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Principal Real Estate Laws and Regulations Protecting Investors’ Interests in Dubai

  1. Real Estate Registration in the Emirate of Dubai

The provisions of Law No. 7 of 2006, grant the Real Estate Registration and Ownership Rights in the Emirates of Dubai to the following individuals:

Type 1 – UAE nationals and other Gulf Cooperation Council (GCC) residents (and companies wholly owned by such nationals) who owns the right to own real estate property anywhere in the Emirates of Dubai.

Type 2 – The Foreign nationals and ex-pats hold the right to possess freehold interests in real estate (as well as usufruct and 99-year leases) only within areas designated by the Ruler of Dubai for foreign ownership.

The Law also regulates the registration of real estate in Dubai on the Real Estate Register at Dubai Land Department (DLD) as a guarantee to the owners of real property rights and defines the DLD’s authority to enter and update any necessary data on the Real Estate Register.

  1. Designation of Areas in which Non-UAE nationals may own Real Estate in Dubai

The provisions of this Regulation No. 3 of 2006 defines the specific areas (“Designated Areas”) wherein the Foreign nationals (Non-UAE/GCC nationals) may possess freehold land and property, as well as other real property rights such as usufruct and long-term lease rights, for up to 99 years.

Certain examples of Designated Areas in Dubai are the Palm Jumeirah, the World Islands, Downtown Dubai, Old town, Burj Khalifa, Business Bay, Dubai Marina, Emirates Hills, Jumeirah lakes Towers (JLT), Jumeirah Beach Residence (JBR), Discovery Gardens, Arabian ranches, Midriff (specified plots), Dubai Investment Park (DIP), Falcon City, Dubai sports city, Dubai motor city, International city, Jumeirah islands & Jumeirah village.

Additional Designated Areas for foreign nationals to acquire freehold property have been established under further regulations. The Dubai Land Department (DLD) contains the updated information on the location and boundaries of the Designated Areas in Dubai wherein foreigners and ex-pats can own freehold property.

  1. Escrow Accounts for Real Estate Developments in the Emirate of Dubai

According to Law No. 8 of 2007, the developers who intend to sell units off-plan in a real estate development project must create a separate Escrow Account for the project with an Escrow agent (bank/financial institution) accredited by the Dubai Land Department (DLD).

An Escrow Account is a bank account of a real estate development project in which the payments made by purchasers of Units sold off-plan or by the financiers of the project are deposited.

All the amount paid by off-plan purchasers and loan payments supported by financiers for the construction of the real estate development project must be deposited in a project escrow account. The amount allotted in the escrow account will be used solely for the building of the real estate development project and the settlement of project finance obligations, as required by law.

The Real Estate Escrow Account Division of the Real Estate Regulatory Agency (RERA) audits and monitors project escrow accounts regularly.

  1. Regulating the Interim Real Estate Register

Under Law No. 13 of 2008, all disposals relating to off-plan real estate units (i.e., units under construction), including the sale, long-term lease, musataha, mortgage, and other disposals, must be registered on the Interim Real Estate Register as maintained by the Dubai Land Department (DLD).

In absence of such regulatory registration, the disposals relating to off-plan real estate units shall be considered null and void.

Further, the provisions of Law No. 9 of 2009 establishes a procedure for a developer to terminate an off-the-plan sales contract in case the buyer fails to meet their payment commitments and authorizes the Real Estate Regulatory Agency (RERA) to cancel such delayed projects.

  1. Regulating the Interim Real Estate Register

The provisions of Regulations of Law No. 13 of 2008 governs the sale of off-plan real estate and requires developers to obtain requisite approvals from the appropriate authorities prior to initiating the real estate project and promoting & selling off-plan real estate units.

Any sale or other disposition of off-plan real estate made by a developer or broker prior to the issuance of the necessary permissions and the registration of the real estate development project with the DLD is deemed null and invalid.

The Resolution also addresses several issues concerning real estate development and off-plan sales, such as area

  • Measurement discrepancies,
  • Developers’ responsibility to register Sales of real estate property in register
  • Developers’ responsibility of disposals of real estate in the real estate register
  • Interim real estate register, as applicable, and
  • The mechanism for cancellation of real estate development projects.
  • Instances of Termination events due to the default of developer or buyer.
  1. Ownership of Jointly-Owned Properties in the Emirate of Dubai 

The provisions of this Law No. 27 of 2007, regulate the rights and responsibilities of real estate owners in Jointly-owned property inter alia, towers, residential and commercial complexes and streamline the provisions pursuant to common areas such as corridors, elevators, swimming pool, parking lots, etc. in such jointly-owned properties.

