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Top Real Estate News
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UAE: 50 Fines Imposed on Real Estate Agents, 7 Licenses Suspended for Rule Violations

 

The UAE has taken decisive action against real estate agents, with fines issued and licenses suspended for violations of regulations in Abu Dhabi.

In the capital, several  real estate agents have faced penalties for non-compliance with rules and regulations governing the real estate sector. Authorities revealed that a total of 50 fines were levied against brokers during the initial quarter of this year for various infractions of real estate protocols.

These penalties were incurred for offenses such as engaging in marketing activities for unregistered projects and failing to uphold professional standards within the industry.

Moreover, the Abu Dhabi Real Estate Centre (ADREC) disclosed that seven real estate brokers had been temporarily barred from practicing, with their brokerage offices also being fined Dh30,000 for violations related to professional conduct.

ADREC emphasised its commitment to ensuring that the highest standards are maintained in Abu Dhabi's real estate landscape by prioritising adherence to lawful practices.

This stringent approach by ADREC mirrors recent actions taken by regulatory authorities in Dubai to tighten oversight of property firms and enforce compliance with advertising regulations to promote transparency.

In February, the Real Estate Regulatory Agency (RERA), operating under the Dubai Land Department (DLD), introduced new terms and conditions governing advertisements to address negative practices prevalent in the industry.

As part of this regulatory crackdown, authorities imposed fines of Dh50,000 on 30 real estate companies found to be in breach of the specified terms and conditions governing real estate advertisements. 

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Who Covers Repair Costs in a Rental Property? Exploring Tenant Rights in the Emirates

In cases where a rented property sustains damage from severe weather conditions, determining the party responsible for covering repair costs — whether it's the landlord or the tenant — can be a legal matter. The UAE's tenancy laws have clearly outlined the repair obligations and provided insights into a tenant's potential entitlement to reimbursement or compensation.

When it comes to renting properties, understanding who is responsible for repairs is crucial for landlords and tenants.

According to Sunil Ambalavelil, principal partner at Nasser Yousuf Alkhamis Advocates and Legal Consultants, the rental laws in Dubai, Abu Dhabi and Sharjah all place the responsibility for repairs and maintenance on the landlord. Depending on your emirate of residence, here is what you need to know about the applicable rental law:

Abu Dhabi

Ambalavelil referred to Article 7 of the Abu Dhabi Rental Law - Law No. 20/2006, which states: “The landlord shall maintain the leased property to keep it fit for use and shall carry out all necessary repairs excluding rental repairs during the rental period unless otherwise agreed.”

He added that in case the tenant is deprived of using the property, they can refer to the emirate’s Rental Dispute Centre, which should be done within one month of the issue arising.

“Therefore, according to the aforementioned laws, it is the landlord’s responsibility to cover all maintenance costs unless otherwise specified in the tenancy contract. However, tenants should be mindful to engage with the court to safeguard their rights and ensure they do not forfeit the opportunity to claim what is rightfully theirs,” he said.

Ambalavelil noted that if a tenant ends up spending on maintenance work, he or she can request reimbursement from the landlord, as per the UAE’s Civil Code, specifically Article 767 (1) of Federal Law No. 5 of 1985.

“This would apply to major defects, where the tenant is deprived of beneficial occupation or enjoyment,” he added.

For minor defects, Ambalavelil referred to Article 767(2), which also gives tenants the option to attend to minor defects that require urgent attention and the landlord fails to attend to them or the tenant is unable to get hold of the landlord, after which he or she can recover the expenses from the landlord or deduct the expense from the rent due.

Dubai

“As per Dubai’s tenancy regulation – Law No. 26 of 2007, the landlord is responsible for covering all maintenance costs unless otherwise specified in the tenancy contract,” said Ambalavelil.
He added that Article 17 of the same law explains that the landlord is responsible for any defect or damage not caused by the tenant.

“If the maintenance expenses are high, the tenant has the right to seek reimbursement from the landlord, as stated in the law. However, if the tenancy contract specifies terms regarding maintenance responsibility, the terms of contract will prevail as per Article 16 of Law No. 26 of 2007. In the absence of such terms in the contract, the issue must be resolved through a maintenance case against the owner in the Rental Dispute Centre,” he said.

Sharjah

“The landlord must handle all the maintenance work during the lease period unless the parties agree otherwise,” he said. Ambalavelil explained that the emirate’s tenancy regulations – Sharjah Law No. 2 of 2007, addresses the responsibility of maintenance.

Article 9: The landlord undertakes to maintain the leased premises to remain valid for use, and to handle all maintenance work during the lease period without the necessary rental maintenance unless the parties otherwise agree.

However, Article 10 of the law also brings in the responsibility of the tenant in cases of damage, stipulating that “they must utilise the leased premises in accordance with the terms outlined in the contract and in alignment with its intended purpose or customary usage”.

“This underscores that tenants should refrain from engaging in activities that could cause damage to the property and subsequently expect the owner to bear the cost of repairs. Although Article 9 clearly implies landlord’s responsibility to take care of the maintenance of the property,” he said.

What if Landlord Refuses?

According to Ambalavelil, the tenant can take a few measures if the landlord refuses to make the necessary repairs, as per Article 8 of the emirate’s rental law, including requesting the rental dispute committee to terminate the contract or request for a rent decrease proportional to the damage.

“Hence, the law has established legal procedures that allows tenants to pursue their rights if they encounter non-cooperation from the landlord regarding property maintenance. These legal measures serve as a safeguard, ensuring that tenants are not burdened with the responsibilities that rightfully belong to the landlord,” he said.

Renters’ Insurance

While the law does protect tenants, legal experts advise them to also consider having ‘content insurance’ or tenant insurance, because it also covers the tenants’ personal belongings and provides alternative accommodation, too.

In the UAE, various insurance policies are available, offering diverse coverage options. However, they are often overlooked, leading to a lack of insurance among many tenants. When considering tenants' rights and addressing their concerns, the resolution varies based on individual circumstances and the type of insurance coverage in place.

Those tenants, who might have taken content insurance, would be covered by that insurance. In particular, all of the damages to their personal property, such as furniture, appliances and other assets, will be covered by the insurance policy. Furthermore, depending on the type of insurance policy, in some cases, insurance policies will even cover temporary accommodation.

Those tenants who did not have insurance, their recourse depends, to an extent, on the cause of the damage. If the property sustained serious damages due to the negligence by or fault of the landlord, then tenants may have a claim against the landlord for compensation of those damages.

An example of this could be when landlords ignored tenants’ earlier requests to fix or remedy certain blatant defects in the property, such as defective window or damaged roof. Even in those cases where damage to the property was due to defective construction, a tenant has a right against the landlord. This is because such damage relates to the property itself, whose obligations are attached to the right of property ownership.

However, there are certain cases where the landlord may not be legally required to cover costs. The extent of the landlord's responsibility to compensate tenants in cases where the landlord is not directly at fault may influence the amount of compensation awarded.

Tenants should also be aware of the landlord's potential defense of force majeure. Recent events such as the storm and subsequent floods in the UAE could be considered force majeure, relieving landlords of their obligations.

Force majeure refers to unforeseeable circumstances preventing contract fulfilment. Landlords may argue that the storm was a natural disaster beyond their control. The outcome regarding force majeure in UAE courts is yet to be determined.

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Dubai RDC Upholds Landlord Right, Evicting Tenant Who Refused to Vacate

In a noteworthy development within the realm of landlords' property rights, the Dubai Rental Dispute Settlement Centre (RDC) has issued a significant judgment. The ruling establishes a pivotal precedent intended to incentivise landlords, particularly investors in real estate in the country, to play a more active role in their investments.

The case revolved around a rental dispute between a landlord and a tenant, wherein the landlord sought to regain possession of his property successfully.

Background

The landlord leased the property to the tenant on a yearly basis. In compliance with Law No. 26 of 2007 and its amended Law No. 33 of 2008, which regulate the relationship between landlords and tenants in the Emirateof Dubai, the landlord served the tenant with a 12-month legal notice to vacate the apartment, expressing the intention to reclaim it for personal use.

However, upon the expiration of the notice period, the tenant refused to vacate the premises, leading to a dispute. Subsequently, the landlord initiated eviction proceedings against the tenant in the Rental Dispute Settlement Centre (RDC). In the initial court hearing, the judgment was erroneously pronounced in favour of the tenant.

Legal Proceedings

NYK Law Firm contested for the landlord's right to regain possession of his property and pursued an appeal in the Appeal Court (RDC). The landlord's action was in accordance with Article 25(2)(d) of Law No. 33 of 2008, which stipulates that upon the expiration of the lease contract, the landlord may seek eviction of the tenant if the intention is to sell the property.

This provision mandates that the landlord must notify the tenant of the eviction reasons at least 12 months prior to the eviction date, and the notice must be served through a Notary Public or by registered mail. It's worth noting that the landlord fulfilled these conditions.

Ruling

In the appellate ruling, the Honourable Court delivered a judgment favouring the landlord, thereby instructing the tenant to vacate the property. Additionally, the court directed the tenant to settle all outstanding rental dues up to the date of eviction and to obtain all necessary clearances from authorities such as DEWA and other relevant entities.

The ruling serves to underscore the legal obligation of tenants to fulfill their commitments to landlords in accordance with the terms of the lease agreement and applicable laws. Furthermore, it reaffirms the principle that tenants are responsible for adhering to the terms of their tenancy contracts and for maintaining compliance with regulatory requirements governing the rental of properties.

Through such decisions, the legal system reinforces the importance of upholding contractual obligations and ensuring equitable relationships between landlords and tenants within the framework of the law.

Conclusion

This ruling stands as a significant motivator for landlords to diligently adhere to the laws governing tenancy agreements. By observing legal protocols and fulfilling their obligations, landlords can defend their position should they encounter disputes requiring legal intervention.

Courts are inclined to favour landlords who adhere to such legal requirements, as evidenced by the favourable judgment in this case. Moreover, the ruling sends a clear message to tenants regarding the importance of respecting the rights and responsibilities outlined in their lease agreements.

It serves as a deterrent against the misuse of legal protections afforded to tenants, emphasising the need for tenants to uphold their end of the contractual commitment. By fulfilling their obligations, tenants contribute to fostering a harmonious and equitable rental environment where both parties can confidently rely on the terms of their agreements.

In essence, this ruling not only reinforces the legal framework governing landlord-tenant relationships but also promotes a culture of compliance and mutual respect between both parties. It underscores the vital role of the legal system in safeguarding the rights and interests of landlords and tenants alike, ultimately contributing to the stability and fairness of the rental market.

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UAE Property Prices Will Slowdown Over Next 12 Months: S&P Global Ratings

The UAE’s real estate market is expected to witness a slowdown in price increases, dropping by nearly 10 per cent by the end of 2024, according to S&P Global Ratings.

Speaking at a media roundtable, Tatjana Lescova, Associate Director at S&P Global Ratings spoke about the outlook of the UAE’s real estate sector and the upcoming supply inventory that will impact the market.

“If you look at the real estate sector today, the first three months of the year (2024) saw double digit growth compared to last year and the prices are continuing to rise. So, we generally think prices will increase on a full-year basis at (the rate of) 5 to 7 per cent this year,” she said. “But this also points towards a deceleration in growth because prices in 2023 increased by almost 15 per cent.”

Lescova added that they expect demand to slow down as well in 2024, “leading towards an eventual turn in the cycle”.

“Businesses coming here will sustain the current trend for some time before the bulk of the new supply, coming in in 2025 and 2026, could result in a shift,” she continued. “So, if you ask whether a slowdown in the real estate sector will come in Q4 2024, it’s hard to point that out, but we think generally it will slow down coming over the next 12 months.”

Lescova also spoke about the impact of the recent UAE floods on the real estate market, saying “it was too early to judge.”

“I think this month (April) will see a dip in transactions, following the impact of the floods, but the long-term impact would greatly depend on the reputation of the development. But if you echo people’s experiences from different areas, this can have an impact on prices potentially,” she said.

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How to Overcome Property Handover Delays in UAE? Challenges and Solutions

When purchasing or leasing property in the UAE, timely handover is an expectation. Yet, delays can disrupt plans and cause frustration. In such instances, knowing your rights and compensation avenues is crucial.

Are you tired of facing delays in property handovers in the UAE? Look no further as we've got you covered! This article provides essential information on how to handle such delays effectively. Don't let delays ruin your dream of owning a property. Read on to find out more!

Addressing Causes and Management of Delays

There are several reasons why property handovers may be delayed, including setbacks in the construction process, issues with permits, financial constraints, or adjustments to the project timeline. While some delays may be unavoidable, developers and landlords are responsible for fulfilling their commitments to minimise inconvenience for buyers and tenants.

In the UAE, construction projects, particularly those in the public sector, frequently experience delays due to contractual, financial and technical challenges.

Construction Law in the UAE

The cornerstone of construction projects' legal framework in the UAE is the Civil Transactions Law, commonly referred to as the Civil Code. Rooted in Islamic principles, this law governs civil transactions and lays down general principles applicable to construction projects.

Legal Framework Overview

The UAE's legal system draws from three main sources of law: Federal Laws and Decrees: These laws have nationwide applicability across all Emirates, providing a uniform legal framework for construction projects.

Local Laws: Each Emirate has the authority to enact its laws, ensuring alignment with federal legislation while addressing specific regional needs and considerations.
Shariah: The legal system in the UAE is influenced by Islamic principles, which are integrated into the legal framework, particularly in matters concerning civil transactions and contracts.

Official Municipality Websites

Here is a list of official Municipality websites of each Emirate in the UAE to stay updated on legal regulations related to construction projects that can be helpful to ensure compliance with legal regulations for construction projects:

  • Al Dhafra Region Municipality
  • Abu Dhabi City Municipality
  • Al Ain City Municipality
  • Dubai Municipality
  • Sharjah Municipality
  • Municipality and Planning Department Ajman
  • Umm Al Quwain Municipality
  • Fujairah Municipality

By visiting these websites, you can access updated laws, regulations, and guidelines that are tailored to the jurisdiction of each Emirate.

