• In case of default in repayment of a loan, a commercial or legal mortgage can be enforced only by application to the primary court of Oman. The secured creditor must obtain a favourable court order in order to be able to enforce it.
  • There are various aspects that the court takes into consideration before passing a judgement in favour of the secured creditor.
  • It is important understand the term ‘default' in the context of Omani law and the adjudication process envisaged under the relevant laws of Oman.
  • In this Practice Note, we will discuss key terms of the foreclosure process and what steps a lender should take to enforce their rights as a secured creditor.


  • Encumbrance : A mortgage or other claim or lien on a real property. A definite Tenancy or a Usufruct is an encumbrance.
  • Enforcement order : The order obtained from the court of Oman to sell the secured assets, usually by way of public auction.
  • Foreclosure : The act of retrieving a mortgaged property upon failure to pay.
  • Freehold rights : This 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 provided under Oman Sultani Decree No. 5/1981 Organizing Usufruct Over the Sultanate's Land as a freehold right for a finite period of 50 years with an option for a further extension of 50 years.

Practical Guidance

  • In unforeseen circumstances such as default in repayment of a loan, the mortgagee can force sale of the security through a court process. The foreclosure can be done only through a court process even if the parties entered into an agreement that gave right to the mortgagee to sell the property without having to go through the court procedure. However, the mortgagee does not require mortgagor's consent to begin the process.
  • Borrowers have the right to object to the enforcement proceedings at any time, however, the effect of raising an objection does not necessarily stop the execution.
  • The court process for enforcement usually takes between three and four months. If the circumstances of the case are more complex, then the time taken may be longer.
  • In seeking enforcement, the court will consider if the sale of the property would cause the company to go bankrupt. The tax liability and the outstanding salary of the employees must be met from the sale proceeds before repayment of the loan.
  • The enforcement of a commercial mortgage can either be through a court procedure or creditors bringing about a liquidation procedure against the company. When the company is put into liquidation, the second ranking creditor will give way to the first ranking creditor. The sale of assets in this case will be on a piecemeal basis.
  • The sale of the legal mortgage security will be by way of a public auction. In the case of land and buildings, the court usually appoints an expert to value the assets and will determine a guideline price. On the auction date, if the property does not fetch the guideline price or more then, the mortgagee has the option either to accept the price or conduct an auction at a later date, which will be communicated to the court. The enforcement must be brought about within 10 years from the date of default.
  • Since anyone can participate in the auction, even the mortgagee themself can purchase the property. However, in most cases, the mortgagee is an Omani or a foreign bank established in Oman and the possession of secured assets can be done only in accordance with article 66 of Oman Sultani Decree No. 114/2000 Oman Central Bank Law.
  • Regarding usufruct rights, the unexpired term can be assigned to the person who agreed to settle a portion or all of the defaulted loan plus interest.
  • This may be questionable where freezone usufruct rights are involved, and the rights to seek enforcement may be qualified by the freezone authority's conditions.
  • If the mortgagee does not have a legal presence in Oman, then an Omani bank must act as a security agent for the foreign mortgagee to create the legal mortgage and register it with the MOH. It is the same in the case of multinational syndicate loans extended against a security on a land or a property situated in Oman.
  • In the event of enforcement, the security agent may act on behalf of the foreign mortgagee(s) to bring about the foreclosure. This is accepted by the Omani courts.

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 Organizing Usufruct Over the Sultanate's Land
  • 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
  • Ministry of Housing MD 5/91 Ranking of Secured Mortgages