Escrow Accounts in Real Estate Development After the Real Estate Regulation Law 2025: What Has Changed for the Buyer?

A simplified explanation of escrow accounts in real estate development projects in Oman following the issuance of the Real Estate Regulation Law by Royal Decree 79/2025, and what it means for off-plan buyers.

If you are thinking about buying an off-plan unit in the Sultanate of Oman, the most important legal question you will ask is not about the design or the delivery date, but rather where your money goes after you pay it.

The answer changed in 2026. The Real Estate Regulation Law issued by Royal Decree No. 79/2025 came into effect in March 2026, unifying under a single legislation what was previously distributed across separate regulations: real estate development, off-plan sales, escrow accounts, common areas, owners' associations, and real estate brokerage and valuation.

This article explains what this practically means for anyone paying a down payment for a project that has not yet been built.

What Did the New Law Repeal?

Before discussing what is new, it is important to clarify what is no longer in effect. Royal Decree 79/2025 repealed three previous regulations:

The Law Regulating Real Estate Brokerage (Royal Decree 78/86)
The System of Apartment and Floor Ownership (Royal Decree 48/89)
The Escrow Account System for Real Estate Development Projects (Royal Decree 30/2018)

Therefore, any article or consultation referring to the 2018 escrow account system as the governing framework today is outdated. The reference now is the new law.

Important note on the transitional status: The decree stipulated that the Minister of Housing and Urban Planning shall issue the executive regulations of the law within one year from the date of its enforcement — i.e., until approximately March 2027. Until their issuance, existing regulations and decisions (including Ministerial Decision 72/2019) continue to operate to the extent that they do not contradict the new law. This means some numerical details are still in a transitional phase and must be verified for each project individually.

What Is an Escrow Account, Simply Put?

An escrow account is a bank account opened in the name of the project rather than the developer, where buyers' installments and project financing are deposited. Withdrawals are made only according to specific conditions linked to construction progress.

The core idea is simple: separating project funds from the company's funds. Instead of your payment mixing with the developer's general accounts and being used in another project or unrelated expenses, it remains reserved for a single purpose.

If the project is in phases, each phase has its own independent account.

What Does the New Law Stipulate?

Venues and chapters of the law are fully dedicated to the escrow account (Articles 28–37). The most prominent aspects for the buyer include:

Opening and closing the account with Ministry approval. The developer cannot open or close the escrow account on their own; approval from the Ministry of Housing and Urban Planning is required. A copy of the escrow account agreement must also be submitted before issuing the project license.

Financial contribution from the developer. The developer is committed to depositing a percentage of the total project cost before licensing, and the value of the land or actually executed works can be counted within it. If the developer obtains bank financing for the project, the financing is paid directly into the escrow account and not to the company's account.

Withdrawals tied to a completion certificate. Payments are disbursed from the account based on a completion certificate approved by the project consultant. If the Ministry proves the certificate data is incorrect, it has the right to appoint another consultant at the developer's expense and issue written instructions to the bank to refrain from making any subsequent disbursements.

Independent audit. The Ministry may appoint a certified auditor to inspect the developer's records and account documents.

Retention percentage after delivery. The developer is committed to keeping a percentage of the unit sales value in the escrow account for one year after delivery as a guarantee for defect remediation.

Protection of funds from the developer's creditors. From the buyer's perspective, this is the strongest provision in the entire chapter: as an exception to the bankruptcy law, funds deposited in the escrow account may not be attached for the benefit of the developer's creditors. This means the company's financial distress does not make your payments part of the pool divided by its creditors.

Project stalling. If an off-plan sales project stalls for any reason, the project consultant is committed to submitting a comprehensive report to the Ministry within 30 days so the Ministry can study the reasons, work to resolve them, or refer the matter to the competent court.

A point to be clarified frankly: The retention percentage after delivery was not specified numerically by the law; it was left to the executive regulations which have not yet been issued as published to date. The widely circulated 5% figure dates back to Ministerial Decision 72/2019 issued under the repealed system, and it applies transitionally rather than under the new law. Therefore, avoid anyone attributing a specific percentage directly to the 2025 law, and ask about the specific percentage applied to your project.

Licensing in Three Stages

One of the most practically useful things for a buyer to know is that the developer goes through three separate licensing gateways:

Real Estate Development Activity Practice License — Practicing the activity is prohibited without a license from the Ministry, and the Ministry establishes a register to record licensed developers.
Project License — Establishing a project is prohibited without a license, preceded by submitting the escrow account agreement.
Advertising and Marketing Permit — The law prohibits advertising, promoting, or marketing domestically for local or international projects without a permit from the Ministry.

The direct meaning: The advertisement you see must itself be licensed. If the seller cannot prove the first and second stages with a document, you are facing a warning sign rather than an administrative detail.

The law also provides for the establishment of a project register accessible to the public — a direct verification tool that must be used before paying.

Off-Plan Sales: Three Additional Protections

The developer must be a corporate entity. An individual is not permitted to sell off-plan.

Transactions outside the framework are void. Any contract transferring ownership of a unit to the buyer before project completion is void, with the exception of approved off-plan sales contracts. This article is directed specifically against "side agreements".

Registration in the Provisional Real Estate Register. Subdivided units are recorded in a provisional real estate register, and any transaction on those units is disregarded unless registered therein. The developer is committed to transferring the registration later to the Real Estate Register without charging the buyer any amounts exceeding official fees.

