In Bahrain, the developer of an off-plan sales project is required by law to open a dedicated bank account to receive all buyer payments and development financing payments. The payments to contractors and other valid costs of the development will be paid out of this bank account. Payments to contractors from this account must be authorized by a qualified engineering professional. This account is referred to as an escrow account and is managed by an independent escrow account agent authorized by the Central Bank of Bahrain and approved b RERA. This escrow account is reserved exclusively for a specific development project. Money from this account can only be used for the assigned project.
By law, a financing bank or other creditor of the development cannot create an attachment or encumbrance over an escrow account.
Should the development project encounter problems or the developer discontinue, the remaining funds in the escrow account must be divided among the buyers of the development. Payments are made in direct proportion to the amount remaining in the escrow account.