How to Handle Breaches of Sale and Purchase Agreements (SPA) in Bahrain
The Sale and Purchase Agreement (SPA) is the cornerstone of real estate transactions in Bahrain. It defines the obligations of buyers and sellers, from payment schedules and handover timelines to title transfer and compliance with Survey & Land Registration Bureau (SLRB) requirements.
When one party fails to fulfill their obligations, disputes arise. Whether it’s a developer delaying handover, a buyer failing to pay installments, or misrepresentation of property terms, a breach of the SPA can lead to serious financial and legal consequences.
Engaging a lawyer in Bahrain, consulting a reputable law firm in Bahrain, or working with an experienced legal consultant in Bahrain ensures that SPA breaches are addressed effectively under Bahraini law.
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Common Types of SPA Breaches in Bahrain
Breaches of Sale and Purchase Agreements typically involve:
- Delayed property handover by developers.
- Failure to pay installments or final amounts by buyers.
- Incomplete or defective construction not matching agreed specifications.
- Misrepresentation of property features such as zoning, amenities, or approvals.
- Failure to transfer clear title or undisclosed encumbrances on the property.
- Unlawful termination of the SPA by either party.
Legal Framework Governing SPAs
Bahrain’s legal framework for property SPAs includes:
- Bahrain Civil Code – governing contractual obligations and remedies.
- Survey & Land Registration Law – ensuring proper registration and title transfer.
- RERA Regulations – especially for off-plan projects and escrow requirements.
These laws give both buyers and sellers protection when an SPA breach occurs.
Legal Remedies for SPA Breaches
1. Specific Performance
Courts may compel the defaulting party to fulfill their contractual obligations
e.g., compelling a developer to deliver the property or a buyer to pay installments.
2. Contract Termination
The non-breaching party may terminate the agreement and seek recovery of paid amounts or release from further obligations.
3. Compensation Claims
Damages may be awarded for financial losses, including repair costs, lost rental income, or interest on delayed payments.
4. Escrow Account Protection
For off-plan purchases, RERA regulations require developers to safeguard buyers’ funds in escrow accounts, which reduces the risk of total financial loss.
5. Mediation & Arbitration
Many SPAs in Bahrain include dispute resolution clauses requiring arbitration or mediation before court litigation.
Consult a Real Estate Law Firm in Bahrain for property transactions.
Example:
A Bahraini buyer signed an SPA with a developer for an apartment in Amwaj Islands, with a promised handover date of June 2024. The project faced delays, and the handover was extended by more than a year. By engaging an advocate in Bahrain, the buyer pursued compensation for rental losses and obtained a revised timeline backed by court oversight.
Best Practices to Avoid SPA Disputes
- Always have the SPA reviewed by a legal consultant in Bahrain before signing.
- Verify that developers are registered and approved by RERA.
- Ensure payment terms are linked to construction milestones, not fixed dates.
- Retain copies of all communication and amendments to the SPA.
- Seek advice from a law firm in Bahrain when negotiating penalties for delays.
A Sale and Purchase Agreement is legally binding, and its breach can create costly disputes between buyers, sellers, and developers. Fortunately, Bahraini law provides multiple remedies, including specific performance, contract termination, compensation, and protection under RERA.
By engaging professional legal services in Bahrain, property owners and investors can ensure their rights are protected. With guidance from a trusted lawyer in Bahrain, a reputable law firm in Bahrain, or an experienced advocate in Bahrain, SPA disputes can be resolved effectively and fairly, securing confidence in Bahrain’s real estate market.
In our previous blog on Legal Remedies for Fraud or Misrepresentation in Property Deals in Bahrain
