal interest such as, a freehold right.
  • Lien : This is when the lender or any other interested party has a right of claim against the property until the debtor clears his debts.
  • Usufruct right : It is defined under Oman Sultani Decree No. 5/1981 Promulgating the Usufruct Law a freehold right for a finite period of 50 years with an option for a further extension of 50 years.

Practical Guidance


  • Assets that are taken as security must exist at the time of registration. The assets must be identifiable and the mortgagor must have the necessary rights and powers (in case of a juristic mortgagor) to give the assets on security in favour of the mortgagee. All elements of a general contract apply to the mortgage agreement.
  • It is not possible for a mortgagee to take security over assets of the mortgagor located outside Oman under a commercial mortgage.
  • Likewise, a foreign lender cannot take security over assets located in Oman whether by way of a legal or a commercial mortgage and will require a security agent in Oman to create security in trust for the principal lender.
  • Security taken by way of assignment is not a valid form of security under the law and therefore, will not afford the necessary protection to the mortgagee against secured creditors. Assignment of security is merely contractual in nature and cannot be formalized by way of registration. An assignment of an under-construction building will not take effect until the asset once constructed, is taken as a security by way of registration either as legal mortgage or a commercial mortgage, depending on the land rights of the Mortgagor.

Registration process

  • The security is created by perfecting the registration of mortgage over freehold and usufruct interests in the land with the relevant authority. A legal mortgage is registered with the MOH whereas a commercial mortgage is registered with the Oman Ministry of Commerce and Industry (MOCI).
  • A leasehold interest cannot be subject to a legal mortgage whereas if it forms part of a commercial concern, then a charge cannot be created on the company as a whole, by way of a commercial mortgage.
  • A standard legal mortgage is signed by both the mortgagor and the mortgagee before the attestor of the MOH. The contract is in Arabic and it can be made be made side by side in English and in Arabic for the benefit of the parties, if so required.
  • The process may require a power of attorney, if the actual mortgagor or the mortgagee cannot attend in person. If the mortgagor or the mortgagee is not registered in Oman, then the power of attorney must be notarised and legalised by the Oman Embassy in the relevant jurisdiction or alternatively apostilled. There can be an addendum to the standard legal mortgage, if parties need additional terms.
  • A fee of 0.5% for residential and 1% for commercial and other properties (with an upper cap of OMR 300,000) of the facility amount is payable at the time of registration to MOH, usually by the mortgagor unless agreed otherwise by the parties. Also, before providing the facility, the mortgagee can conduct a search in the registry of MOH to check if there is any pre-existing encumbrance.
  • A mortgage, legal or commercial can be released by way of letter of release and discharge of loan issued by the mortgagee. The fee for release is OMR 30.
  • A registered mortgage is capable of being amended. If there is an additional facility or an asset that was existing at the time of lending, such as under construction property, can be added to the mortgage agreement by way of a supplemental mortgage agreement. In terms of priority of security ranking, the supplemental mortgage will not take effect from the date of first registration, however from the date of supplemental mortgage only. An additional mortgage registration fee will be applicable if the facility amount is increased.
  • In case of commercial mortgage registered with the MOCI, the assets that are registered are mentioned in the registry with the date of charge and the name of the Mortgagee in whose favour the charge is created.

Related Content

  • Oman Law No. 55/1990 Promulgating the Commercial Law
  • Oman Sultani Decree No. 29/2013 Omani Civil Transactions Law
  • Oman Sultani Decree No. 2/1998 Promulgating the Land Register Law
  • Oman Sultani Decree No. 5/1981 Promulgating the Usufruct Law
  • Oman Sultani Decree No. 88/1982 on the Executive Regulations of the Usufruct Law
  • Oman Sultani Decree No. 29/2002 Promulgating the Law on Civil and Commercial Procedures
  • Oman Sultani Decree No. 114/2000 Oman Central Bank Law