REALWorld Law

Which legislation applies to property transactions?

In Dubai, the following property rights exist:

• Absolute ownership, not restricted in time, ie freehold.
• Grant - this is land which is 'granted' by the Ruler of Dubai to citizens of the United Arab Emirates and which can be taken back by the Ruler as he wishes. The Ruler may also impose conditions of grant, for example, a restriction on further transfers.
• Usufruct – this is similar in nature to a lease but is a 'real' right.
• Musataha – this is also similar to a lease but includes the right to develop the land and own any buildings constructed on it for a maximum of 50 years.
• Leasehold – a personal right between two parties, where the landlord grants the right of exclusive occupation to the tenant of a specified property.
• No concept of a non-exclusive 'licence' to occupy exists in law but, as a commercial agreement, there is nothing in principle to prevent such an arrangement being entered into.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

Yes: As a starting point, the right of ownership of property in Dubai is restricted to:

• Citizens of the United Arab Emirates (UAE)
• Citizens of other countries in the Gulf Cooperation Council (commonly referred to as the 'GCC' and which comprises of the UAE, the Kingdom of Saudi Arabia, Qatar, Bahrain, the Sultanate of Oman and Kuwait)
• Companies wholly owned by GCC citizens, and
• Public joint-stock companies

However, in 'designated areas' of Dubai, non-GCC nationals may acquire the following rights:

• Absolute ownership not restricted in time, and
• A usufruct (including a musataha interest) or long-term leasehold interest not exceeding 99 years.

A usufruct is essentially a 'real' right to exploit land owned by another person and a musataha is a type of usufruct which includes the right to construct on the land.

There are numerous 'designated' areas in Dubai and the Ruler of Dubai has the authority to make such designation.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

Pre-emption rights are not imposed by law.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

A transfer must take place by first applying to the Dubai Land Department (DLD) through one of its trust offices in Dubai. Each party to the transfer (eg seller, purchaser or mortgagee) has to attend at the trust office in person, or appoint a duly authorised representative to attend on its behalf, using a power of attorney valid in the UAE. The parties sign the relevant DLD forms and provide the necessary manager's cheques for payment of the DLD registration and transfer fees. 

Depending on the nature of the transaction, the DLD may require one or more 'no objection certificates' from any relevant third parties. For example, the master developer of a community usually has to provide a 'no objection certificate' when a unit within the relevant community is being transferred from one party to another, and such a certificate will not be issued if there are any service charge fees outstanding.

Other parties from whom a 'no objection certificate' may be required by the DLD (usually in the case of plot sales, rather than the sale of completed buildings/units) include the Roads and Transport Authority, Dubai Electricity and Water Authority and the relevant telecommunications company.

Following attendance at the DLD, the application for transfer will be processed and a new title certificate will be issued to the purchaser. If the land is mortgaged, the original title deed will be issued to the bank.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

Yes. All transactions that create, transfer, change or cancel rights over land in Dubai must be registered (since the introduction of Law No (7) of 2006) at the Dubai Land Department (DLD).

Administrative Resolution No. 134 of 2013 makes it also a requirement to register long leases (those with a term of 10 years or longer) at the DLD.  Leases with a shorter term are registered on Ejari for a nominal fee.

The property register at the Dubai Land Department is not open to the public.

Are transfers of title recorded in this country?

The register itself is private. Therefore, there is no publicly available information regarding ownership of land in Dubai. The only way a third party can obtain independent confirmation from the DLD as to the legal owner of a particular piece of land is if it presents a 'no objection certificate' from the owner to such third party seeking to obtain such information.

Does title insurance exist in this country?

Title insurance is not common.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

This depends on the nature of the transaction. Commonly, the parties will enter into a very basic 'memorandum of understanding', 'letter of intent' or 'heads of terms', which document will set out key information such as the names of the parties, a description of the property and the purchase price. Quite often, the parties will then treat this document as the 'contract' and pay the monies, attend to transfer formalities etc pursuant to it.

Increasingly, this is changing and whilst parties are still likely to enter into such a document, it is less likely to be considered by the parties as being legally binding, and is used as a starting point for the drafting of a detailed sale and purchase agreement.

When the sale and purchase agreement is signed and dated by both parties, the parties then arrange to visit the Dubai Land Department to attend to the transfer formalities. This may be either on the same day as completion or at a later date. However, transfer of title does not take legal effect until registration of the transfer has been completed.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

Buyers do carry out detailed due diligence, as in any other jurisdiction. However, this is limited because of the lack of information available to the public. 

The register maintained by the Dubai Land Department (DLD) containing ownership details is private. In order to verify title, a seller must issue a 'no objection certificate' allowing the DLD to confirm ownership of the relevant property to a potential (and named) purchaser. More commonly, a seller would simply provide a copy of its title certificate to a potential purchaser to prove ownership, and possibly a copy of the 'affection plan' issued in respect of the property by Dubai Municipality in order to show the approved use of the land.