It further establishes Owners Associations (OA) that are responsible for the administration, operation, maintenance, and repair of such common spaces.

Developers are also held responsible to repair structural faults for ten (10) years and minor defaults for one (1) year from the date of receiving the Certificate of Building Completion.

  1. Requirements to register Mortgages in the Emirate of Dubai

The provisions of this Law No. 14 of 2008, establishes a mandatory requirement to register mortgages (as the case may be) on:

  1. The Real Estate Register – in the case of completed properties
  2. The Interim Real Estate Registry – for under construction off-plan real estate units

The law also regulates the conditions of creating a mortgage over real estate property, including real estate units under construction.

Furthermore, the law also lays out the process for mortgage enforcement in the case of a failure on part of the borrower to repay the debt.

  1. Registration of Real Estate Brokers in the Emirate of Dubai

In accordance with Regulation No. 85 of 2006, the Real Estate Regulatory Agency (RERA) is responsible for licensing and regulating real estate brokers, as well as monitoring their operations.

Every individual who intends to perform brokerage activity in the emirates of Dubai must register themself in the Register of the Real Estate Brokers by submitting an application in the prescribed form to the Division of the Real Estate Brokerage. A person may not engage in Brokerage activity in the Emirate of Dubai unless he has obtained a license from the competent authorities and registered in the Register.

Requirements for Registration in the Brokers’ Register

  1. A valid trade license from competent authorities.
  2. A certificate of membership in the Dubai Chamber of Commerce & Industry.
  3. In the case of sole proprietorships or corporations, a copy of the applicant’s license/passport.
  4. An accurate copy of the Brokerage shop’s ownership certificate or lease agreement.
  5. A certificate of good conduct for the owner of the institution and the company’s senior management or senior managers.
  6. None of the company’s directors or partners permitted to manage the company has ever been declared bankrupt or convicted of a crime involving dishonesty or trust.
  7. Earning credentials in courses specialised in the real estate field from the educational institutions approved by the Land and Property Department.
  8. Passing the Brokerage Profession test.

The provisions of the law also define the terms and conditions for broker registration, brokers obligations towards investors, broker’s fees, disciplinary Penalties on brokers, Cancellation of the Brokerage Capacity, settlement of disputes mechanism.

  1. Establishment of Dubai Land Department (DED)

The provisions of this Law No. 7 of 2013, establishes the Dubai Land Department’s roles, responsibilities, functions, and goals, which include inter alia;

  • implementing best practices in real estate Registration,
  • improving Registration Procedures,
  • Enhancing the real estate regulatory environment,
  • Promotion of real estate investment.

The Dubai Land Department’s mandate, according to the law, is to serve the Dubai Government’s strategic objectives for the real estate sector and to develop land registration procedures in accordance with international best practices as part of a broader strategic framework to plan and develop an integrated real estate strategy that is fully compatible with the highest international standards.

The strategy will also aid in the improvement of the sector’s control and monitoring processes, the oversight and development of leasing rules, and the encouragement of investments by creating appropriate settings to support real estate’s position in Dubai’s overall growth plan.

  1. Establishment of the Real Estate Regulatory Agency (RERA) 

The provisions of this Law No. 16 of 2007  establishes the role and powers of the Real Estate Regulatory Agency (commonly referred to as “RERA”) in regulating the real estate industry, including licensing developers, brokers, real estate management companies, and other real estate professionals, as well as monitoring and overseeing their activities. The Real Estate Regulatory Agency (RERA) is referred to as the regulatory arm of DED.

11 Fees Structure of Dubai Land Department

Major provisions of this Executive Council Resolution No. 30 of 2013, spell out the fees structure for the following activities:

  1. Fees for the Registration of real estate disposals on the Real Estate Register including the registration of both
  • off-plan sales of real estate units
  • completed units
  1. Fee structure for all types of services provided by the Dubai Land Department (DLD).
  2. Fines, in case of non-payment of the prescribed fees.

 

  1. Regulating the Relationship between Landlords and Tenants in the Emirates of Dubai

The provisions of this Law No. 26 of 2007, governs the contractual relationship between Landlords and Tenants regulated by a written Lease Contract in the Emirate of Dubai. It has been made obligatory for the Landlord and Tenant to register their tenancy contract or any amendments thereto with the Real Estate Regulatory Agency (REAR) through Ejari System allowing no room for uncertainty.

The Law provides a legal framework specifies the rights and obligation of tenant and landlord concerning the use and maintenance of the leased property, Eviction cases; when Landlord may demand eviction of tenant prior to the expiry of tenancy period, Rent determination process, Rental Disputes Center for the settlement of rental disputes etc.

