Provisions of the Musataha Contract

The Musataha contract gives rise to specific obligations and rights for both the Landowner and the Musatih (the holder of the Musataha right). These rights and obligations stem from the legally documented agreement, as well as the relevant provisions of the Iraqi Civil Code and Real Estate Law.

We summarize the most important rights and obligations of the parties as follows:

Rights of the Landowner

Upon the conclusion of the Musataha contract and its registration with the Real Estate Registration Department, a set of rights is established in favor of the Landowner.

Although the establishment of the Musataha right for the Musatih does not strip the Landowner of their authority to dispose of their land, this authority becomes restricted to the extent that its exercise does not conflict with the rights acquired by the Musatih under the contract. These rights are as follows:

1. Legal Dispositions and Restrictions: Article (233) of the Real Estate Registration Law regulates this issue. It rules that the Landowner may conduct all legal dispositions regarding the land, with the exception of those that infringe upon the Musatih's rights, such as establishing an easement right on the land without the Musatih's consent. The law also permits the Landowner to undertake actual physical acts, such as partition (Ifraz) and consolidation (Tawhid), provided that prior consent is obtained from the Musatih. Based on this, the Landowner may transfer ownership to a third party via sale or gift without needing the Musatih's consent. In such a case, the transferee (new owner) replaces the original owner in all rights and obligations arising from the Musataha contract.

2. Assignment of Ownership and Easements: The Landowner has the right to assign the ownership of the land to the Musatih himself or to any other person, whether for consideration (compensation) or without. However, assignment to a party other than the Musatih requires that the land remains burdened by the existing Musataha right. The Landowner may also arrange an easement right in favor of a neighboring property; however, this action is conditional upon the Musatih's consent due to the potential impact it may have on their rights.

3. Modifications to the Property: The Landowner may make changes to the real estate, such as subdividing it into several properties or consolidating it with an adjacent property belonging to them. This is subject to the condition of obtaining the Musatih's consent initially and observing the ruling of Article (231) of the Real Estate Registration Law. This article mandates the processing of the partition transaction for the parts devoid of construction if the Musataha applies to a specific part of the land. Furthermore, if the Musataha right covers the entire land, partition requires the Musatih's consent.

4. Collection of Rent and Termination for Non-Payment: The Landowner enjoys the right to collect the rent agreed upon in the contract. In the event that the Musatih delays payment for three consecutive years, the Landowner has the right to request the judicial termination (rescission) of the contract, unless otherwise agreed. Exercising this right requires that the Musataha contract includes a specified rent payable at a specific date or dates, and that the Musatih’s delay in payment for the mentioned period is proven. Additionally, the Landowner has the right to utilize the sub-surface (underground) of the land in cases where the Musatih does not exploit this sub-surface, provided this does not prejudice the existing rights of the Musatih.

5. Reversion of Buildings and Compensation: The Landowner holds the right to the reversion of buildings and structures erected by the Musatih upon the termination of the contract or the expiration of its term. In this case, the Musatih is compensated for the value of the building as "due for removal" (debris value) or as "standing," depending on what the parties agreed upon. In the absence of an agreement, the Musatih is entitled to the value of the structures as due for removal (rubble value) in accordance with the provisions of Article (1270) of the Civil Code. The Landowner also has the right to request the Musatih to remove the buildings and structures and take their debris upon the expiration of the contract term.

Obligations of the Landowner

The obligation to deliver the land to the Musatih is considered the most critical obligation resting on the shoulders of the Landowner. These obligations include:

1. Delivery of the Land: The Landowner must deliver the land free of occupants and impediments that would prevent the Musatih from utilizing it according to the purpose for which the Musataha right was created. If the land is occupied by third parties, the owner must evict the occupants and deliver it to the Musatih. However, if the Musatih himself was occupying the land prior to the conclusion of the contract, he is considered to be already in actual possession, and there is no need for a new delivery procedure. The date of delivery must be stated in the contract because the Landowner is not entitled to rent except from the date of actual delivery. If the Landowner delays delivery, even if due to a foreign cause beyond their control, the Musatih may refrain from paying rent for the period of delay, even if the contract stipulates advance payment, as the Musatih has not enjoyed the benefit of the land as long as they have not actually received it.

2. Non-Interference: The Landowner must refrain from interfering with the Musatih’s utilization of the land during the validity of the contract. The Landowner must not make any changes to the subject matter of the contract that would cause the loss of the expected benefit or make its execution impossible for the Musatih.

3. Prohibition of Overlapping Rights: The Landowner may not establish another Musataha right on the same land as long as the first Musataha right is existing and continuous. This applies even if the Musatih delays in performing their obligations related to construction. The Court of Cassation confirmed this principle in its decision Number 1248/M1/1997, which ruled that: (The Landowner does not have the right to interfere with the occupants holding the benefit of Musataha under the pretext of preventing opposition in the event that the Musatih delays in implementing the contract concluded between them).

4. Expropriation and Force Majeure: In the case of land expropriation (Eminent Domain), destruction, or the occurrence of any other cause preventing the Musatih from utilizing it, the Musatih has the right to request the termination of the contract with compensation based on the provisions of Article (177) of the Iraqi Civil Code.

   • Compensation Calculation: If expropriation occurs on a property upon which a Musataha right is established, the holder of this right is entitled to a portion of the expropriation amount equivalent to the value of its utilization for the remaining years of its term, after deducting the agreed annual rent, maintenance expenses, and fees due during that period.

   • Non-Construction Scenario: If the Musatih has not constructed the agreed-upon buildings at the time of the expropriation request, their share of the expropriation amount is determined not to exceed ten percent (10%) of it, in addition to the annual rent previously paid to the Landowner for the years preceding the expropriation request, in accordance with Article 35 of the Expropriation Law No. 12 of 1981.

5. Partial Construction and Assignment: It is worth noting that if the Musatih constructs part of the agreed-upon building and then disposes of their right to another person before the completion of the building and the expiration of the contract term, the Landowner does not have the right to request the termination of the Musataha contract for non-completion of the building, in accordance with Article 177 of the Iraqi Civil Code No. 40 of 1951.

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