Understanding Rights and Legal Protections

The UAE has regulations safeguarding the interests of property buyers and tenants facing delayed handovers which are as follows:

Developer Accountability: Developers are bound by sales and purchase agreements to deliver properties within agreed timelines. Failure to do so can lead to penalties or compensation for affected parties.
Rental Disputes Resolution: For rental properties, each emirate's Rental Disputes Centre (RDC) facilitates fair resolutions between landlords and tenants, offering a transparent process to seek compensation for delays.
Termination Options: In cases of significant delays, buyers and tenants may terminate contracts and seek refunds. However, contract terms vary, so reviewing agreements is essential.
Exploring Compensation Solutions:When confronted with handover delays, consider these compensation options:
Lease Extension: Tenants can negotiate with landlords to extend leases until handover, ensuring uninterrupted accommodation.
Financial Reimbursement: Buyers and tenants may seek compensation for incurred losses, covering additional rent, relocation expenses, storage fees, or related costs.

Navigating Contracts and Legal Recourse

Here are some legal recourse options you can explore in the event of delays in construction projects:

Review Contract Terms: Check for penalty clauses specifying compensation for delays.
Legal Action: If negotiations fail, legal recourse is available. Consulting a real estate lawyer can guide you through the process.

Managing Off-Plan Property Delays

Confirm Payments and Paperwork: Ensure all dues are settled and paperwork is complete to avoid delays stemming from overlooked tasks.
Site Evaluation: Visit the project site to assess progress and understand reasons for delays, engaging with developers for insights.

While property handover delays pose challenges in the UAE, proactive awareness of rights and compensation avenues can mitigate their impact. Regular contract reviews, legal consultations when needed and open communication with involved parties are vital. In complex situations, seeking legal assistance ensures a smooth, lawful resolution

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Remove Non-compliant Ads or Risk Fines up to Dh50,000, Dubai Realty Brokers Warned

Brokers in Dubai are required to advertise entire off-plan projects, rather than individual units, according to a recent update from the local regulator.
Advertising specific properties is deemed a violation of the permits issued by the
Real Estate Regulatory Agency (RERA), the regulator asserts.

"It has been observed that some brokers are breaching the terms and conditions for real estate advertisements by obtaining permits to market specific properties," notes RERA, emphasising that this practice will not be tolerated.

Brokers have been instructed to remove all non-compliant ads from property portals within five days, failing which they may face penalties. Violators risk fines of up to Dh50,000 and suspension for up to three months.

RERA's latest intervention aims to eliminate fake and duplicate listings of Dubai freehold properties online. In February, the authority mandated the immediate removal of ads for properties that had been sold or rented out, to uphold transparency in the property market.

The latest rules indicate that RERA is also focusing on off-plan sales marketing. The new rule requires a single brokerage firm to directly assume all responsibilities for marketing a project, rather than subcontracting it to other agencies.

Off-plan sales have continued to outstrip ready home sales in Dubai, with developers rushing to launch new projects slated for handovers between 2026-2028.

Impact on the Dubai Property Market

For brokers, the cap of three brokers per property ad fosters equitable competition and declutters listing portals, enabling prompt identification of market trends.

For sellers and developers, it means diminished competition from unverified listings and enhanced accuracy in pricing trends.

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Convenient Service: You Can Now Access Sharjah Property Ownership Deeds on UAE Pass

Sharjah's Real Estate Registration Department has introduced a convenient new service allowing customers to access ownership and usufruct deeds through the UAE Pass app, making it the first government entity in the emirate to offer this feature.

Through the UAE Pass digital identity app, customers can now download various types of deeds, including ownership and private benefit deeds (such as ownership deed, joint ownership deed, usufruct deed, or joint usufruct deed), directly onto their mobile devices.

Abdul Aziz Ahmed Al-Shamsi, Director-General of Sharjah Real Estate Registration Department, emphasised the department's commitment to providing a seamless and efficient experience for customers. He stated: "We aim to facilitate smooth transactions for our customers by ensuring they can complete their tasks quickly and effectively. This aligns with our strategic objectives to deliver services according to the highest global standards."

The "UAE Pass" serves as the nation's primary digital identity for all citizens and residents, enabling users to securely access services from local and federal government agencies without the need to physically visit service centers.

The initiative underscores the UAE's commitment to digital transformation and enhancing public service delivery through innovative digital solutions.

(The writer is a legal associate at NYK Law Firm, one of the top legal consultants in Dubai)

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Starting April 1, Landlords in Dubai Need Legal Order to Seek Rent Re-evaluation

Starting April 1, 2024, Dubai landlords are required to obtain a legal order before seeking a rent re-valuation.
Dubai landlords still have the option to apply for a rent re-valuation through the Real Estate Regulatory Authority (RERA) if they believe they are entitled to a higher rental rate than suggested by the updated Rental Index.

However, they must adhere to new requirements set by the RERA, which mandate the attachment of a judgment or legal order to their re-valuation request. This requirement applies to all rent re-valuation requests made from April 1, 2024 onwards.

According to the Ejari portal, landlords must initiate the process through the Rental Dispute Centre (RDC) and file a case to obtain the necessary legal order.

Previously, landlords could apply for a rental evaluation to adjust their rental rates based on the outdated calculator.

This recent change marks a shift from the previous practice where landlords could pay a fee to the Dubai Land Department for rental valuations, as noted by property management firm Allsopp & Allsopp Group.

The updated RERA Rental Index calculator now serves as the sole reference for calculating rental increases, following its update on March 1, 2024. Consequently, landlords are no longer permitted to raise rental prices above the benchmark provided by the calculator.

While landlords retain the option to request re-evaluations, the process for obtaining a revaluation certificate has undergone modifications, according to a statement from Allsopp & Allsopp.

Anisha Sagar, Director of Property Management at Allsopp & Allsopp Group, highlighted the significance of this change, citing that as of the first quarter of 2024, approximately 72,885 rental contracts have been renewed in Dubai, involving 145,770 tenant and landlord decisions.

Given this substantial volume, utilising the RERA calculator as the definitive source for rental adjustments is deemed logical.

The introduction of legal requirements ensures that valuation changes are scrutinised fairly against the updated calculator, providing assurance to both landlords and tenants alike.

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DLD’s New Collaboration to Enhance Opportunities for Emiratis in the Real Estate Sector

The Dubai Land Department (DLD) announced a significant collaboration with nine prominent developers, both private and government-backed, to boost job opportunities for Emiratis in the real estate sector.

The agreement, signed with companies including Emaar Properties, Expo Dubai, and Damac Properties, aims to allocate a portion of their projects, ranging from 10 to 15 per cent, to be sold exclusively through Emirati brokers.

This initiative is part of the "Dubai Real Estate Programme," designed to empower local talent and facilitate their advancement within the real estate industry.

Alongside project allocation, the agreement includes provisions for offering guidance, professional training, and ongoing support to Emirati professionals. The objective is to attract more nationals to the private sector and enhance their expertise, enabling them to establish successful ventures in real estate.

Following the surge in Dubai's real estate sector post-pandemic, there has been a notable increase in job opportunities, particularly in brokerage services.

The demand from both local and international investors has led to the establishment of numerous brokerage firms. Recognizing this trend, DLD aims to further expand its network by collaborating with additional developers in the near future.

The programme's primary goal is to boost Emirati participation in the real estate market. By encouraging their involvement in real estate activities, the initiative seeks to enhance their contribution to one of Dubai's key economic sectors.

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Legal Framework and Regulations Governing Property Mortgages in UAE

The real estate market in the UAE has experienced significant growth, attracting investors globally. An important aspect of property ownership in the UAE is having a thorough understanding of the legal framework governing property mortgages.

It is essential for property owners, investors and lenders involved in real estate dealings in the UAE to have a solid grasp of UAE property mortgage laws.

By familiarising themselves with the fundamental concepts, processes and legal considerations highlighted in this article, stakeholders can effectively navigate mortgage transactions and safeguard their interests in the ever-evolving UAE property sector.

Key Concepts of UAE Property Mortgage Law

Definition: A mortgage is a legal contract where a property owner (mortgagor) pledges their property as collateral to secure a loan from a lender (mortgagee). The lender maintains a lien on the property until the loan, including principal and interest, is fully repaid.

Mortgage Registration: All property mortgages in the UAE must be registered with the respective emirate's land department to be legally binding. This process involves submitting the mortgage agreement and necessary documents to the land department and paying the required registration fees.

Mortgage Priority: The priority of a mortgage determines its position concerning other creditors' claims on the property. Typically, mortgages are ranked based on their registration date and time with the land department, with earlier registrations holding higher priority.

Rights and Obligations: Property mortgages in the UAE grant specific rights and responsibilities to both the mortgagor and mortgagee. While the mortgagor retains property ownership and possession, the mortgagee has the authority to enforce the mortgage in case of default by the mortgagor.

Procedures for Property Mortgage Transactions

Negotiation and Agreement: The process commences with negotiations between the mortgagor and mortgagee to establish the terms and conditions of the mortgage, such as loan amount, interest rate, repayment schedule, and other relevant terms.

Execution of Mortgage Agreement: Upon reaching a mutual understanding, the parties proceed to execute a mortgage agreement that outlines the terms of the mortgage. This agreement must adhere to the legal requirements set forth by UAE law and must be signed by all parties involved.

Registration Process with Land Department: Following the execution of the mortgage agreement, along with the submission of necessary documentation, the agreement is presented to the land department of the relevant emirate for registration. Once registered, the mortgage is officially documented in the land registry, serving as notice to third parties regarding the mortgagee's stake in the property.

Funds Disbursement: Upon successful registration, the mortgagee releases the loan funds to the mortgagor in accordance with the agreed-upon terms. The mortgagor can utilise these funds for property acquisition, development, or other purposes, as outlined in the mortgage agreement.

Legal Considerations for Property Stakeholders

Conducting Due Diligence: Prior to finalising a mortgage agreement, property owners and investors should conduct thorough due diligence on the property, lender and mortgage terms to mitigate risks and ensure compliance with legal regulations.

Sharia Compliance: In instances where Islamic financing structures like Murabaha or Ijara are utilised, all parties must ensure adherence to Sharia principles governing financial and property transactions.

Default and Foreclosure Awareness: Property owners should understand the implications of defaulting on mortgage payments, which could lead to foreclosure proceedings initiated by the mortgagee to recover the outstanding debt by selling the mortgaged property.

(The writer is a legal associate at Dubai-based NYK Law Firm)

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Understanding Due Diligence on Properties in the UAE: Be Well-informed and Protected

Conducting due diligence is an essential step that involves extensive research and examination before entering into any property agreement, especially for those looking to invest in UAE real estate.

This step is highly recommended by property lawyers in the UAE as it ensures that you are well-informed and protected before making any purchase.
When it comes to conducting due diligence on properties in the UAE, the process can be overwhelming without proper guidance.

To make things easier, here’s a list of frequently asked questions to ensure you are well-informed before making any property-related decisions.

What is Due Diligence When Buying Property in the UAE?

Due diligence is a thorough check-up conducted before purchasing a property in the UAE. It involves examining every aspect, from legalities to the physical condition of the property, to ensure a safe and informed investment.

What is the Importance of Due Diligence?

Due diligence is essential to comprehend the property's true nature, identify any potential risks or issues, and ensure a smooth transaction process. It provides peace of mind and safeguards against unexpected complications.

What is the Process?

Due diligence entails several steps, including reviewing property titles, conducting physical inspections, verifying financial aspects, researching the neighbourhood and identifying any legal disputes or historical issues associated with the property.

Start by reviewing the property's title deed to confirm ownership, any existing mortgage agreements and accurate property specifications. Obtain copies from the property developer or seller and conduct a title search at the Dubai Land Department to verify ownership and identify any legal encumbrances.

Employ a licensed technical inspection company to verify the property's dimensions and physical condition, ensuring there are no defects or discrepancies. This step provides assurance and confidence in the property's condition before proceeding with the transaction.

After completing due diligence, draft a Memorandum of Understanding (MoU) to outline the key terms of the property transaction. Ensure that any additional terms and conditions are attached as addendums to Form F, which must be signed and recorded with the Dubai Land Department.

Who are the Professionals Involved?

To conduct proper due diligence on the property's title deed, ensure you have the necessary power of attorney from the seller or developer. Consider seeking assistance from the best lawyers to guide you through the process and ensure legal compliance.

Professionals such as lawyers, surveyors and real estate agents play crucial roles in the due diligence process. They provide expertise in legal matters, property inspections, and market insights to facilitate a seamless transaction.

What are the Timelines and Costs?

The duration of due diligence varies depending on the property's complexity but typically takes a few weeks to a couple of months. While there are associated costs with hiring professionals, the investment is worthwhile for the security and confidence it brings to the purchase.

What are the Common Pitfalls?

Pitfalls in due diligence include overlooking ownership laws, cultural or legal misunderstandings, developer reputation, contractual complexities and inadequate dispute resolution planning. Engaging knowledgeable professionals helps mitigate these risks.

Also, sellers may attempt to make alterations to the property after due diligence, so conduct a final check closer to the transfer date to ensure the property status remains unchanged.

Stay proactive, stay informed and take the support of legal experts to navigate the complexities of property due diligence with ease.

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Landlords Can’t Kick Out Tenants Without Valid Reason; Notice is Must

 Renting a property provides individuals with a place to call home. When you rent a place to live in the UAE,  you have rights and responsibilities. The law protects tenants and landlords alike. However, tenants might worry about being kicked out suddenly.

This article explains the rules for  eviction in the UAE  and what rights tenants have. The relationship between landlords and tenants in the UAE is mainly regulated by Federal Law No. 26 of 2007, also known as the UAE Tenancy Law .

This law sets out the rights and duties of both parties and provides guidelines for various rental matters, including evictions.  Each emirate may also have its own rules that work together with the federal law.

