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Buy Freehold Property in Dubai

17/12/2017

Where you intend purchasing property in the name of an offshore company, take note that only companies registered as offshore entities with the Jebel Ali Free Zone Authority are eligible to register real property rights with the Department of Lands and Properties.

The basics of buying freehold property in Dubai are the same as anywhere else in the world: One needs to be very careful and exercise due diligence.

Owning a property in Dubai as a foreigner

In order to purchase property in Dubai, you must be over 21 years of age.

Where you intend purchasing property in the name of an offshore company, take note that only companies registered as offshore entities with the Jebel Ali Free Zone Authority are eligible to register real property rights with the Department of Lands and Properties (hereinafter referred to as the “Dubai Land Department“). Therefore you cannot purchase the property in the name of a BVI, Cayman Islands or other offshore jurisdiction company.

Is the property you are intending to purchase located in an area where non-UAE and non-GCC nationals are permitted to purchase freehold property in Dubai?

Dubai property laws permits foreigners to own real estate in certain areas of Dubai designated by law. Most of the designated areas are well known to the general public, however your broker or lawyer will be able to assist you in determining whether the property is located in a ‘designated area’ or you could consult the Real Estate Regulatory Authority (“RERA”) website.

Are you purchasing an ‘off-plan’ or ‘resale’ property?

There are different sets of protocols applicable depending on whether you purchase a property under construction or a completed property.

With regards purchasing “off-plan” properties take note of the following:

The most important initial step is to ensure the project and the developer are registered with RERA and that the escrow account has been established. You can review the RERA website in this regard.

If you are buying property “off plan” from a developer and you are required to effect payment of a deposit, then the money should be paid into a RERA approved escrow account and a receipt issued for the payment.

Whenever you are purchasing property that has yet to be completed, ensure that the purchase agreement includes the completion date and the compensation awarded if the property is not completed by that date. Furthermore, if the property is to be furnished, decide on an appropriate deadline for furnishing and attach a schedule identifying the furnishings.

Purchasing “resale” property in Dubai

You should not pay any part of the purchase price without having a sale agreement or other form of contract in place. A simple sale agreement is the only document required for purchase. However, this is legally binding and should only be signed when all reasonable due diligence on both the property and verification of seller’s ownership have been undertaken and all negotiations completed.

If you are purchasing on the secondary market the deposit should be held by the broker or your lawyer in escrow pending transfer.

Is your broker registered?

Every broker requires individual registration with RERA and is issued a renewable Broker ID card which is required to be carried with them at all times, therefore, requests your broker to provide his card for verification, and you can also review the RERA website to confirm registration.

Verification of ownership and property details

Your due diligence should include verification of the seller’s ownership of the property and his ability to on-sell the property to you, inspection of the property and verification of the size and other particulars of the property, identify the warranties to be assigned to you at the time of purchase and whether the property is currently tenanted, because by law the sale is subject to tenancy rights. In respect of off-plan sales additional due diligence in relation to the developer, escrow, construction progress and his ability to complete the project should be undertaken.

It is also very important to accurately determine if the property you intend to purchase has existing finance, and from which lender as the seller’s existing mortgage has to be cancelled before the property can be transferred into your name.

It is also advisable to hire a lawyer to aid with the due diligence and purchasing process, though this is not a formal requirement in Dubai.

Building Insurance

Building insurance is mandatory when taking a mortgage on property in Dubai. Your lender will usually include this with your mortgage.

Registration

Where the property is sold off-plan the sale will be recorded in the Interim Real Estate Register maintained by the Dubai Land Department.

Where construction of the property has completed, the disposition will be recorded in your name in the Real Estate Register maintained by the Dubai Land Department as evidenced by the issuance of a title deed. The sale is not complete or legal and the property is not yours until registration has been affected.

For further information regarding documents required, registration procedures and applicable fees you may consult the RERA website: https://rpdubai.ae. For additional information you can also consult the Dubai Land Department website: https://www.dubailand.gov.ae.

The above information relates to property ownership in the Emirate of Dubai. Dubai is one of the seven Emirates of the United Arab Emirates (“UAE“). The other Emirates, namely Abu Dhabi, Fujairah, Ras Al Khaimah, Ajman, Sharjah and Umm Al Quwain, each have their own unique property laws and procedures applicable to property ownership in their respective Emirates.

The above information is a general guide to the subject matter; we recommend you seek professional advice prior to investment and purchase of freehold property in Dubai or in any of the other Emirates of the UAE.

If you have purchased a property/land and are encountering difficulties, you should seek qualified independent legal advice on your rights and methods of redress.

For more information about this article, please contact Ashraf El Motei at a.motei@motei.com

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