Freehold Property in Dubai the Legislation

The long-awaited Dubai property law was issued by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. The law says expatriates are now among those who can own properties in Dubai. Law No.7 of 2006 stipulates that freehold is limited to UAE and GCC citizens and companies wholly owned by them, as well as public shareholding companies.

The law also stipulates that upon approval of Dubai's Ruler, non-UAE nationals may be given the right to own properties in some parts of Dubai.They may be given the right to acquire a freehold property, or a 99-year lease property, in areas designated by the Ruler. The law includes 11 chapters comprising 29 articles covering the issues of definitions, general rules, the implementation system of property hold, and the jurisdictions of the Dubai lands and properties Department.

It also stipulates the setting up of a property registration office at the Dubai Lands and Properties Department. This office will be responsible for documenting property rights and their amendments. Its records hold the ultimate evidence against all - without exceptions. Its records cannot be challenged except in the case of forgery.

The law says that a multi-storey property is considered a single property unit that shall be given one entry in the property record. All apartments of a single property unit will have supplementary records that include names of the owners of its apartments, storeys and any common facilities.

Following are the excerpts of the new Property Registration Law:

Article No.3

Provisions of this law are applied to properties located in Dubai.

Article No.4

Freehold is limited to UAE and GCC citizens and companies wholly owned by them, as well as public shareholding companies. The law also stipulates that, upon approval of Dubai's Ruler, non-UAE nationals may be given the right to own properties in some parts of Dubai, designated by the Ruler, on a freehold basis, or a 99-year lease.

Article No.5

The original documents and judicial rulings upon which properties are registered are to be kept at the Lands and Properties Department. It bans the removal of documents from the department. Judicial bodies or any expert or committees assigned are authorised to review the documents and get attested copies.

Article No.6

The Lands Department is solely assigned to register property rights and long-term leasing contracts as stipulated in Article No.4 of this law. Under the law, the department will carry out the following duties: Specifying survey areas or re-conducting surveys and attesting location maps.

  • Specifying rules related survey and releasing maps related to property units.
  • Preparing model property contracts.
  • Setting rules related to regulating, keeping and destroying documents.
  • Setting rules related to the use of Computer in data entry and saving.
  • Setting rules related to the regulation and keeping the records of property brokers.
  • Setting rules related to the assessment of properties.
  • Setting rules related to the sale of properties in auctions, and supervising the auctions.
  • Fixing fees for services offered by the department.
  • Setting up branches of the department upon the director's discretion.

Article No.7

A property register at the Dubai Lands and Properties Department shall be set up for documenting property rights and their amendments. Its records hold the ultimate evidence against all without exceptions. Its records cannot be challenged except in the case of forgery.

Article No.8

Documents of the property register which are electronically saved, have the same evidential value of the original documents.

Article No.9

All property transactions and deals that result in giving, moving, changing or removing property rights, must be registered with the property register. And so must all the final rulings that prove such dealings, which are not considered valid until they are registered.

Article No.10

To undertake transferring any property rights is limited to the contractor's commitment to the guarantee if he defaulted on his contractual duties whether a compensation was stipulated in the undertaking or not.

Article No.11

The inheritance notification must be registered with the property register, in case heirs have property rights within their inheritance. And, no dealings will be admitted unless registered.

Article No.12

The department has the authority to look into applications submitted by owners of unregistered lands seeking to settle their legal status.

Article No.13

The department can correct purely financial errors in the property register upon a request by applicants or on its own, with informing concerned parties.

Article No.14

The department coordinates updating property data with parties concerned.

Article No.15

The registration of property areas and units at the property register must be based on typographic, property unit and property area maps. It also reads that each property area must have an independent map, manifesting all property units in the area and their numbers.

Each property unit must also have a separate map, showing its location, boundaries, length, area and buildings, and the numbers of neighbouring units. The law also stipulates that any amendment to the property unit, whether by dividing or merging units must be registered with the property register. The department issues ownership certificates regarding property rights, which are considered ultimate evidence to prove property rights. The above-mentioned certificates must include any terms, conditions, undertakings or any other commitments. The provisions of federal civil transactions law No.5 of 1985 and its amendments are still valid in the cases not stipulated by this law.

Any agreement or deal concluded in violation of this law is invalid. Any person, department or public prosecution has the right to contest such a deal. This law abrogates the provisions of the decree concerning legal and penal suites related to land transactions in Dubai, dated November 6, 1997 The Chairman of the department issues the necessary regulations and rules to put this law into effect. The law shall be published in the official gazette, and is to be taken into force from the date of its issuance.

After perusal of United Arab Emirates Federal Law No.(5) of 1985,concerning Civil Transactions,Law No.(7) of 2006 concerning Real Estate Registration in the Emirate of Dubai,Rule No.(3) of 2006 concerning allocation of areas where foreigners can own properties in the Emirate of Dubai,His Highness Shaikh Mohammad Bin Rashid Al Maktoum,Vice-President and Prime Minister of the UAE Ruler of Emirate of Dubai do hereby promulgate a new law:Law No.8 concerning guarantee accounts of Real Estate developments in the Emirate of Dubai.

This law may be under Law No 8 on Guarantee Accounts (commonly known as trust or escrow accounts), people buying properties in Dubai off plan will make their payments into special accounts managed by banks, instead of directly into property developers's pockets.

The law also stipulates that money in these accounts will be released to developers only when certain stages of construction are completed, encouraging companies to keep building work on time and easing fears that they will gather payments and flee the country before a brick has been laid.

The law includes 5 chapters comprising articles covering the issues of definitions and general rules.