According to the UAE Tenancy Law, landlords must follow specific procedures when evicting tenants. These typically involve giving tenants a written notice of eviction, stating the reasons clearly.

Valid reasons for eviction might include not paying rent, breaking lease terms, or the landlord wanting to use the property for themselves or their family. Landlords usually have to give tenants a notice period before starting eviction proceedings. The length of this period might vary depending on the reason for eviction and the terms of the lease.

Generally, tenants should get at least 30 days' notice if they're being evicted because of rent arrears or lease violations. But longer notice might be needed for other reasons, like ending the lease agreement.

Tenant Rights

Right to Notification: Tenants have the right to written notice from their landlords before being evicted. The notice should explain why they're being evicted and how much notice they'll get.
Right to Challenge: If tenants think the eviction is unfair or illegal, they can challenge it legally. This might mean getting legal advice, complaining to the right authorities, or disputing the eviction in court.
Right to Redress: In some cases, tenants might be entitled to compensation or help finding a new place if they're evicted unfairly or without proper notice. Landlords who don't follow eviction procedures might face penalties under the UAE Rent Law.

In short, landlords in the UAE can't usually evict tenants without warning or a good reason. The laws around eviction are there to protect tenants and make sure they're treated fairly.

Tenants should know their rights and what to do if they're facing an unjust or illegal eviction. Getting legal advice can help tenants avoid evictions without notice and stand up for their rights.

(The writer is a legal associate at Dubai-based NYK Law Firm)

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004Follow The Law Reporters on WhatsApp Channels.

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Know Your Rights as a Tenant for a Stress-Free Tenancy in the UAE

Are you a tenant in the UAE feeling overwhelmed or uncertain about your rights? Don't fret! Understanding your rights as a tenant is key to ensuring a harmonious and stress-free living experience.

Whether you're renting an apartment, villa, or commercial space, familiarising yourself with your rights can empower you to navigate any challenges with confidence and ease.

Here's a breakdown of your rights as a tenant in the UAE:

Security of Tenure: As a tenant, you have the right to occupy the property for the duration specified in your lease agreement. Your landlord cannot arbitrarily evict you without a valid reason or proper legal procedures.

Fair Rental Contract: Your lease agreement should clearly outline the terms and conditions of your tenancy, including rent amount, payment schedule, maintenance responsibilities, and any additional fees. Ensure that the contract is fair and compliant with UAE laws.

Privacy and Peaceful Enjoyment: You have the right to privacy and peaceful enjoyment of the rented property. Your landlord must respect your privacy and cannot enter the premises without prior notice except in cases of emergency or legal requirements.

Maintenance and Repairs: It is the landlord's responsibility to maintain the property in a habitable condition, ensuring that essential services (such as water, electricity, and sanitation) are functioning properly. The landlord should promptly address any necessary repairs at no cost to the tenant.

Security Deposit: Upon signing the lease agreement, you may be required to pay a security deposit to the landlord. This deposit should be refunded to you in full at the end of the tenancy, minus any legitimate deductions for damages beyond normal wear and tear.

Rent Increases: Your landlord cannot increase the rent arbitrarily. Any proposed rent increase must adhere to the guidelines set by the Real Estate Regulatory Agency (RERA) and should be communicated to you in writing with sufficient notice.

Dispute Resolution: In the event of a dispute between you and your landlord, both parties have the right to seek resolution through amicable negotiation, mediation, or legal channels such as the Rental Dispute Settlement Center (RDSC) or Dubai Courts.

In addition to the above, there are specific laws and regulations that can empower tenants to assert their rights:

Rent Disputes Settlement Centre (RDSC): Established in Dubai, the RDSC is a specialised judicial body that resolves rental disputes between landlords and tenants. It offers mediation and arbitration services to help parties reach amicable settlements or issue binding judgments when necessary.

Rent Increase Caps: In Dubai, the Rental Increase Calculator issued by the Dubai Land Department sets limits on how much landlords can increase rents based on various factors such as the current market rent, property type, and location. This helps protect tenants from arbitrary rent hikes.

Ejari System: The Ejari system, managed by the Real Estate Regulatory Agency (RERA), requires all rental contracts in Dubai to be registered online. This ensures transparency and legal protection for both landlords and tenants, as well as facilitates dispute resolution processes.

Tenancy Contracts: According to UAE law, all tenancy contracts must be in writing and registered with the relevant authorities. The contract should include essential terms such as the parties involved, rent amount, payment schedule, duration of tenancy, and terms of renewal or termination.

Security Deposit Limits: While there is no specific federal law governing security deposits in the UAE, local regulations may set limits on the amount landlords can charge as a security deposit. For example, the security deposit in Dubai is typically limited to 5% of the annual rent.

Notice Periods for Eviction: UAE law stipulates specific notice periods landlords must provide tenants before initiating eviction proceedings. The notice period varies depending on the reason for eviction and the emirate in which the property is located.

Knowledge is power! By familiarising yourself with your rights as a tenant in the UAE, you can confidently assert your rights and protect your interests throughout your tenancy.

If you ever encounter any issues or uncertainties, don't hesitate to seek guidance from legal professionals or relevant authorities. Your comfort and peace of mind in your rented space matter, and knowing your rights is the first step towards achieving a harmonious living environment.

(The writer is a legal associate at Dubai-based NYK Law Firm)

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004Follow The Law Reporters on WhatsApp Channels.

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Sharjah Consultative Council Approves Draft Law on Real Estate Leasing for 2024

Sharjah Consultative Council (SCC) has endorsed a draft law concerning the leasing of real estate in the northern emirate for the year 2024, following the introduction of several amendments during the sixth meeting of the first regular session of the eleventh legislative term.

This marks the second draft law to be deliberated by the Council at the onset of its activities for the eleventh legislative term, Wam reported.

During the session chaired by Dr Abdullah Belhaif Al Nuaimi, the Council deliberated on the real estate leasing draft law and examined the report presented by the Legislative and Legal Affairs, Appeals, Suggestions, and Complaints Committee of the Council.

Counselor Dr Mansour Mohammed bin Nassar, Head of the Legal Department of the Government of Sharjah, praised the development, emphasising the significance of the current draft law as it establishes a framework that contributes to Sharjah's progress and its commitment to regulating landlord-tenant relationships in accordance with existing laws in the emirate.

"Sharjah is an attractive environment for investors and families, hence the need for robust laws and regulations governing real estate transactions, including purchases, sales and other property rights, all of which will be addressed by the draft law," he said.

"Given that the previous law dates back to 2007, approximately 17 years ago, there is a pressing need to amend it to keep pace with developments and meet the evolving needs of all parties involved," the Counselor added.

Khaled Falah Al Suwaidi, Director of Customer Service at Sharjah Municipality, highlighted that the draft law includes regulatory provisions that align with the vision to enhance tourism, investment and residential appeal in the northern emirate.

"The current wording of the draft law addresses the societal living conditions and brings together all relevant stakeholders under an organised legal framework that reflects the developments and demand in the real estate sector of the emirate," he added.

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Unified Vision: Realty Giants Nakheel and Meydan Merge Under Dubai Holding

 

Real estate giants Nakheel and Meydan have merged with Dubai Holding, as declared by His Highness Sheikh Mohammed bin Rashid, Vice President and Prime Minister of the UAE and Ruler of Dubai, today.
H.H Sheikh Ahmed bin Saeed will oversee Nakheel and Meydan's integration into Dubai Holding, according to the Executive Office.

Both Nakheel and Meydan's boards of directors will be dissolved as they amalgamate with Dubai Holding. This integration aims to sustain and propel growth through a unified vision, leveraging Dubai's global competitiveness, the Executive Office noted.

His Highness Sheikh Mohammed stated: "In a significant stride towards reinforcing our economic growth, we have directed the incorporation of Nakheel and Meydan into Dubai Holding." His Highness highlighted the formation of a global economic entity, led by Sheikh Ahmed bin Saeed Al Maktoum, diversifying across sectors like technology, media, hospitality, real estate and retail.

The objective is to establish a financially efficient entity with assets worth hundreds of billions, equipped with global expertise to compete regionally and globally, aligning with national objectives and the Dubai Economic Agenda D33, Sheikh Mohammed added.

Dubai Holding, established in 2004, has been dedicated to nurturing an innovation-driven, knowledge-based economy, managing a portfolio including Jumeirah Group, Dubai Properties and Tecom Group. The latter operates 10 business clusters, with Dubai Internet City and Dubai Media City as its flagships.

Nakheel and Meydan have introduced various projects across sectors such as property, retail, hospitality, leisure, and healthcare. Joining Dubai Holding will further diversify the conglomerate's operations across property, tourism, hospitality, leisure, entertainment and investments.

The strategic amalgamation aims to leverage synergies, diversify the economy and enhance competitiveness in the global market, the Executive Office said. It aims to address the growing demand for specialized services globally and capitalise on emerging opportunities for long-term global demand.

Dubai Holding's inception aligns closely with the emirate's ambition to become a global business and tourism hub. The company has spearheaded key projects in the emirate, including Madinat Jumeirah, Dubai Studio City, Dubai International Academic City and vital entities like Dubai Media City and Dubai Internet City. Its subsidiary, Tecom Group, manages business districts and oversees developments like Dubai Design District and Dubai Industrial City, while still retaining Dubai Holding's stake.

Investments and joint ventures under Dubai Holding encompass Dubai Hills Estate, du, Rove Hotels, and Dubai Waste Management Centre, alongside projects like City Walk, La Mer, and Bluewaters Island.

The conglomerate's entertainment division includes renowned developments such as Global Village, Ain Dubai, Dubai Parks and Resorts, Roxy Cinemas and Wild Wadi, along with radio stations like Dubai 92, Dubai Eye, and Virgin Radio.

Presently, Dubai Holding boasts assets worth Dh130 billion ($35.4 billion) spanning over a dozen countries. 

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It’s Right Time to Claim Your Slice of the Dubai Dream; Follow TLR Realty Tips

Investing in property in Dubai offers promising prospects for long-term gains. The city boasts a favourable property price-to-rent ratio, suggesting potential capital appreciation in the future. Dubai's real estate market remains robust, attracting investors seeking diversification and high returns.

Recent data indicates that investments in Dubai's real estate reached $100 billion in 2023, with a projected five per cent growth in 2024, aligning with the UAE's 4.5 per cent economic growth.

With Dubai's residential real estate market predicted to experience a 15 per cent growth rate in 2024, it's an opportune moment for investors to acquire properties at reasonable prices and benefit from high annual yields, with profit margins ranging from five per cent to nine per cent.

When contemplating property acquisition in Dubai, it's essential to grasp both the legal landscape and the various advantages associated with investing in this dynamic city. Understanding the legal aspects ensures compliance with regulations, while recognising the benefits empowers buyers to make informed decisions.

Let's explore the legal framework and benefits of property purchase in Dubai.

Legal Procedures

Purchasing property in Dubai involves navigating legal procedures and administrative requirements. By understanding the legal framework, steps involved and key considerations, buyers can make informed decisions.

Legal Framework: Law No. 7 of 2006 serves as the primary legislation governing property ownership in Dubai. This law allows UAE and GCC residents to purchase property anywhere in Dubai. Foreign nationals, however, can buy property in designated areas classified as freehold or leasehold.

Freehold and Leasehold Ownership: Freehold ownership grants full ownership rights to the property without any restrictions, whereas leasehold ownership allows individuals to own the property for a set period, typically up to 99 years.

Steps to Buying Property in Dubai

Prepare the Buyer-Seller Contract: Negotiate terms with the seller and draft a precise contract outlining pricing, payment methods, and terms to avoid misunderstandings.
Sign the Real Estate Sale Agreement: Download the sale contract (Form F) from the Dubai Land Department (DLD) website, customise it as needed, and sign it in the presence of a witness.

Apply for No Objection Certificate (NOC): Obtain an NOC from the developer to finalise ownership transfer, ensuring there are no outstanding charges on the property.
Transfer Ownership at Registrar’s Office: Submit required documents, pay fees and receive approval for ownership transfer, resulting in the issuance of a new title deed in the buyer’s name.

Administrative Costs: Administrative fees for property purchase in Dubai include Dh580 for issuing the title deed and four per cent of the property value as fees payable to the Dubai Land Department (DLD).

Buying Property Without an Agent: Direct purchases from developers or individual sellers are possible in Dubai, bypassing the need for a real estate agent.

Role of Trustee Offices: Trustee offices in Dubai act as intermediaries authorised by the DLD to oversee property registration, manage mortgages and facilitate transactions, ensuring compliance with regulations and maintaining market integrity.

Understanding Title Deeds: A title deed issued by the DLD certifies property ownership and outlines legal rights, including the right to use, mortgage, sell or lease the property. It contains essential details such as owner name, property location, size and type.

TLR Tips for Property Purchase

  • Deal only with RERA-registered real estate agents.
  • Ensure documents in foreign languages are attested and translated into Arabic.
  • Complete transactions within 60 days of contract signing.
  • Prominent freehold districts for foreign buyers include Arabian Ranches, Palm Jumeirah, Dubai Marina and Downtown Dubai.

Benefits of Investing in Dubai Realty Market

Dubai has emerged as a hotspot for property investment, attracting individuals and businesses from around the world. From its strategic location to its tax-free environment, Dubai offers a multitude of advantages for property buyers, making it an attractive proposition.

High Returns on Investment: Dubai's real estate market has witnessed remarkable growth, with property values appreciating steadily. This presents an opportunity for property owners to enjoy substantial capital gains over time, making it an attractive destination for investors seeking high returns on their investments.

Tax-Free Environment: One of the most appealing aspects of buying property in Dubai is the lack of property and income taxes. This tax-free environment allows investors to maximize their returns without the burden of additional tax obligations, making Dubai an enticing option for property buyers.

Strategic Location: Situated between Europe, Asia, and Africa, Dubai serves as a strategic hub for international business and commerce. Its advantageous location enhances the potential for rental income and capital appreciation, making it an appealing option for property investors seeking global connectivity.