Increasingly, more detailed due diligence is being requested by potential buyers and provided by sellers, in particular for higher value deals and more complex deals. It is becoming reasonably common for enquiries before contract to be raised, and for copies of any site investigation studies (eg environmental surveys etc. to be requested) and site inspections undertaken. It is also more common now that purchasers request a due diligence report from their lawyers and obtain professional valuation surveys of the property.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

The consent of a mortgagee will be required where the property being sold is being given a security for a mortgage. Equally, the consent of any person with a superior interest in the same property will be required in order for an inferior interest to be registered (eg the consent of an owner to the registration of a usufruct holder registering their interest).

Land which has been 'granted' by the Ruler of Dubai to a national of the United Arab Emirates usually has certain conditions attached to the grant, and the consent of the Private Office of the Ruler may be required to a transfer.

Any family dispute arising from a transfer of property is likely to be dealt with by the Shari'ah Courts in Dubai, however, there is no specific consent required from a spouse to a transfer where that property is registered in the name of the other spouse.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

Yes. The contract must be in writing and signed by the parties to it. It must also contain all the fundamental terms of the transaction.

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Which legislation applies to property transactions?

The law provides that a developer selling property is liable, for 10 years from the date the completion certificate for the property is issued by the relevant authority, to repair any structural defects of which it is notified.

In respect of defective installations in a newly constructed property, the law provides that a developer is liable to repair or replace such items for a period of one year from the date the completion certificate is issued. Installations includes mechanical and electrical works, sanitary and plumbing installations and similar items.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

Misrepresentation is dealt with under the Civil Code of the United Arab Emirates (Law No. (5) of 1985). This defines misrepresentation as being:

1. When one party deceives the other by words or deeds which leads the other to consent to what he would not otherwise have consented to; or 
2. Where there has been a deliberate silence regarding facts which, if the other party were made aware of them, would have led them to not enter into the contract.

If there has been misrepresentation, the person misled may cancel the contract. In practical terms, this may require a court ruling which can take some time to obtain.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

Planning, zoning and construction laws may all be relevant and a buyer of a building under construction or already completed should carry out due diligence to ensure that all the relevant statutory approvals have been obtained.

Depending on the use of the property, certain health and safety rules and regulations will apply. 

Last modified 3 Apr 2023

Which legislation applies to property transactions?

Such environmental laws are in their infancy in this jurisdiction and as such, this is not currently a highly regulated issue.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

Dubai Municipality is responsible for zoning in the Emirate of Dubai. For each plot of land, Dubai Municipality will issue an 'affection plan' which shows the land and states the permitted use of it (for example, industrial or hotel). Any application for a change of use must be approved by Dubai Municipality in advance.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

No, although the consent of the Roads and Transport Authority, Dubai Electricity and Water Authority and the relevant telecommunications company will be required in order to obtain the requisite full building permit from Dubai Municipality for the construction on the land. Therefore, in practice, such public authorities will be involved in such projects but there will not be a development agreement entered into between them and the developer directly.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

Yes, but the Civil Code of the United Arab Emirates (Law No (5) of 1985) provides that it must be for the public benefit and compensation must be paid.

For 'granted' land, ie land in Dubai which has been granted by the Ruler of Dubai to another Emirati citizen or a company wholly owned by Emiratis, the terms of the grant often include a provision that the land can be taken back by the Ruler at any time.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

VAT is applicable in the United Arab Emirates from 1 January 2018 and the following rates apply:

• Sale of commercial real estate – 5% (standard rate)
• First sale of new residential property (within 3 years of completion) – 0% (zero rated)
• Subsequent sale of existing property – exempt (no VAT)

In the case of investment properties, the transaction may be treated as the ‘transfer of a going concern’ which does not attract VAT. The conditions for obtaining this treatment are complex and advice should be sought.

To register a transaction at the Dubai Land Department (DLD) certain fees apply.

For a sale and purchase, the registration fee is 4% of the purchase price, to be split equally between the seller and the buyer unless otherwise agreed. It is common practice for the seller to insist on the buyer paying the full 4% to the DLD. If the buyer is granting a mortgage over the property to a bank, the mortgage must also be registered and the registration fee is 0.25% of the mortgage amount, up to a maximum of AED 1,500,000.

For long term leases, the registration fee is 4% of the total value of the contract. For musatahas (rights to use and exploit land belonging to another person, along with the right to build on that land) the registration fee is 1% of the value of the contract.

Please note that the above fees are correct as at 1 March 2023. The DLD website can be checked for up-to-date details on fees.

In addition, there may also be agents' fees, surveyors' fees, lawyers' fees, architects' fees (for plans used to obtain a building permit) etc.

Last modified 3 Apr 2023

Which legislation applies to property transactions?

There will be nominal fees payable to the relevant company regulator to register the transfer of shares, for example, the Dubai Economic Department or any free zone authority.

Dubai Land Department (DLD) require changes in shareholding of real-estate-owning companies to be informed to them and a proportionate transfer fee will be applied. Failure to inform the DLD can result in a fine.

Care is required when entering into a share deal because the location of the land will be all important in determining what nationalities can own shares in the owning company. For example, a local LLC company which has 'local' shareholders and which owns land in an area not designated for foreign ownership cannot then have some shares held by a 'foreigner' as it will no longer be entitled to own the land.

Last modified 3 Apr 2023