Overview

• Oman Sultani Decree No. 6/1989 on the Regulation of the Relationship between Landlords and Tenants of Residential, Industrial and Commercial Premises and Registration of Lease Contracts related thereto governs the relationship between a landlord and a tenant in Oman.
• Oman Sultani Decree No. 6/1989 governs the rights and entitlements of the landlord and tenant respectively, as well as their individual and joint obligations.
• Lease Agreements are further governed by Oman Sultani Decree No. 29/2013 Omani Civil Transactions Law, which essentially narrates the rights and entitlements of the parties and their legal capacities for entering into a tenancy contract.
• This Practice Note covers the subtenancy or subleasing of leased properties situated in Oman.

Definitions

• Usufruct right: Under Oman Sultani Decree No. 5/1981 on the Usufruct Law it deems this to be a real right, however the ownership is to be returned upon expiry of the finite period of 50 years or with an extension option in additional 50 years.
• Lease: It is an agreement that formalizes the relationship of and between the landlord and the tenant.
• Landlord: The person who lets the property on rent.
• Tenant: The person who takes possession of the property against payment of rent.

Practical Guidance

Lease agreements

Lease agreements for residential purposes are typically completed on a standard one page form issued by the respective municipality, which has the general terms of the lease on the overleaf. The terms mentioned there are the reproductions of Oman Sultani Decree No. 6/1989 in nutshell. In cases where the lease is for commercial and industrial purposes, the parties usually enter into an addendum to the tenancy contract with additional terms and conditions that can be separately agreed upon by the parties, provided that such terms and conditions do not contradict Oman Sultani Decree No. 6/1989.

Maximum and minimum period of contract

There is no minimum period under Oman Sultani Decree No. 6/1989. However, a lease to be registered with the municipality cannot be more than seven years. If a lease period is longer than seven years, then the long lease must be registered with the Ministry of Housing. In any case, a lease cannot be more than 50 years. A usufruct contract that affords more land and property rights to a lessee cannot itself be entered in for more than 50 years.

Difference between usufruct and lease in land rights and subleasing rights

• Usufructs, regulated by Oman Sultani Decree No. 5/1981 are rights granted to a third party to utilize and develop real estate. Usufruct is a right that grants a third party a temporary real right to exploit and benefit financially from the development of the property. The usufruct may initially be held for a term of 50 years and is renewable for a further 50 years as per mutually agreed by the parties. The real estate reverts back to the owner upon expiry of the usufruct period. This may be compared to a standard lease, which is required to be registered with the Muscat municipality and has the term period of three years which is renewable upon mutual agreement of the parties. If a lease exceeds seven years, then the lease agreement must be registered with the Ministry of Housing.
• A primary distinction between usufruct rights and lease rights is the ownership rights. In a standard lease, the tenant may not under any circumstances sub-lease the property to any external third party without the prior consent of the landlord. However, in a usufruct, the owner of the usufruct may sub-lease the property at any time without the consent of the owner of the land.
• The lessee may not transfer the lease agreement to a third party, and may not subcontract the property without the written authorization of the lessor.
• Lease contracts will remain in force until the expiry thereof as agreed between the parties, and will be automatically renewed for a similar duration unless either party expresses its intention of evacuating the premises, providing the other party with a minimum notice period of three months prior to the expiry of the duration, or half the period of the contract if it was less than three months.
• The lease does not expire by either party’s death, although the lessee’s successors may demand the termination of such if the incurred liability outweighed their financials or if the property was no longer of use to them. The lease may also be terminated if the agreement was entered into due to the lessee’s personal skills or for personal considerations.
• In accordance with article 9 of Oman Sultani Decree No. 6/1989, the lease may not be terminated by the lessee’s death or abandonment of property, and will remain in force for the wife, underage children and parents. The agreement will also remain in force for relatives up to third degree of kinship permanently living in the property for at least a year prior to the death or abandonment.

Death of the primary tenant and sub-leasing

Article 2 of Oman Sultani Decree No. 5/1981 states that in the event of the death of the usufruct holder, the usufruct right will automatically cease. Article 2 of Oman Sultani Decree No. 5/1981 further states that the usufruct will entitle the usufruct holder to use and exploit the land subject to the agreement set in place by the owner of the land, and thus authorize the usufruct holder to dispose their right by way of assigning to third parties or mortgaging the same and all other such acts that are consistent with the nature of the usufruct and without prejudice to the ownership of the land itself.

How eviction of a primary tenant affects sub-leasing

Usually the sub-leasing will come to an end with the eviction or termination of the primary tenancy. Depending on the agreement between the parties, there may be compensation for the affected sub-tenant.

Related Content

Legislation

• Oman Sultani Decree No. 6/1989 on the Regulation of the Relationship between Landlords and Tenants of Residential,
• Industrial and Commercial Premises and Registration of Lease Contracts related thereto
• 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 on the Usufruct Law
• Oman Sultani Decree No. 88/1982 on the Executive Regulations of Oman Sultani Decree No. 5/1981 on the Usufruct Law
• Oman Sultani Decree No. 29/2002 Promulgating the Law on Civil and Commercial Procedures