Stable Economy: Dubai boasts a stable and diversified economy, supported by key sectors such as tourism, finance, real estate, and logistics. The city's commitment to economic diversification and infrastructure development ensures a conducive environment for property owners, minimizing risks and enhancing long-term stability.

World-Class Infrastructure: Dubai's infrastructure is renowned for its modernity and sophistication. The city offers state-of-the-art amenities, including world-class transportation systems, healthcare facilities, educational institutions and entertainment options. This quality infrastructure enhances the desirability of properties, attracting both residents and investors.

Safety and Security: Dubai is known for its high levels of safety and security. The government has implemented stringent measures to maintain law and order, ensuring a peaceful living environment for residents and investors alike. This factor instils confidence in property buyers, making Dubai a preferred destination for real estate investment.

Cultural Diversity: Dubai actively embraces cultural diversity, welcoming people from all around the world to reside and work in its cosmopolitan environment. The city's diverse population fosters a vibrant social scene, offering a rich tapestry of cuisines, festivals, and cultural experiences for residents to enjoy.

Lifestyle and Entertainment: Dubai epitomises luxury and opulence, providing residents with access to unparalleled lifestyle amenities and entertainment options. From lavish hotels to high-end shopping centres and exquisite dining establishments, Dubai offers a high-quality lifestyle that appeals to discerning individuals.

Residency Opportunities: Purchasing property in Dubai provides a residency opportunity, enabling individuals to enjoy the city's benefits, including access to healthcare, education and other essential services. Depending on the property's value, investors may be eligible for a renewable residency visa, making Dubai an attractive option for those seeking long-term settlement or investment.

Future Growth Potential: Dubai continues to invest in ambitious projects and initiatives, positioning itself as a global destination for business, tourism, and innovation. The city's forward-thinking approach and commitment to growth indicate the potential for future appreciation in property values, making it an attractive long-term investment option for savvy investors.

Dubai presents a compelling proposition for investors looking to capitalide on the city's growth and prosperity. Whether you're seeking a lucrative investment opportunity or a luxurious lifestyle, Dubai's real estate market has something to offer for everyone.

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004Follow The Law Reporters on WhatsApp Channels.

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Rental Disputes Centre Signs Deal with Tarahum Charity Foundation

Rental Disputes Centre (RDC), the judicial arm of Dubai Land Department (DLD), has inked a memorandum of understanding (MoU) with the Tarahum Charity Foundation to strengthen their strategic partnership in community and charitable endeavours.

Aligned with the commitment to realise the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, the collaboration aims to provide support to citizens and residents dealing with rental issues and judicial rulings.

The agreement between the two parties aligns with the UAE’s directives to foster partnerships between the public and private sectors and enhance cooperation in areas of mutual interest.

The MoU was signed by Judge Abdulqader Mousa Mohammed, Chairman of the Rental Disputes Centre at Dubai Land Department, and Osama Ibrahim Seddiqi, Vice Chairman of the Board of Directors of Tarahum Charity Foundation.

The signing ceremony was attended by Eng. Marwan bin Ghalita, CEO of the Real Estate Regulatory Agency at the Dubai Land Department, Judge Abdulaziz Abdulrahman Anwahi, President of ‘Yadul Khair’ committee and Mohammad Al Mulla, Deputy Director General of Tarahum Charity Foundation.

Judge Abdulqader Mousa Mohammed said: “The Rental Disputes Centre is steadfast in its mission to provide aid and support to families facing rental disputes. Our partnership with the Tarahum Charity Foundation marks a crucial stride in realising our vision, aligning with the directives of our esteemed leadership to strengthen collaboration between the government and private sectors in pursuit of the emirate’s goals.

We are pleased with this partnership and anticipate further enhancing the role and impact of the ‘Yadul Khair’ committee within the RDC, embodying the humanitarian ethos that defines Dubai.”

As outlined in the memorandum, the collaboration aims to define a framework and parameters for the partnership between the two entities, with the goal of realising their vision, strategic goals, and satisfying stakeholders. This involves fostering cooperation through community involvement, as well as promoting and advertising shared ventures through suitable media channels and effective methods.

Osama Ibrahim Seddiqi said: “The memorandum of understanding aims to establish an institutional partnership with steady steps and clear visions to serve and assist individuals facing rental issues and judicial rulings in Dubai.”

He emphasised that the joint effort aims to assist humanitarian cases affected by rental lawsuit issues and resulting judicial rulings from the Rental Disputes Centre. He also underpinned that this memorandum would serve as a beacon of hope for struggling families to start a new life, bringing happiness back to them.

He also highlighted the role of RDC in achieving precise and speedy justice, providing both judicial and humanitarian services and promoting tolerance in UAE society through an integrated judicial system focused on consolidating a secure real estate environment, underscoring that the Tarahum Charity Foundation greatly prioritises assisting all segments of society, considering it a top priority.

Judge Abdulaziz Abdulrahman Anwahi affirmed that this initiative aims to support humanitarian cases affected by rental disputes in Dubai and alleviate their burden during the holy month of Ramadan. He emphasised that the RDC handles many humanitarian cases, which the centre prioritises over material concerns in line with the law and ethos of Dubai.

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Understanding Rent Increase in the UAE: Legal Implications and Tenant Rights

Renting a property in the UAE can be a complex process, particularly when it comes to rent increases. Given the dynamic real estate market and the influx of expatriates, it is crucial for both landlords and tenants to have a clear understanding of the legal framework surrounding rent hikes.

This article aims to explore the intricacies of rent increase regulations in the UAE, shedding light on the legal implications and tenant rights associated with such changes.

In the UAE, the relationship between landlords and tenants is governed by Federal Law No. 26 of 2007, commonly known as the UAE Tenancy Law, along with its subsequent amendments. Additionally, each emirate may have its own regulations pertaining to rental matters.

However, the UAE Tenancy Law applies to all emirates unless otherwise specified. Under the UAE Tenancy Law, landlords are allowed to increase the rent of residential properties under certain circumstances.

These circumstances typically include the completion of the lease period, which is usually set at one year, or if the current rent is significantly lower than the average market rate for similar properties in the vicinity. However, any rent increase must comply with the guidelines outlined in the law.

Legal Implications

Notice Period: Landlords are obligated to provide tenants with sufficient notice before implementing a rent increase. Generally, this notice period ranges from 90 to 180 days, depending on the emirate and the terms specified in the tenancy contract. Failure to provide adequate notice can render the rent increase invalid.

Limitations on Increase: The UAE Tenancy Law imposes restrictions on the extent to which landlords can increase the rent. While there is no specific cap mentioned in the law, rent hikes must be justifiable and reasonable. Any arbitrary or excessive increase beyond the prevailing market rates may be considered unlawful.

Dispute Resolution: In the event of a disagreement between landlords and tenants regarding a rent increase, both parties have the option to seek resolution through appropriate channels. This may involve filing a complaint with the relevant rent dispute committee or utilising mediation services provided by governmental authorities.

Tenant Rights

Right to Challenge: Tenants have the right to challenge any proposed rent increase that they believe is unjust or unreasonable. They can provide evidence, such as market comparisons or rental valuation reports, to support their case.

Protection from Retaliation:Landlords are prohibited from retaliating against tenants who exercise their rights or express concerns about rent increases. Any form of harassment, eviction threats, or arbitrary lease terminations in response to such actions is illegal and can lead to legal consequences for the landlord.

Renewal Options: When the tenancy contract expires, tenants have the choice to renew the lease under mutually agreed terms. Landlords cannot force tenants to accept a rent increase as a condition for renewal if it violates the provisions of the UAE Rent Law.

Rent increases in the UAE are governed by strict legal regulations designed to safeguard the rights of both landlords and tenants. It is crucial for individuals to understand the legal framework surrounding rent hikes, including notice periods, limitations, and dispute resolution mechanisms, in order to ensure a fair and transparent rental market.

Tenants should be aware of their rights and the options available to them in the event of unjustified rent increases, while landlords must adhere to the prescribed procedures to avoid legal consequences.

By upholding principles of fairness and compliance with the law, the rental landscape in the UAE can foster harmonious relationships between landlords and tenants.

(The writer is a legal associate at Dubai-based NYK Law Firm)

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004Follow The Law Reporters on WhatsApp Channels.

 

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Thinking About Buying Property in UAE? Here are 5 Important Tips to Remember

Whether you're seeking lucrative rental yields, capital appreciation, or a dream vacation home, the UAE's real estate landscape offers a wealth of opportunities for astute investors.

Embrace the journey, seize the opportunity, and unlock the untapped potential of the dazzling world of UAE real estate, where opulent skyscrapers, sun-kissed beaches, and unrivalled luxury make it an ideal destination for investors from around the globe.
If you're
thinking about investing in property here, we've got some simple tips to help you get started.

Choose a Location that Aligns With Your Lifestyle

From the glitzy metropolis of Dubai to the cultural tapestry of Abu Dhabi and the tranquil shores of Ras Al Khaimah, the UAE is a treasure trove of diverse real estate opportunities. Each emirate boasts its unique charm, lifestyle offerings, and investment potential. Delve into the heart of each location, considering factors like infrastructure, proximity to amenities, and future development plans to unearth the perfect investment gem that aligns with your vision.

Understanding Legal and Regulatory Framework

As you embark on your UAE property investment journey, navigating the legal landscape is paramount. Familiarise yourself with the laws and regulations governing property ownership, foreign investment, and residency visas. Stay abreast of recent regulatory changes, taxation policies, and compliance requirements to ensure a smooth and legally sound investment process. Consulting with legal experts specialising in UAE real estate law can provide invaluable guidance and peace of mind.

Stay Informed About Market Trends

The UAE's real estate market is a dynamic ecosystem influenced by a myriad of economic factors, geopolitical events, and market trends. Stay ahead of the curve by immersing yourself in market intelligence and analysing key indicators such as rental yields, occupancy rates, and demand-supply dynamics. Identify emerging investment hotspots, anticipate market shifts, and capitalise on lucrative opportunities to maximise your investment returns.

Choose Reputable Developers

When venturing into off-plan properties or new developments, partnering with reputable developers is paramount. Conduct thorough due diligence on developers' track records, past project deliveries, and reputation for quality and transparency. Look for industry accolades, customer testimonials, and regulatory certifications as hallmarks of excellence. Aligning yourself with trusted developers ensures a seamless investment experience and mitigates potential risks.

Financial Planning and Investment Strategy

As with any investment endeavors, prudent financial planning is key to success in UAE property investment. Define your investment objectives, set a realistic budget, and explore financing options tailored to your needs. Consider factors such as mortgage rates, loan tenure, and repayment terms when structuring your financial strategy. Leverage the expertise of financial advisors to optimise your investment portfolio and mitigate financial risks effectively.

Investing in property is a journey, and with the right knowledge and guidance, you can turn your real estate dreams into reality in the vibrant landscape of the UAE. Happy investing!

The writer is a legal associate at NYK Law Firm, Dubai

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004Follow The Law Reporters on WhatsApp Channels.

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Can't Afford Your Flat? Don't Sweat! Some UAE Banks Offer to Pay Rent in Advance

Rental expenses constitute a significant portion of the monthly outlay of most residents in the UAE, often ranking as the primary expenditure in their budgets, whether monthly or annually.

Over the past three years, rental prices in the UAE have steadily increased, driven by a substantial influx of foreign workers and the robust expansion of the economy. According to reports, in the final quarter of 2023, average apartment rents in Abu Dhabi saw a 2.0 per cent year-on-year rise, while villa rents increased by 0.8 per cent per cent. Similar upward trends were observed in Dubai and the Northern Emirates during 2023.

Dubai alone recorded 205,346 new rental contracts and 293,624 renewals, indicating the enduring demand in the rental market. Projections indicate that rental rates will continue to climb in 2024, albeit at a slightly slower pace.

To address the challenges posed by escalating rents, several local banks offer a 'rent in advance’ service to alleviate the financial strain on their customers.

Which are the Banks Offering this Facility?

Dubai Islamic Bank: The largest Shariah-compliant lender in the UAE, offering the 'rent in advance’ facility through Al Islamic Finance.

HSBC Bank: Provides customers with the option to pay rent in advance through a ‘Rent Loan,’ with an annual percentage rate starting from 7.24%. This rate is available to Premier customers employed by an HSBC-listed company, who transfer their salaries to HSBC.

Ajman Bank: Offers rent payment through its Shariah-compliant personal finance scheme, ‘Service Ijarah,’ allowing customers to use the service for a predetermined period in exchange for agreed-upon rent.

First Abu Dhabi Bank:Allows tenants to manage rent payments with the bank’s credit card, offering interest-free easy payment options for rent and property fees.

Al Hilal Bank: Assists tenants facing financial difficulties with rent payment through the ‘Rent Finance’ scheme, offering payment tenure of up to one year with competitive rates. Requirements include a minimum salary of Dh5,000, a valid passport and visa, and a six-month bank statement, among others.

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UAE Announces New Federal Law to Manage Government Properties

The UAE Ministry of Finance has unveiled Federal Decree-Law No. 35 for 2023, focused on enhancing the legislative framework for the inventorying and administration of government properties.

The decree encompasses the organisation of all federal assets, be they real estate or otherwise, with the overarching goal of more effectively managing and enhancing the financial resources of the federal government both domestically and internationally.
By implementing leading global practices, the law aims to streamline the governance of federal assets, optimise their utilisation and promote sustainable growth.

Furthermore, it aspires to elevate the country's global competitiveness rankings and bolster its credit rating.
The new legislation mandates the development of a cutting-edge electronic platform to catalog federal real estate properties, enhancing their protection, oversight, and upkeep. This initiative strengthens asset security and fosters transparency, in line with the country's digitalisation efforts.

The law provides clarity on the definition and registration procedures for federal real estate assets, addressing uncertainties in their management and utilisation.

It introduces strategies for optimising government asset returns by enabling efficient leasing and usage while accommodating the specific requirements of federal entities.