Source: https://dubailand.gov.ae/en/news-media/dubai-land-department-launches-know-your-rights-as-a-real-estate-investor-in-dubai-guide-to-spread-a-safe-real-estate-culture/#/

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Mainstream Monday

New Changes to Real Estate In the UAE

This week we look at some of the latest changes to Real Estate in the UAE

Every Monday we will summarize some of the latest legal announcements and updates across the UAE. These will include valuable information relevant to you or your business.

Our team of qualified legal professionals aim to support you to help achieve all your legal and real estate requirements by advising on but not limited to;

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    Commercial Real estate disputes/litigation
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    Termination of leases and contacts
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    Landlord/ tenant disputes
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    Ensuring effective real estate contract management
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    Debt Recovery
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    Support with all other legal issues

LATEST UPDATES

There has been a number of changes to the real estate market in Dubai over the past week, with the issuance of four landmark legislations that affect developers, visitors, tourists, owners and investors in the emirate. We provide a brief overview of the changes below.

 

FIRST DECREE

Decree No. (33) of 2020 on the special committee for unfinished and cancelled real estate projects in Dubai.

Introduces the Special Tribunal for Liquidation of Cancelled Real Property Projects in the emirate of Dubai and Settlement of Related Rights. The previously existing ‘Special Committee for unfinished and cancelled real estate projects in Dubai’ has now been renamed to the Tribunal.

The Special Tribunals processes will be decided by the Chairman of the Dubai Judicial Council. However, the Decree presents the Tribunal with the authority to review and settle all disputes, grievances, and complaints for which the previous Special Committee did not issue final decisions or judgements. As such, going forward, along with these the Tribunal will also review and settle disputes and complaints arising from unfinished, cancelled or liquidated real estate projects.

Additionally, the Tribunal is tasked with the following obligations:

    • Settle disputes related to unfinished real estate projects that have been cancelled pursuant to Law No. (13) of 2008 and thereafter referred to the previous Committee by the Real Estate Regulatory Agency (RERA).
    • Determine rights and obligations of each developer if the real estate project is transferred from one developer to another.
    • Liquidate and settle all rights related to a real estate project, if RERA has cancelled it.
    • Review both normal and urgent matters and issue judgments or amicable settlements.

Following the issuance of the Decree, all courts in Dubai, including DIFC Courts, are prohibited from accepting accept any disputes, appeals or complaints related to unfinished or cancelled real estate projects, or those that fall under the jurisdiction of the Tribunal.

This Decree replaces Decree No. (21) of 2013 on the formation of the special committee for unfinished and cancelled real estate projects in Dubai and annuls any other legislation that contradicts or challenges its articles. The Decree will be published in the Official Gazette and is effective from the date of its publication.

 

SECOND DECREE

Law No. (19) of 2020 amending Article (11) of Law No. (13) of 2008 on the Interim Real Estate Register in Dubai was issued at the same time. This law introduces an amendments that states that if the developer did not initiate construction works in the real estate project due to reasons beyond his control, or if the project was cancelled due to a decision issued by RERA, the developer must refund the entire amount paid by purchasers.

The law will be published in the Official Gazette and is effective from the date of its publication and annuls any other legislation that contradicts or challenges the articles.

 

THIRD DECREE

No. (32) of 2020 transferring the ownership of certain educational lands in Dubai to the Knowledge Fund Establishment was issued on the 19th of December. The educational lands that would be subject to this decree include:

  • lands granted to government entities and real estate developers
  • lands leased to third parties
  • undeveloped lands granted to individuals and private entities that have not been developed within five years of the date of the grant or have ceased to have education activity
  • lands allocated to federal entities, foreign communities and civil society organisations that:
      • were not developed within five years of the date of allocation, or
      • education activity has ceased in the allocated land, or
      • the purpose of the allocation has lapsed.

The educational lands excluded from this Decree include:

  • those granted to public education facilities
  • lands within education zones like Dubai Academic City and Dubai Knowledge Park
  • mortgaged lands, and
  • common lands that include educational lands.

However, real estate developers can retain the educational lands granted to them before the Decree comes into force if they agree to pay 75% of the land’s market value to the Knowledge Fund Establishment in annual instalments within a period not exceeding 34 years. The Department of Land and Property in Dubai (DLD) will determine the market value of the educational land within three months of the date of Decree coming into force. The real estate developer must notify the Knowledge Fund Establishment of its desire to retain the educational land within six months of the land’s market value being determined.

The Decree will become effective from the date of its publication in the Official Gazette.

If you have questions or concerns regarding any of these, please reach out to us at info@legalcircle.co or  at +971 (0) 4 329 70 55. We can also be found via Whatsapp, LinkedIn or Instagram for more help.

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