This is a major step towards consumer protection in Dubai.From now on all developers launching new projects have to produce certificates showing that building work has reached certain pre-selected stages before trust account managers give them access to buyers' money. This could weed out smaller private developers operating in Dubai.

Following are the excerpts of the new Law:

Article No.2

In implementation of the provisions of this Law, the following terms and phrases shall have the meanings appearing parallel thereto, unless otherwise provided by the context.

Emirate : Emirate of Dubai
Department : Department of Lands
President : President of the Department
Director : Director General of the Department
Register : Register prepared by the Department for registration of developers.
Guarantee Account : Guarantee account of a property development in which sums paid by buyers of units on the plan or by financiers of developments are deposited.
Concerned Authorities : concerned government or semi-government licensing authorities.
Developer : A natural or corporate person licensed to carry on property development business in the Emirate, including a main or minor developer.
Property Development : Projects involving construction of multi-storeyed buildings or compounds for residential or commercial purposes.
Property : Everything that is permanently fixed in its space and cannot be shifted without destruction or alteration in appearance.
Unit : A partitioned part of a property which a developer sells to third parties.

Article No.3

Provisions of this Law shall be applicable to a who sells units on the plan of the Emirate's property developments that are not yet completed, whether under or in the process of construction, and who receives payments from buyers or financiers against such units before completion of the developments.

Article No.4

A special register known as (Register of Developers) shall be prepared at the Department to register names of developers licensed to carry on property development business in the Emirate. No developer may carry on such business in the Emirate unless being registered in the Register.

Article No.5

A developer shall not advertise in local or foreign media, or participate in local or foreigner exhibitions, for promotion of sale of units or properties on the plan or in the process of construction in the Emirate, until having obtained a written permit from the Department. The Director shall issue the necessary decisions to regulate the terms and conditions of advertising in media and participation in exhibitions.

Article No.6

Without prejudice to provisions of Article (3) of this Law, a developer wishing to sell units on the plan shall apply to the Department in order to open a guarantee account and shall enclose the following documents:

  • Trade license and certificate of registration of membership in Dubai Chamber of Commerce & Industry.
  • Title deed of the plot intended for development.
  • Letter of approval in relation to the development and issued by the main developer.
  • Architectural designs and layouts approved by concerned authorities and the main developer.
  • A balance sheet approved by the development's consultant about sums payable to creditors of the development.
  • Building permit issued by concerned authorities .
  • Copy of a sale contract between the developer and the buyer.

Article No.7

A guarantee account shall be established according to a written agreement between a developer and the Department through which sums paid by buyers of units on the plan, or paid by financiers, shall be deposited in a special account opened under the name of the property development in an approved bank in the Emirate. The agreement shall determine the conditions of account management, the rights and obligations of contractual parties and other terms and obligations.

Article No.8

The Department shall enter into a contract with an approved,experienced and qualified auditor to manage a guarantee account under its supervision. Spending from deposited sums shall be according to the conditions of contract and the provisions of this Law, and the guarantee account shall be governed by criteria of financial and accounting control that are in force in this regard.

Article No.9

Depositors or their representatives may examine their own accounting records and request copies thereof. The representative of official authorities may also examine the records as well as obtain copies thereof.

Article No.10

In the event that a developer mortgages a development to obtain a loan from financing establishments or companies he shall have to deposit the mortgage sum in the guarantee account. Disposal of a mortgage sum shall be according to provisions of this Law.

Article No.11

A developer may apply to the auditor for spending from a guarantee account after submitting a certificate issued by the consultant of a development describing completed stage and the requirement of a subsequent stage. The auditor shall have to inform the Department in writing about sums paid to the developer.

Article No.12

Without prejudice to Article (11), an auditor shall disburse payments due to a developer within 7 working days from the date of request for payment or the date of completion of required documents.

Article No.13

The Department shall keep 10% of the value of a development in the guarantee account for a period of one year after a developer has obtained a certificate of completion. The held sums shall not be spent until the units are registered in names of buyers and title deeds are issued under their names.

Article No.14

Without prejudice to any penalties provided for in any other law, a penalty of incarceration and payment of a fine not less than 200,000 Dirhams,or either one of them, shall be imposed on anyone who:

  • Carries on property development business in the Emirate without a license.
  • Submits false documents or misstatements to concerned authorities in order to obtain a license for carrying on property development business.
  • Offers to knowingly sell units in bogus property developments.
  • Embezzles, uses or squanders payments delivered to him for the purposes of construction of property developments,and misappropriates such payments.
  • Any auditor who deliberately prepares a false report about the result of an audit he conducts on a developer's financial position, or conceals significant facts from his report.
  • Any consultant who knowingly approves false documents about a property development.

Article No.15

If proved that a developer is unable to execute a development, the Department shall take necessary legal actions to protect rights of third parties.

Article No.16

A developer shall be cancelled from the Register in any of the following events:

  • If he declares his bankruptcy.
  • If he cancels his license.
  • If carries on prohibited business in the Emirate.
  • If he repetitively violates provisions of Article (5) of this Law.

Article No.17

Existing developers at the time when provisions of this Law are applicable shall adjust their status in accordance with the provisions herein.

Article No.18

The Department may collect management fees against services offered in accordance with this Law.

Article No.19

This Law shall be published in the Official Gazette and shall be effective from the date of publication.

Mohammad Bin Rashid Al Maktoum Ruler of Emirate of Dubai promulgated in Dubai on Tuesday 10th of October 2006, corresponding to 18th of Ramadan 1427 AH.