Under the decree-law, federal government assets encompass various properties used for public services such as roads, railways and bridges, including movable assets supporting these properties referred to as "real estate by allocation."
It also encompasses other non-real estate federal properties and federation-owned personal property not designated for public use, whether movable or immovable.

Additionally, the legislation delineates rights related to any federal property and explicitly identifies intangible assets as recognised properties of the federation.

Moreover, the decree-law outlines regulations for managing private federal properties and non-real estate assets not allocated to public service, specifying procedures for acquisition, utilisation, and disposal. It establishes a registry for federal real estate properties and facilitates coordination with relevant local authorities for asset recovery or transfer to local governments.

The law outlines the management of federal properties within and outside the state, sets leasing rules for private properties, and stipulates requirements for using and benefiting from federal assets.

The law also emphasises the need to comply with local urban planning and building regulations to ensure the optimal utilisation of these properties.

“One of the key aspects of the law is the emphasis on property rights and fair usage. The law establishes guidelines for the allocation and use of federal properties, ensuring that they are utilised in a manner that promotes sustainable development and benefits the public interest. This includes provisions for the protection of property rights, fair competition in the allocation of properties and the prevention of misuse or abuse of federal properties,” said a senior legal associate at international law firm Kaden Boriss.

The new law will replace the federal Decree-law No. 16 of 2018 concerning federal government real estate properties when it comes into effect on March 28,2024. The aforementioned decree-law can be found on the UAE legislation platform.

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372 New Real Estate Projects on Showcase

Investors and homebuyers in Sharjah are in for a treat as the Sharjah Real Estate Exhibition – Acres 2024 introduces a limited-time offer with a generous 50 per cent discount on registration fees.

Issued jointly by the Sharjah Chamber of Commerce and Industry and the Real Estate Registration Department, this exclusive offer is part of a strategic initiative to fortify the real estate sector.

Running from January 17 to 20 at Expo Centre Sharjah, Acres 2024 introduces reduced buying and selling fees, approved by the Sharjah Executive Council. This initiative aligns with Resolution No. 30, enacted in November 2022, allowing all nationalities to own various types of real estate.
Abdulaziz Ahmed Al Shamsi, Director-General of Sharjah Real Estate Registration Department, highlighted how the emirate's growth in population and investments is met by the surge in demand for residential units.

Under this special offer during Acres 2024, real estate developers will incur selling fees of 0.5 per cent, while UAE and GCC nationals will pay only one per cent purchasing fees. Other nationalities will pay only a two per cent fee during the exhibition.

With 372 new real estate projects showcased from the UAE, Oman, Jordan, Georgia, Egypt and Turkey, Acres 2024 offers a diverse range of opportunities. The event also includes panel discussions, workshops and industry talks in Arabic and English by leading experts.
To accommodate the heightened interest, the exhibition space has expanded by 60 per cent, promising an enriching experience for all attendees.

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004Follow The Law Reporters on WhatsApp Channels.

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Landlords Can Seek Court Intervention for Tenant Contract Violations Under Saudi Ejar

Landlords can pursue court intervention for tenant contract violations under Saudi Ejar as the authority emphasized that the utilization of Ejar for rent payments encompasses all newly established residential rental contracts

The Ejar platform has outlined that landlords have the right to take legal action, including seeking fines if tenants violate the terms of their contracts. According to Ejar, if a tenant refuses to vacate the property after the contract has expired, the landlord can approach the court to impose fines for each day of delay. This is applicable only if the rental contract includes a stipulation regarding fines for delayed vacating.

In response to an inquiry, Ejar explained through its official statement that if the rental contract includes a provision for daily fines, the landlord can claim compensation for each day of delay through the execution court, especially if the contract is an executive document. For non-executive documents, landlords can seek legal recourse by approaching the judiciary.

The Real Estate General Authority recently announced restrictions on financial transactions related to rent payments through the digital channels of the Ejar platform, effective January 15. Approved digital payment channels include Mada or SADAD, using the biller number 153. Ejar emphasized that this move aligns with the decision of the Council of Ministers.

Furthermore, Ejar clarified that digital channels for rent payments are mandatory for all new residential rental contracts. As of January 15, any proof of rent payment outside the designated digital channels using the number 153 will not be considered valid. It's important to note that this directive does not currently extend to commercial rent contracts.

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Managing Legal Risks in the UAE Construction Industry

The construction industry in the United Arab Emirates (UAE) has experienced remarkable growth in recent years, fuelled by ambitious infrastructure projects and urban development. However, with great opportunities come great challenges, and navigating the legal landscape is crucial for success.

Managing legal risks is a key aspect of ensuring a smooth and successful construction project in the UAE. In this blog, we will explore the various legal risks in the UAE construction industry and discuss strategies to manage them.

 1. Understanding the Regulatory Environment

The UAE has a complex legal framework governing the construction industry, with laws and regulations at both federal and emirate levels. Familiarising yourself with these regulations is fundamental to managing legal risks.

2. Contractual Clarity

One of the primary ways to manage legal risks in construction projects is to establish clear and comprehensive contracts. The contracts should clearly define the scope of work, duration of the project, project timelines, payment terms, prerequisites to be complied before hand over of the project, and the obligation of the Main/Subcontractors to rectify the defects during the Defects Notification Period, termination of the contract and dispute resolution mechanisms. Engaging legal professionals experienced in UAE construction law is essential to ensure that the terms of the contracts are not ambiguous and offer protection in the event of disputes.

3. Compliance with Local Laws

The UAE legal system is unique, and adherence to local laws is critical to avoid legal complications. It includes compliance with labour laws, environmental regulations, and health and safety standards. Failure to comply with these laws can lead to severe penalties and project delays.

4. Dispute Resolution Mechanisms

Despite best efforts, disputes may arise during construction projects. Understanding the best and most effective dispute resolution mechanism is essential. The UAE recognizes litigation and alternative dispute resolution (ADR) methods such as arbitration and mediation.

It includes specific dispute resolution clauses in contracts, and selecting a suitable method can help resolve disputes efficiently. Considering the complexities involved in construction disputes, the parties to the contract prefer to get the disputes through Arbitration.

5. Risk Allocation and Insurance

Effective risk management involves allocating risks appropriately among project stakeholders. Clearly defining responsibilities and liabilities in contracts helps allocate risks effectively. Additionally, obtaining comprehensive insurance coverage is a prudent measure to mitigate financial risks associated with unforeseen events, such as accidents, delays, or property damage.

6. Intellectual Property Protection

Construction projects often involve innovative designs and engineering solutions. Protecting intellectual property rights is crucial to prevent unauthorized use or replication of proprietary designs.

7. Local Partnerships and Relationships

Establishing strong partnerships with local entities, contractors, and suppliers can be invaluable in navigating the legal landscape. Local partners can provide insights into the regulatory environment, cultural nuances, and industry practices, enhancing the project's chances of success.  Further, a project's development is the outcome of teamwork. Main Contractors, suppliers, and subcontractors are among its participants.

Successfully managing legal risks in the UAE construction industry requires a proactive approach, a comprehensive understanding of local laws, and strategic planning. By investing time and resources in legal due diligence, clear contractual arrangements, and effective risk management strategies, construction stakeholders can navigate the complexities of the UAE legal landscape and contribute to the success of their projects.

Ultimately, a well-managed construction project not only minimizes legal risks but also establishes a foundation for long-term success in the dynamic UAE construction industry.

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Why Should You Hire a Real Estate Lawyer Before Buying a Property?

The Dubai real estate market has witnessed an impressive surge, attracting foreign investors globally. The complexity of legal processes in property transactions has emphasized the pivotal role of a real estate lawyer in Dubai.

A real estate lawyer plays a crucial role in navigating the intricate legal terrain associated with property acquisitions. Their involvement ensures a comprehensive due diligence process, an essential step in assessing all aspects of a business transaction. Each company being unique, thorough information gathering becomes imperative to make informed decisions in property dealings.

Guiding clients through the entire process, real estate lawyers offer clarity and expert advice. Their assistance becomes invaluable should any disputes arise in the future, providing optimal solutions and legal counsel.

Among the top firms in Dubai, NYK Law Firm stands out as a premier real estate legal service provider. With a proficient team of experienced lawyers and legal consultants, NYK Law Firm specializes in offering optimal legal solutions to various real estate issues. Whether it's property purchase, sales, or resolution of rental disputes, the firm is committed to providing the best legal counsel.

The involvement of a real estate lawyer goes beyond addressing existing issues; they also help anticipate and mitigate potential legal problems that might arise between buyers and sellers in the course of property transactions. Their proactive approach ensures smoother dealings and avert future conflicts.

 

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Property Transactions added to UAE Pass Portal

The UAE Pass portal is expanding its scope to include property buying and selling registrations, aiming to enhance transparency in these transactions. The UAE authorities have announced that property transactions has been included in the UAE Pass Portal. 

Previously focused on storing residency records, driver's licenses, medical data, and more under an individual's Emirates ID, UAE Pass is now extending its services to property transactions. This step marks a significant advancement, especially in Dubai, where property buyers previously registered via the REST app, the Dubai Land Department's platform which provides real estate services. 

Incorporating the UAE Pass into corporate tax compliance measures is beneficial, especially concerning individuals managing businesses with real estate assets. While corporate tax doesn't directly apply to individually-owned property deals, if these individuals conduct businesses deploying these assets, they become eligible for corporate tax registration. This aspect demands significant attention from business owners in the near future.

What is UAE Pass?

The UAE PASS stands as the pioneering secure national digital identity available to citizens, residents, and visitors in the UAE. This digital identification grants access to a multitude of online services spanning diverse sectors. Additionally, it offers functionalities like digitally signing and verifying documents, requesting official digital document copies, and utilizing these capabilities to apply for services through our affiliated partners.

Moreover, utilizing the UAE Pass for registration contributes to transparency in the property market. Further, it will simplify the reporting process and, coupled with its security features, guarantee that 'price discovery' and 'related balances' necessary for corporate tax processing are accurately captured right from the start, maintaining uniformity in reporting standards.

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5 Things to Consider Before Buying a Property in Dubai

Buying a property in the land of opportunities is nothing less than a dream come true. While you leap forward with one of the biggest decisions of your life it is essential to conduct proper research before jumping to conclusions. To ensure a smooth sailing of the process it is necessary to consult the best lawyer in Dubai to avoid legal troubles. 

Here are 5 factors to keep in mind before buying a property in Dubai.

Research

Conduct thorough research on the property type and gather background information. Instances exist where scammers may present high-value properties that don't match the actual reality. Be cautious of counterfeit assets and ensure meticulous examination of documentation and contracts to avoid potential fraud.

Tenure and Affordability

Prior to purchasing a property, it's crucial to assess the duration of your stay in the city. Understanding market values and potential income margins is vital. Yet, it's equally important to consider budgeting needs and property maintenance expenses.

Hire a Lawyer

It is essential to consult a top real estate lawyer to guide you through out the process. Buying a property might seem like an easy task, but there are legal intricacies which need to be taken care of. With the help of an experienced real estate lawyer, it is easy to file documents and navigate legal transactions. It is advantageous to hire a lawyer, to resolve disputes in case of any.

Due Diligence

The main aim of due diligence is to recognize and minimize possible risks. By scrutinizing legal paperwork like permits and titles, purchasers can reveal any legal limitations that might affect the property’s worth. Likewise, analysing financial records and performing property inspections allows buyers to evaluate the property's state and detect any unforeseen expenses or structural issues. Further, due diligence helps buyers and investors evaluate the property's market value, potential revenue sources, and anticipated investment returns.

Property Valuation

Property valuation is the process of determining the value of your property by considering various factors such as its location, condition, and other pertinent aspects. A skilled surveyor conducts an in-person assessment, documenting observations and capturing photographs to compile a comprehensive valuation report for your property.

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Litigation vs Arbitration: Introduction to Dispute Resolution in UAE

In the fast-growing construction industry of the UAE, problems and disagreements are bound to happen. When they do, it's crucial to have a plan for resolving them. The two main ways to do this are through litigation, which is like taking the problem to a court, and arbitration, which is like bringing in a neutral expert to help sort things out.

Litigation is the more traditional approach, where the courts make the final decision. It can be formal,time consuming and costly. On the other hand, arbitration is a more flexible and often quicker method where the parties agree on an arbitrator to make a decision.

What is Construction Dispute Resolution?

Construction dispute resolution in the UAE refers to the processes used to settle disagreements in the construction industry. Common methods include negotiation, mediation, arbitration, litigation, and expert determination. The choice of method depends on factors like the nature of the dispute, parties involved, and contract terms. Mediation and arbitration are often favored for their efficiency, while litigation is the more formal but potentially costlier route. Well-drafted contracts with dispute resolution clauses and legal experts are crucial for effective resolution.

The United Arab Emirates (UAE) has witnessed a significant surge in construction projects over the years, making it a hub for international developers and contractors. With this growth, construction disputes have also become more prevalent. When conflicts arise, it's essential to understand the available methods of dispute resolution. In the UAE, two primary avenues for resolving construction disputes are litigation and arbitration.

Understanding the differences between these methods is essential, as it can significantly impact how disputes are settled in the UAE's construction industry.

Litigation in the UAE

Litigation involves taking a dispute to the courts for resolution. In the UAE, the primary courts that handle construction disputes are the Federal Court and the local courts, which are organized on an emirate-by-emirate basis. There are different types of courts in the UAE, and each one has specific rules. It's structured and follows the law, but it can take a long time and can be expensive.

Litigation is like going to court when you have a problem in the construction business. It's the more official and traditional way of solving issues. 

 Arbitration in the UAE

Arbitration is an alternative dispute resolution method where parties agree to have an impartial third party, an arbitrator, make binding decisions on their dispute. In the UAE, arbitration is increasingly popular for construction disputes due to its flexibility and efficiency.

Arbitration is a bit like having a referee for a sports game. It's usually quicker and more flexible, and you can pick an arbitrator who understands your specific problem.