This has been reinforced by the Real Estate Register Law issued by Royal Decree No. 56/2026, effective since May 18, 2026, which granted provisional registers and electronic title deeds full legal validity.

Defect Warranty: Ten Years, Not One Year

It is easy to confuse two completely different figures:

A one-year cash retention in the escrow account after delivery to address defects.
The developer's warranty for major defects in the building and project infrastructure for ten years from the date of unit delivery.

The first is a short-term liquidity tool, while the second is a long-term legal obligation. The expiration of the first year does not mean the termination of your right regarding structural defects.

What If the Developer Defaults or the Project Is Cancelled?

Here, clarity is required rather than reassurance. The law does not grant the buyer an explicit provision for an automatic right to rescind and recover all amounts when a developer defaults or a project is canceled. Its mechanism is indirect: the consultant's report within 30 days, the Ministry's authority to suspend disbursements, the immunity of account funds from the developer's creditors, alongside referring the details of both parties' rights upon breach to the executive regulations which have not yet been issued.

This does not diminish the value of existing protections, but it means the terms of your contract with the developer remain very important. Read the delay and cancellation clauses carefully, and do not assume the law will cover what the contract omitted.

Penalties: Why Do They Matter to the Buyer?

The law punishes violations with imprisonment from one to three years and a fine ranging between 10,000 and 100,000 Omani Rials for offenses including practicing the activity or establishing a project without a license, unauthorized advertising, unlawful withdrawals from the escrow account, and submitting incorrect financial reports. Furthermore, the penalty for practicing brokerage or real estate valuation without a license amounts to imprisonment and a fine, in addition to administrative sanctions including warnings, suspension or revocation of licenses, and fines that double upon repetition.

The presence of a criminal penalty for unlawful withdrawals from the account is what turns the escrow account from a banking arrangement into an actual guarantee.

Does Having an Escrow Account Mean the Project Is Risk-Free?

No. The escrow account regulates cash flow and does not guarantee construction quality, delivery dates, investment returns, or that the market will move in your favor.

A legally compliant project may be delayed due to technical, contractual, or market reasons. Therefore, inspecting the developer, their past track record, execution capability, and the realism of the payment schedule remains essential even with all regulatory guarantees in place.

What Should a Buyer Ask Before Paying?

Is the developer registered in the register of licensed developers? Request the license number.
Is the project licensed, and is it registered in the publicly available project register?
Is the advertisement you saw permitted?
Has an escrow account been opened for the project, in which bank, and under whose name?
Exactly which account will my payment go into? Request the account number in writing.
What is the payment schedule and how is it linked to completion milestones?
Who is the project consultant approving the completion certificates?
What is the post-delivery retention percentage applied specifically to this project?
Is the unit registered in the provisional real estate register?
What are the delay and cancellation clauses in the contract, and what are the agreed remedies?

If the answers are verbal or vague, the problem is not with the question.

Signs Worth Pausing For

Requesting the transfer of payments to a personal account or an account in the name of a company rather than the project.
Pressure to pay "before prices rise" while delaying the delivery of documents.
Inability to present the project license or prove registration in the register.
Advertisements using words like "guaranteed" or "fixed return" without a specific guaranteeing entity and clear duration.
A contract lacking a clear delay or cancellation clause.

What About Older Projects or Other Types of Deals?

Not every real estate deal is an off-plan sale. Buying a ready unit from an individual owner, registered land, or a property in a completed project is subject to different tracks where an escrow account might not exist at all.

Likewise, projects licensed before the new law came into effect may be in a transitional status. Therefore, one must verify with the Ministry of Housing and Urban Planning or a legal specialist regarding your specific project rather than applying general information to a particular deal.

How Does This Benefit the Market as a Whole?

Good regulation does not protect the buyer alone. Serious developers benefit from a framework that distinguishes them from non-compliant ones, banks gain greater clarity in project financing, and the market acquires confidence that attracts broader investment.

The Ministry of Housing and Urban Planning indicated in July 2026 that more than 190 real estate companies were registered with the Ministry by the end of June 2026, within a regulatory ecosystem encompassing development, brokerage, owners' associations, and escrow accounts.

Conclusion

The Real Estate Regulation Law 79/2025 transitioned the escrow account from an independent system into a chapter within a unified legislative framework, reinforced by fund immunity from the developer's creditors, a three-stage licensing process, a public project register, a ten-year structural warranty, and criminal penalties for unlawful withdrawals.

However, a portion of the numerical details awaits the executive regulations. This means a buyer in 2026 operates within a stronger framework than a year prior, yet still needs to verify project by project and document by document.

The Difference Between Protection and Risk Warning

It is useful to distinguish between what the law prevents and what it merely warns you about. The law prevents practicing activity without a license, prevents unauthorized advertising, prevents unlawful withdrawals from the account, and voids transactions outside the approved framework. However, it does not prevent a poor choice of location, an inflated price, or an optimistic rental estimate.

Regulatory protection is a floor, not a ceiling. You start with it and then add your own due diligence.

Warning: This is a general explanation and not a legal interpretation of the law or its regulations. The numbers and percentages applied may change with the issuance of the executive regulations. Verify the requirements applicable specifically to your project with the Ministry of Housing and Urban Planning or via a legal specialist.