Litigation vs Arbitration

In the UAE, arbitration is a good choice for construction disputes because it's flexible, private, and often quicker. But you have to be careful because the decision is final, and you can't change it easily.

The choice between litigation and arbitration for dispute resolution in the UAE depends on various factors, including the specific circumstances of the dispute and the preferences of the parties involved. Both litigation and arbitration have their advantages and disadvantages, and what is "better" can vary from case to case.

In the UAE, people are using arbitration more for construction disputes because it can be faster and tailored to their needs. But it's important to consider things like costs, relationships, and the type of issue you have when choosing between these two methods. You can also mix both by trying to talk things out first (mediation) and then using arbitration or going to court if that doesn't work.

The choice between litigation and arbitration for construction dispute resolution in the UAE is not one-size-fits-all. Parties should carefully consider their specific circumstances and priorities when deciding which method to pursue.

Litigation in UAE offers the certainty of a legal process but can be costly and time-consuming. Arbitration, on the other hand, provides a more flexible and efficient approach with specialized decision-makers but may lack the legal precedent and open nature of court proceedings.

The UAE's construction industry stakeholders must weigh the advantages and disadvantages of both litigation and arbitration to choose the most appropriate avenue for resolving their disputes. In many cases, arbitration appears to be the preferred choice, offering a more streamlined and expert-driven process to reach a timely and satisfactory resolution.

Ultimately, the decision between litigation and arbitration should be made based on the specific circumstances of the dispute, the preferences of the parties, and any contractual agreements in place. Many construction contracts in the UAE include arbitration clauses that mandate arbitration as the preferred method of dispute resolution. Parties should carefully review their contracts and consider seeking legal advice to make an informed decision. Additionally, mediation is another alternative dispute resolution method that can be considered before resorting to litigation or arbitration, as it may help parties reach a settlement without the need for formal proceedings.

It's important for parties involved in construction projects in the UAE to be aware of the specific legal provisions in their contracts, which may contain dispute resolution clauses that dictate the applicable law and procedures. In the absence of such clauses, parties should consider the UAE Arbitration Law and seek legal advice from the best lawyers in Dubai to navigate the dispute resolution process effectively. It is essential to consult the best lawyers in Dubai for the arbitration or litigation procedures in UAE. 

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Exploring Tenant Rights and Landlord Responsibilities in the UAE

The thriving real estate market attracts a diverse population of residents and expatriates in the UAE. It's essential to understand the rights and responsibilities of tenants and landlords to ensure a fair and transparent relationship. Here are the key aspects of tenants' rights and landlord responsibilities in the UAE.

Tenants' Rights 

1. Right to a Written Lease Agreement: Tenants have the right to a written lease agreement outlining the terms and conditions of the tenancy. This agreement should specify the rent amount, payment schedule, and duration of the lease. 

2. Peaceful Enjoyment of the Property: Tenants have the right to peacefully enjoy the rented property without interference from the landlord, including privacy and the right to live freely.

3. Rent Increase Regulations: Tenants are protected from arbitrary rent increases. The landlord has to notify the rent increase 90 days before the expiry of the contract aligned with the rental increase calculator.

4. Security Deposit Refund: Tenants have the right to the timely return of their security deposit, usually within 30 days of the lease termination, provided there are no damages or unpaid rent. 

5. Repairs and Maintenance: Landlords are responsible for maintaining the property in a habitable condition. Tenants have the right to request necessary repairs, and landlords are obliged to address these issues promptly.

6. Notice Period for Eviction: Tenants should be given a proper notice period before eviction, as per the UAE Rent Law. This allows tenants to prepare for relocation. 

7. Access to Legal Recourse: Tenants have access to the best lawyers in UAE to address disputes and issues with landlords. It is advisable to consult a rental dispute lawyer in UAE to have a better understanding of the issue. 

Landlord Responsibilities 

1. Maintaining the Property: Landlords are responsible for ensuring that the property is maintained in good condition, including structural and mechanical components. Regular maintenance and necessary repairs are their obligation. 

2. Providing Essential Services: Landlords must ensure the availability of essential services such as water and electricity throughout the tenancy period.

3. Security Deposit Handling: Landlords are required to handle security deposits responsibly. They must return the deposit on time after deducting any valid expenses. 

4. Rent Increase Regulations: The landlord can increase the rent in line with the rental index calculator, and if the landlord has notified you of the increased rent 90 days before the expiry of the contract, the tenant is liable to pay the increased rent. If after such notification, the tenant fails to pay the increased rent, the landlord can get the tenant evicted after obtaining a court order for eviction

5. Respect Tenant Privacy: Landlords should respect the privacy of tenants and seek permission before entering the property for inspections or repairs, except in emergencies.

6. Notice of Eviction: Landlords must provide tenants with a proper notice period as per the law if they intend to terminate the lease agreement. Evictions without notice or legal grounds are prohibited. 

7. Following Legal Procedures: Landlords should follow legal procedures when dealing with tenant-related matters, including eviction, disputes, or rent increases. Consult a legal consultant or the best lawyer in Dubai to avoid hassles. 

Whether you’re a tenant or a landlord, you must follow the rules and regulations to avoid rental disputes. It is advisable to consult a real estate lawyer to understand your rights.

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How to Handle Construction Defects in UAE?

In the construction business in the United Arab Emirates (UAE), accusations of construction defects are one of the causes of construction disputes. These claims may be made for several reasons, including project delays, ineffective planning or communication, a failure to communicate, or the discovery of flaws during or after the project. The main factors to consider while resolving building fault claims in the UAE are as follows.

Understand the legal framework

Types of Construction Defects

A flaw in the building process, such as one in the design, materials, or craftsmanship, can result in a finished or partially built structure failing to meet the requirements of the relevant contract.

Remedies for inferior work

Under UAE law, a court must choose whether to mandate specific performance, that the contractor pays the employer's costs for hiring a third party to finish the job (also known as remedial work), or to terminate the contract and require the contractor to pay damages. The judge must be convinced that a given performance is impossible before determining compensation.

Experts’ involvement

Courts regularly hire experts to determine the best course of action for correcting faulty works, while Arbitral Tribunals seldom do the same.

Fact-sensitive cases

Cases involving construction faults are very fact-sensitive, and the best course of action will rely on the specific contract, the documents, and the facts of the case.

Prevention is better than cure

Construction flaws must be avoided since choosing the right solution for flawed work in the UAE is sometimes difficult during construction disputes. Investing in quality control systems, routine inspections, and effective project management can reduce the risk of construction disputes in the UAE.

Handling accusations of construction defects

Consider taking the following actions if you're dealing with a building fault claim in the UAE:

Assemble evidence: Gather any pertinent paperwork, such as the contract, the project plans and specifications, and any correspondence about the fault.

Engage experts: If required, seek the advice of professionals to evaluate the type and severity of the condition and offer advice on the best course of action.

Consider an alternative to litigation: Construction conflicts can be settled by informal negotiation, mediation, and expert decision.

Obtain legal counsel: Hire a construction lawyer to assist you with the legal procedure and, if required, advocate your interests in court or arbitration.

The roles played by the parties engaged in the project must be understood to fight against accusations of building fault. Getting a copy of the project agreement and making a diagram of the relationships between the parties are two ways to approach this problem. You can choose which parties you need to notify of the claim on behalf of your client after you are aware of the relationships between the parties. Many challenges and requests for continuances can be avoided by anticipating these problems at the outset of a litigation.

Construction fault claims in the UAE construction sector may be a challenging and divisive topic. Construction lawyers may successfully manage the difficulties of construction disputes in the UAE by investing in quality control methods, receiving expert guidance when necessary, and comprehending the legal environment.

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Learn more about property ownership in the UAE

The UAE is a popular destination for property ownership and investment, attracting domestic and international investors. The UAE's robust real estate market offers various opportunities. It is necessary to be familiar with the regulations governing property ownership and investment.

Freehold Ownership

One of the most significant developments in the UAE real estate sector is the introduction of freehold ownership for certain designated areas. Freehold ownership allows foreigners to have complete ownership rights over properties, granting them the ability to buy, sell, lease, or rent properties without restrictions.

Leasehold Ownership

Leasehold ownership is the alternative option in areas where freehold ownership is not available. Under leasehold ownership, an individual or entity can lease a property for a specific period. While leasehold ownership does not grant complete ownership rights, it provides considerable flexibility in terms of leasing, renting, or subletting the property.

Property Registration

Property ownership in the UAE requires proper registration to ensure legal protection and ownership rights. The registration process involves submitting relevant documents, such as sale and purchase agreements, title deeds, and proof of payment, to the concerned land department or Real Estate Regulatory Agency (RERA) in Dubai. Property registration provides transparency, safeguards against fraud, and establishes a legal framework for property transactions. It is recommended to seek legal advice and help from an experienced real estate lawyer.

Foreign Ownership Restrictions

While the UAE offers full ownership to foreigners in designated areas, it is important to note that certain restrictions still apply. Non-GCC nationals can only own properties in designated areas. These restrictions vary between emirates, and it is crucial to research and understand the specific regulations governing property ownership in the desired location.

Property Financing

Several financial institutions in the UAE offer mortgage facilities for property purchases. However, eligibility criteria and financing terms may vary depending on the borrower's nationality, income, and the property's location. It is essential to research and compare different financing options to find the most suitable one, considering interest rates, repayment terms, and associated costs.

Property Taxes and Fees

The UAE does not impose income tax on property rental income or capital gains from property sales. However, property buyers need to be aware of other fees and taxes associated with property transactions, such as registration fees, agency fees, transfer fees, and maintenance fees. These costs vary depending on the emirate and the specific property.

Navigating the regulations surrounding property ownership and investment in the UAE is crucial for individuals looking to capitalise on the country's thriving real estate market. By staying informed and seeking professional guidance, investors can make well-informed decisions and seize the opportunities offered by the UAE's dynamic real estate sector.

 

 

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UAE Eviction Laws that You Must Know

Know your rights before getting evicted.

By Ilina Devadhar

In the pandemic, many countries enacted various laws and regulations to block tenant evictions for a certain period of time. This was done to safeguard the interests of millions of tenants who would otherwise have ended up on the streets. Abu Dhabi and Dubai, too, blocked all evictions for two months in March 2020.

Currently, Laws govern the way that an eviction must take place. In the UAE, these Laws are strictly adhered to and are primarily in the interest of the tenants.

All the matters related to real estate are regulated through an agency known as Real Estate Regulatory Agency (RERA). RERA is one of the regulatory arms of the Dubai Land Department (DLD). This agency has set definitive laws that regulate tenant and landlord relationship. The laws highlight the roles of each party and the procedure to be followed in case of any dispute.

Law No. (26) of 2007 deals with the relationship between landlord and tenant. The law is known as ‘Regulating the Relation Between Lessors and Lessees of Properties in the Emirate of Dubai’. However, specific provisions of this law have been amended by Law No. (33) of 2008. 

When a landlord wants to evict a tenant, due process must be followed. If not followed, then the tenant can file a suit against the landlord. Thus, the laws are such that they protect the interests of the supposedly weaker party; in this case, it is the tenants. Rental Dispute Settlement Centre (RDSC) solves any disputes between renters and landowners.

Requirements

Firstly, according to Article (4) of Law (33) of 2008, both parties must ensure that a valid tenancy contract is registered with RERA through Ejari along with all the verified documents. 

According to Article (6) of Law (26) of 2007, if a tenancy contract expires but the tenant continues to live on the estate without any objection from the landlord, then it is automatically assumed that the tenancy has been extended for the same period or one year, whichever is less. The exact terms of the contract are to be followed.

Article (25) of Law No. (33) of 2008 provides a detailed list of when a tenant can be evicted when the tenancy contract is still in operation, as well as the conditions for evicting a tenant upon the expiry of the agreement.

In the case of eviction before the expiry of the tenancy, the landlord is obliged to serve such a notice to the tenant. If the tenant fails to abide by any obligation within 30 days from the date of being notified as stipulated in Clause (1), Article (25) of Law No. (33) of 2008, then the landlord is legally allowed to evict the tenant. Clause 1 mentions 9 cases when a lessor may request the eviction of a tenant before the expiry of the contract. 

Further, the eviction notice must be written and sent via the public notary or through registered mail.

If a tenant fails to pay the rent or any fraction of it within 30 days from the date of notifying the same, then the lessor has the right to evict the tenant. However, this often leads to tenants waiting till the very last date to pay, much to the landlord’s disappointment. The court is silent on the number of times a tenant can default as long as he eventually pays the arrears within the given notice period.

The tenant is not allowed to sublease the property unless there is written consent from the lessor. If a tenant does sublease the property or any part of it without prior approval, then both the tenant and subtenant will be evicted, and the subtenant can claim compensation from the tenant.

The tenant cannot grant third-party access to the property for any illegal usage.

Now, suppose the landlord wishes to evict the tenant after the expiry of the contract. In that case, the landlord is obliged to serve such a notice to the tenant at a minimum duration of 12 months as stipulated in Clause (2), Article (25) of Law No. (33) of 2008. There are four exclusive cases mentioned in this Clause, and the lessor must meet any one of them to have a successful eviction claim. The eviction notice must be written and sent via the public notary or through registered mail.

It is important to note that RERA has not issued any property rent law that specifically governs the termination of tenancy contracts before the expiry date. For early termination of any contract, there has to be a relevant clause in the tenancy agreement. Otherwise, the tenant can demand compensation for premature termination of the contract.

Article (7) of Law (26) of 2007 reinforces the concept that valid rental agreements shall not be unilaterally terminated by either of the parties unless there has been a mutual agreement.

It is also important to note that when an action for eviction has been lodged, the tenant is liable to pay the rent during the ongoing hearing till the final judgement. This is stipulated in Article (31) of Law (26) of 2007.

Other cases

Death of party

Article (27) of Law (26) of 2007 clearly states that there will be a continuation of the tenancy contract on the death of either the tenant or the landlord. For termination, the lessor must send a 30-day notice.

Transfer of ownership

Article (28) of Law (26) of 2007 states that the tenancy will not be impacted in the case of transfer of property ownership to a new owner. The existing tenant has full right to occupy the property until the tenancy contract expires.

 UAE has one of the best regulated laws and through new and modern initiatives like EJARI (my rent), the rental market and real estate sector is one of the best regulated rental markets in the world. Now, the laws should also remove a major discrepancy which is the number of times a tenant can default and delay the rent payment. A ball park number like 3 or 5 counts should be maintained that way the landlords, too, can have a steady flow of income without worrying and this can attract more people to buy property. An assurance will be created for both parties.

(Writer is Legal Research Intern with The Law Reporters)

Pic- blancolaw

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5 Steps to follow before buying a property in Dubai

Purchasing a property in Dubai can seem like a daunting task if you're not familiar with the local real estate market. However, with the right guidance you can navigate the process smoothly.

Though the basic steps include determining your budget and choosing the right property to call your home, the article will look at it from the legal aspects of property sale in Dubai.

Step 1: Verify before making a decision

Before making the decision, verify both the property and the seller. It involves confirming that the seller is the lawful owner, by examining the property's title deed. It is also advisable to check for any current mortgages, liens, or disputes associated with the property. 

Step 2: Hire a competent lawyer

Having a competent legal professional is crucial in any property transaction. A lawyer can review the contract, advise you on the complexities of the purchase, and make sure that all legal requirements are met. 

Step 3: Memorandum of Understanding (MOU)

To avoid any legal issues, it is essential to meticulously review the Memorandum of Understanding (MOU), which serves as a preliminary contract outlining the terms and conditions of the property sale. Seeking guidance from a real estate lawyer before signing the document is strongly advised.

Step 4: Sales and Purchase Agreement (SPA)

The Sales and Purchase Agreement (SPA) is a legally binding contract that outlines the terms and conditions of the property sale. It includes the purchase price, payment terms, and transfer of ownership. The SPA should be reviewed by a real estate lawyer to make sure it represents the interests and legal rights of the buyer.

Step 5: Pay the fees

Purchasing a property in Dubai involves various fees and taxes such as registration, agency, and transfer fees. It is advisable to seek the assistance of a lawyer to ensure timely and accurate payment of the fees. 

Step 6: Registration

Once the sales transaction is complete, it is necessary to register the property with the Dubai Land Department. The lawyer can handle this process and make sure all required paperwork is filed properly. 

Buying a property in Dubai involves several legal complexities, but with legal guidance, you can acquire the best property in Dubai. With proper guidance, you can find the perfect property to call home.

For any legal queries or information, contact ask@tlr.ae or call us on +971526443004

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Procedure for Filing Case in Rental Dispute Settlement Center

The Rental Disputes Settlement Center serves the purpose of resolving disputes between landlords and tenants. The RDSC holds the sole jurisdiction over all rental disputes and the same is outlined by Article 6 of Decree No. 26 of 13 concerning the Rent Disputes Settlement Center in Dubai. Moreover, the RDSC is responsible for appeals and the enforcement of the judgments under its jurisdiction. To ensure a smooth filing process at the RDSC, it is required to prepare all the legal documents in advance and attend all the necessary hearings

Required Documents:

  • Ejari tenancy contract and certificate.
  • Latest DEWA bill.
  • Title deed and passport of the landlord (original and copy).
  • Tenant’s passport and visa copy.
  • Emirates ID (original and copy).
  • Rental deposit slips.
  • Copies of cheques made to the landlord.
  • Proof of correspondence between the parties.
  • Any other supporting documents regarding the dispute. 

Fees for Filing a Case at the RDSC

The fees required for registering a case in the RDSC are charged at 3.5% of the annual rent paid in favor of the leased premises and not less than AED 500 or more than AED 15,000 for the financial claims. In the event of eviction or tenancy-related contract renewal, the maximum fee that can be paid is AED 20,000. If a financial claim and eviction claim are being requested, the maximum fees will be AED 35,000. The claims made at the First Instance Circuit take anywhere between one to three months to pass judgment. However, an expert is called upon to study a case which can take up to nine months.

Procedure within RDSC.

The following highlights the process for filing a dispute within the RDSC:

Step 1:  Cases are to be first filed with the Mediation and Conciliation Directorate to attempt to reach an amicable settlement within 15 days. If the resolution is successful, it is documented as a court order.

Step 2: If a settlement is not reached, the case will be moved to the First Instance Circuit. The RDSC judgment at the First Instance Circuit will be effective and executable unless an appeal is made. The appeal can be made for lease agreements with an annual rent value above AED 100,000. Once the judgment has been passed, 50% of the award must be paid by the appealing party for the appeal to be accepted.

Step 3: The judgment of the First Instance Circuit may be appealed within 15 calendar days from the date of issuance or the date the defendant was notified of the judgment; otherwise, the First Instance Circuit judgment becomes final and executable. If the First Instance Circuit judgment is appealed, litigation before the Appeal Circuit usually takes one to two months. The Appeal Circuit judgment is final and executable.

Step 4: After receiving the executable judgment, an execution file can be opened. A period of 15 days is provided for the defendant to comply with the judgment. The enforcement procedures of the judgment, including eviction procedures, will commence following the lapse of 15 days from the date the tenant is notified of the judgment.

The RDSC serves as an all-inclusive medium for resolving rental disputes between property owners and tenants in Dubai. By reviewing the jurisdiction and the various procedures involved in filing a case with the RDSC, parties can ensure that they undergo an unencumbered and smooth process which would increase the likelihood of a favorable outcome.

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The boom in Dubai’s luxury property market

The luxury property market has seen a boom in recent years, with a growing number of high-end properties being sold. This trend has been fuelled by a variety of factors, including a growing number of ultra-high-net-worth individuals, low-interest rates, and strong demand for prime real estate in popular cities and vacation destinations. 

Dubai has achieved several milestones in the luxury property market, with the recent sale of a Jumeirah Bay Island plot for $34m. The city's pro-business government policies and high level of investor interest have propelled it to surpass New York and London as the premier destination for luxury real estate investments. The residential market in Dubai has experienced a significant 70% growth, with a major portion of buyers hailing from Russia, the United Kingdom, and India. 

The surge of ultra-high-net-worth individuals (UHNWIs), defined as individuals whose net worth is $30 million or higher, has been a significant factor behind the growth of the luxury property industry. According to a recent report by Wealth-X, the number of UHNWIs has grown significantly in recent years, with Asia leading the way.

Another factor driving the luxury property market is low-interest rates. With interest rates at historic lows, many investors are turning towards real estate to generate income and diversify their portfolios. Luxury properties, in particular, offer attractive returns and strong potential for capital appreciation.

In addition to these factors, the luxury property market has been fuelled by strong demand for prime real estate in popular cities and vacation destinations. Many investors are drawn to these properties for their prime locations, stunning architecture, and luxurious amenities, like private pools, spas, and gyms.

Despite the surge in demand for luxury properties, there are also concerns that the market may be overheating. Some experts worry that prices are becoming unsustainable, particularly in certain cities where property values have skyrocketed in recent years. There are also concerns about the impact of rising interest rates and economic instability on the luxury property market. It is often preferred to consult a real estate lawyer before buying any property.

The boom in the luxury property market is driven by a variety of factors, including the rise of UHNWIs, low-interest rates, and strong demand for prime real estate in popular cities and vacation destinations. While the market has seen impressive growth in recent years, there are concerns about its sustainability and the potential impact of economic factors on the market. As always, investors should carefully evaluate market conditions and do their due diligence before investing in luxury properties.

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Why should you consult a real estate lawyer before buying a property?

Investing in real estate is a significant financial commitment that an individual will likely undertake during their lifetime. Whether it is a residential or commercial property or even a parcel of land, the transaction entails a multitude of legal complexities that can prove daunting for the average purchaser to handle.

A real estate lawyer is a legal professional specializing in the laws and regulations governing real estate transactions. They are experts in navigating the legal complexities of property purchases and sales, helping buyers and sellers understand their rights and obligations under the law. 

Consulting a real estate lawyer before purchasing a property is advisable for the following reasons:

  • Ensure the transaction is legally sound
  • Verify that the property is free from any legal encumbrances
  • Ensure the seller's legal right to sell the property
  • Verify and obtain all necessary permits and licenses
  • Help negotiate fair contract terms
  • Identify any hidden costs or liabilities
  • Guide financing options
  • Advise on alternative financing options
  • Provide peace of mind knowing the investment is protected
  • Provide expertise and guidance in the event of legal disputes or issues

Buying a property is a significant investment that involves several legal intricacies that can be challenging for an average buyer to navigate therefore consulting a real estate lawyer before committing to any property purchase is highly recommended.

A real estate lawyer can help ensure that the transaction is legally sound, negotiate fair contract terms, provide valuable guidance on financing options, and provide peace of mind to buyers knowing that their investment is protected.

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Why invest in UAE real estate market in 2023?

Dubai is a rapidly expanding city with a thriving economy that offers attractive returns on property investments. Its impressive infrastructure, connectivity, and urban planning have established it as a global hub. It is also evolving into a sustainable city.

Due to the absence of taxes, Dubai is an attractive location for investment, particularly in the real estate sector, where investors can benefit from high rental yields of 6-10% and an average return of 7.5%. Coastal areas are desirable, leading to high demand and liquidity in Dubai's real estate market.

Dubai's real estate market has been named the most transparent in the Middle East. Dubai is the most favorable location for inhabitants and investors due to its robust social, financial, and service environments. The ability to apply for a resident visa if they own a property valued at AED 750,000 or more is a big perk for international investors. Dubai's trust and confidence in potential investors are further portrayed by the UAE government's recent announcement that overseas investors would be qualified for a 10-year resident visa.

It is the best destination to invest in if you're looking to generate high rental income. The returns on investment in Dubai's real estate market can go up to 10% annually, which is much higher than in other cities across the globe. The rental prices in Dubai provide an opportunity for investors to purchase properties at a low price and rent them out at a high annual rental yield, resulting in a profit of around 5-9%. Many investors have adopted this strategy to maximize their earnings.

Furthermore, the real estate market in Dubai offers a range of properties at economical rates compared to the international market, making it an attractive option for investors looking to benefit from their investments. Dubai's thriving economy, as a hub for tourism and retail in the Middle East, attracts a significant amount of foreign investment every year. Additionally, it is one of the top destinations for foreign direct investment projects.

Overall, investing in Dubai's real estate market is a smart choice. It offers high returns on investment, and the government's initiatives to enhance transparency in the market provide a safe and trustworthy atmosphere for investors. It is preferred to consult a real estate lawyer before buying or selling a property in the UAE.

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Construction arbitration and dispute resolution in UAE

The UAE's construction industry is a major contributor to the country's economy, with the initiation of large infrastructure projects worth billions of dollars.  

However, disputes are common in this industry. The dispute resolution takes place  through arbitration. It is advisable to seek professional help from a top legal consultant with experience in arbitration for disputes relating to construction.

Despite this, there are several benefits of arbitration, including flexibility in procedure, the option to choose the location, confidentiality, careful examination of claims and defenses, the ability to recover legal costs, and impartiality.

Most construction projects are complex. Generally, construction disputes occur between the owner, contractor, sub-subcontractors, architects, and material suppliers. Many of these construction disputes settle outside court through arbitration. It allows parties in dispute to decide to present their case to an unbiased third party, known as the arbitrator, who acts as a judge.

The following factors contribute to construction disputes: unclear contract terms or technological problems. Parties who don't understand their legal obligations.  Incomplete designs, poor organizational conduct, and poorly drafted contracts.  Errors in contract documents, wrongful termination, failure to remedy defects, or incomplete claims. 

According to UAE law, parties can decide to settle disputes outside of court through arbitration. Arbitration is the common dispute resolution mechanism to avoid the troubles of litigation in the UAE courts. Also, the parties can choose the coverage, language, location, regulations, arbitrators, and timings. The process and the results have a binding effect. The UAE courts approve the arbitration award without re-examination of the merits of the case. The court revokes the award in certain scenarios.  

It is necessary to have a binding agreement signed by authorized individuals representing both parties. The parties should determine whether they prefer institutional or ad hoc arbitration. Institutional arbitration requires prior payment of fees. The tribunal will be chosen by the institution. For ad hoc arbitration, the parties must enter into a tri-partite arbitration agreement with the arbitrator. Construction arbitration resolves complex disputes involving contracts, documentation, expenses, emails, agendas, plans, and statutory licenses. The arbitration clause must meet the specific needs of the parties' situation. 

The arbitration team comprises the legal team, experts, clients, and witnesses. Arbitration starts when the claimant delivers a ‘Notice to Arbitrate’. It should declare that it is a request to arbitrate the controversy. And, provide facts like names, contact details, description of the conflict, the remedy sought, choice of arbitrator, language, etc.

The arbitral tribunal may comprise a sole arbitrator or a three-person tribunal. If not mentioned in the arbitration clause, the relevant provisions of the UAE’s arbitration law will apply. The UAE’s arbitration law provides that within 30 days of its constitution. The tribunal gives notice of the date for the first meeting.

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Here are the common disputes in the construction industry

The construction industry in the UAE is one of the most significant sectors of the country's economy. However, disputes between developers, main contractors, and sub-contractors are common in the industry. In this article, we will discuss some of the most common disputes in the UAE construction industry and how the UAE laws address these disputes.

  1. Payment Disputes

Payment disputes are one of the most common types of disputes in the UAE construction industry. Typically, payment disputes arise when the main contractor or sub-contractor does not receive payment for work completed. UAE laws, specifically Federal Law No. 6 of 2018, provide a legal framework for payment disputes, including payment terms, payment schedules, and late payment penalties. Under this law, payment must be made within 30 days of receiving a payment application, and any delayed payment can result in interest and penalty payments.

  1. Delay Disputes

Delay disputes arise when there is a delay in the completion of a construction project. This can be due to various factors, such as poor project management, adverse weather conditions, or issues with the supply chain. UAE laws, particularly Article 247 of the Civil Transactions Law, provide a legal framework for delay disputes. If a delay is caused by a contractor, the developer may claim compensation for the losses incurred. If the delay is due to a force majeure event, such as a natural disaster, the contractor may not be held liable for the delay.

  1. Quality Disputes

Quality disputes arise when the developer is not satisfied with the quality of work provided by the main contractor or sub-contractor. Quality disputes can lead to delays in project completion and additional costs for rectifying the work. UAE laws, specifically Article 891 of the Civil Transactions Law, provide a legal framework for quality disputes. Under this law, the developer has the right to request that the contractor corrects any defective work at their own expense.

  1. Design Disputes

Design disputes arise when the developer is not satisfied with the design of the construction project. This can be due to errors or omissions in the design, or changes to the design during the construction process. UAE laws, specifically Article 878 of the Civil Transactions Law, provide a legal framework for design disputes. Under this law, if the contractor has prepared the design, they are responsible for correcting any errors or omissions at their own expense.

Disputes between developers, main contractors, and sub-contractors are common in the UAE construction industry. The UAE laws provide a legal framework for resolving these disputes, and it is essential for all parties involved to understand their rights and obligations under these laws. Consulting an experienced lawyer can resolve disputes quickly and efficiently.

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UAE: Types Of Rental Disputes You May Experience

Rental disputes are common among landlords and tenants. The reason for this disagreement varies in each case. Though most cases are solved peacefully between both parties, at times matters are being turned to the judiciary.

When either party breaches the contract during the tenancy, the relationship between the landlord and tenant gets tainted.

The rental issues involving property located in the Emirate or its free zones, including counterclaims and requests for interim or urgent action from either party to the lease, must be settled by the Rental Dispute Settlement Centre (RDC).

Although there are numerous causes for disputes between landlords and tenants, the following are the most frequent ones.

Disputes over increase or decrease in rent

The common reason for rental conflicts is the increase or decrease in rent. A lot of landlords believe they have the right to increase the rent without providing tenants with proper notice at lease renewal time.

The landlord has the right to raise the rent if the current rent value is less than the average rent value of similar units in the area. However, the tenant has the right to know about the increase at least three months before the tenancy agreement expires. The same applies if a tenant requests a lower monthly rental payment.

Three months before the lease expiration, the tenant has the option of negotiating with the landlord to get the rent decreased for a valid reason. Without doing so, the disagreement can lead to a rental dispute.

Conflicts over repairs and maintenance

Landlords and tenants are often not on the same page when it comes to the maintenance of the rental property.

Under the terms and circumstances of the tenancy, the landlord shall perform all material maintenance duties.

However, minor repairs and ongoing maintenance must be handled by tenants.

One way to prevent such problems is to specify the expenses of repairs that will be borne by tenants and landlords.

There is always a chance that a rental disagreement will arise whenever repairs or maintenance are needed.

Tenant Insurance

The landlord is allowed by law to provide the tenant with insurance to cover the maintenance of the property until the conclusion of the rental agreement. The landlord is required to reimburse the tenant for any unused insurance.

Except for the expenses incurred from daily use or for reasons beyond the tenant's control, the tenant is required to deliver the property to the landlord at the end of the lease period in the same condition that was received at the beginning of the contract.

Although it is against the law for landlords to do so, cutting off services to the property can lead to disputes with tenants.

Disputes regarding the final settlement

Landlords and tenants are likely to argue about the final payment at the end of rental agreements.

Tenants demand a complete retrieval of the security deposit, while landlords desire to keep the greatest amount to restore their buildings.

Further disputes involve the damage to property, the return of security deposits, and the upkeep and repair of facilities.

The UAE  has specialized  Rental Dispute Lawyers who advise clients on tenancy disputes and help them resolve them much more amicably and rapidly.

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Know Your Rights As A Tenant Using RERA’s Rental Index Calculator

Are you planning to move from your apartment or renew your lease in Dubai? You can use the RERA calculator to determine how competitive the rates are in your neighborhood.

It is essential to understand, how to utilize the Dubai rent calculator before renting out a property. After the pandemic, rents have been on the pitch in Dubai.

The Dubai Land department’s Real Estate Regulatory Agency (RERA) guards the tenant-landlord relationship.

What is RERA?

RERA is responsible for maintaining and updating the ‘Rental Price Index’ in Dubai, which constitutes a database that documents the average rental prices for all types of property in Dubai. This index is then updated on a yearly basis in order to apply to all the rental transactions in Dubai. The rental index allows users to calculate the possible rent increase and also to find the average market rent of any given area in Dubai. This is a free service that can be used by any user and thus helps to maintain both transparency and a fair balance in the market in matters concerning rental increases.

 

The rent calculator helps understand the pricing restrictions. Therefore, you can point out this issue to the landlord if they overcharge your rent each year. 

To calculate the rental index, Visit the RERA website and enter the specified details like property type, current annual rent, contract end date depending upon each category.

 

According to the Rent Control Act, a tenant has primary rights, including the right against unfair eviction, the right to pay fair rent, and access to essential services, among others. Without proper knowledge about legal protections, tenants can be victims of exploitation.

 

For those staying in rented accommodation, you must be aware of the rights and responsibilities of a tenant. Some landlords may try to charge higher rent, take advance payments, infringe on the tenant's privacy, or force eviction from the house for no valid reason.

When can a landlord increase the rent?

  • No additional rents are permitted; the rental rate must be less than 10%  below the market standard.
  • A maximum 5% rent increase is permitted, but it must be between 11% and 20% less than the standard market rental rate.
  • A 10% rent increase is permitted, but it must be between 21% and 30% less than the market average.
  • A 15% rent increase is permitted, but it must be between 31% and 40% less than the average market rental rate. If the rental rate is more than 40% below the market average, a maximum rent increase of 20% is permitted.

Rights of the tenant

Additionally, the tenant is entitled to refer any conflicts to the Rent Control Court without being questioned. Legal heirs of the tenant are also tenants under the Rent Control Act. They are privileged to all the rights of a tenant. The tenant has the right to avail notice period if the owner asks for termination of tenancy. They also have the right to evaluate the property's Energy Performance Certificate (EPC).

In case of a rental increase, the landlord is required to provide the tenant with a ninety days’ notice before the expiry of the tenancy notifying of the rental increase.

The landlord is not allowed to raise the rent, if this mandatory notice period has not been allowed to the tenant. Further, the rental increase should also be justifiable subject to the applicable percentage of the increase as stated in this article. When the landlord does not follow these provisions, the tenant is allowed to reject the rental increase. Further, the tenant should file a complaint before the Rental Dispute Settlement Centre (RDSC) if  amicable resolution is not possible.

The tenancy or rental agreement describes all the obligations and rights of the tenant and owner. It must be printed on stamp paper with the state government's recommended value. The agreement should list all the terms and conditions of tenancy. It needs to be signed by both landlord and tenant in the presence of two witnesses, who will also sign the agreement. The rental agreement must be registered at a local Sub-Registrar office.

 

The Rental Increase Calculator is an electronic service developed by Dubai Land Department (DLD) to calculate rent increase percentages following Decree No. (2) for 2011. The service specifies the increase based on the average decline in the region's rental value, depending on the specifications of the unit in question, including its use, location, number of rooms, and a variety of other parameters.

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Dubai's Smart Judicial System settles over 1,00,000 Disputes valued at Dh654 billion in record time.

Dubai's Renting Disputes Centre (RDC), which created the first smart judicial rental system in the world, has resolved 100,000 rental claims. Within the span of nine years, RDC has boosted investor trust in the emirate's legal framework.

Being the judicial arm of the Dubai Land Department (DLD), RDC was established as part of a systematic development journey to bring economic stability to landlords and tenants. Through establishing a specialized judicial system based on a streamlined mechanism. Since its inception, the center has received 103,975 lawsuits, which only represent 1.9% of the total number of lease contracts registered with the DLD. During the same period, totaling more than 5.2 million lease contracts worth Dh654 billion.

Judge Abdulqader Mousa, Director of RDC said that the Centre is founded on a sustainable methodology, as well as a cutting-edge real estate and rental model in line with the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates, and Ruler of Dubai, who has consistently emphasized that justice is the cornerstone of good administration and welfare of society's citizens.

The duration for resolution of first-instance lawsuits was 10 days and for appeals 14 days. Such expeditious and swift resolution of disputes is in line with the country’s vision to consolidate its position in the global arena as a premier real estate destination for investors.

Launched in 2015, RDS is the first smart judicial rental system in the world that is specifically designed to manage rental disputes. It also includes their registration, resolution, issuance of judgments, and accelerated the accuracy of litigation and is available to litigants, whether inside or outside the country.

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UAE’s construction sector is set to make a comeback in 2023

Despite having a low debt-to-GDP ratio, the Gulf region's reserves were severely impacted by the dramatic decline in oil prices during the pandemic era. The Institute of International Finance (IIF) predicted that assuming an average oil price of $44 per barrel, the aggregate current-account balance for the nine MENA oil exporters will go from a $64 billion surplus to a whopping $104 billion deficit in 2020.

The pressure put on the UAE economy by the severe decline in oil prices and the resulting slowdown in activity because of the pandemic led rating agencies to take action on UAE enterprises in the real estate, trade, retail, transportation, and hospitality sectors in 2020.

The year, 2022 marked a full-time economic recovery in the post-covid era. This recovery created a demand for oil and natural gas in the global markets which helped middle eastern countries, especially UAE to liquidate their sovereign wealth. This has caused UAE to venture into high-rise building construction programs and stabilize retail inflation in the UAE economy.

Along with these unique advantages to UAE and other middle eastern countries, the dip in shipping costs and building materials costs add to the optimistic image of the construction sector of U.A.E. in 2023. Commercial construction, industrial construction, infrastructure construction, energy & utility construction, institutional construction, and residential are the primary sectors in the UAE construction market.

The commercial construction sector is predicted to grow in real terms in 2023, aided by the ongoing recovery of the tourism and hospitality industries. The government unveiled the Dubai 2040 Urban Master Plan in March 2021, with an intent to increase the area of land to be used for hotels and tourist activities by 2040.

To improve the industrial sector's contribution to GDP by 2031, projects worth USD 300 Billion, headed by the government, are projected to assist the industrial construction sector's expected growth in 2023. In addition to its efforts to promote long-term economic diversification following the UAE Economic Vision 2030 plan, the government's emphasis on enhancing the business climate will help the sector's output throughout the projection period.

Considering the government's efforts to create a sustainable transportation system under the Traffic and Transportation Plan 2030, it is anticipated that the infrastructure construction industry will grow.

The government's goal to achieve carbon neutrality by 2050 will encourage additional investments in the renewable energy industry, which will result in an increase in the actual size of the energy and utility sector during the following years. The Abu Dhabi National Oil Company (“ADNOC”) announced in December 2021 that it would invest a sizeable sum on capital expenditures from 2022 to 2026.

Investments in projects related to health, education, and museums are anticipated to assist the institutional building industry. The government has allotted a sizeable portion of the budget to the healthcare and education sectors. The residential sector is anticipated to benefit from escalating housing demand as well as financial investments made as part of the Sheikh Zayed Housing Programme. The ambitious projects devised by the public and private sectors of the United Arab Emirates set up a stage for 2023. It is anticipated that the construction industry would witness a boom this year, resulting in an increase in employment possibilities and economic growth.

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Unwarranted evictions and post-covid rent hikes: Reiterating your rights

The law that forbids landlords from re-renting out a property after evictions, isn't benefitting the people as much as it should. The tenant may file a lawsuit if the landlord raises the rent, but most tenants don't want to spend money on a legal battle as the cost of legal justice is rising daily.

The Real Estate Regulatory Agency (Rera), based on a rent formula it created and ran, sets the guidelines for rent increases and decreases in Dubai. If you check the rental calculator today, it still displays the price from Covid times because it hasn't been brought up to speed in the past two years. The reason landlords aren’t happy with their current prices are because properties like theirs are getting rented at prices at least 30/40% more than what they’re charging.

However, it is important to keep in mind that many landlords did reduce their rent during Covid in order to assist their tenants, who were frequently facing job loss or pay reductions. But tenants who’ve been evicted suffer from a sudden hike in price relative to what they were living off of which put a severe strain on these people who were not ready to face the new post-covid price range.

Recently, it has become customary for tenants to receive their eviction notices via email or WhatsApp messages. According to the 2008 Landlord and Tenant Law, a landlord must serve an eviction notice in person before a notary public or through registered mail if they want to evict a tenant. What's more, the landlord must give justification for the eviction. The Landlord and Tenant Law of 2008 specify the circumstances under which landlords may evict their tenants. The 2008 Landlord and Tenant Law distinguish between evicting a tenant who has a lease that is about to expire and evicting a tenant who has a lease that has already expired.

In the Emirate of Dubai, the laws expressly outline the rights of landlords and renters in order to fairly balance the power between the parties. It is clear that tenants have the right to remain in their homes unless there is an urgent legal justification, and that landlords have the right to increase rent following a set method.

It is imperative that the legal justice system in Dubai constantly updates itself on all matters post-covid so that the people aren’t misled with regard to price hikes and/or price drops of a certain commodity. In order to avoid incurring additional costs by referring their dispute to the RDC, it is advised that both landlords and tenants become familiar with Law No. 33 of 2008 (the Landlord and Tenant Law). It is always best to seek the advice and assistance of a legal expert if either party is unsure about a specific legal provision.

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How to reduce mortgage costs for UAE property buyers?

In UAE, a larger part of first-time home buyers finds it easier to get a mortgage from a lending institution.

There are alternative ways for savvy investors to acquire real estate that don't involve taking on a mortgage.

Here are a few ways to save money on your mortgages so you can pay less for the properties you buy.

Shop around for the best deal

The first thing you need to do before applying for a home loan is to compare shopping and find the best deal for your needs. Before you register, shop around to see the recommended interest rates by lenders and deals offered to their borrowers. You might save money by taking out a loan with your lender of preference or by going with a different lender entirely.

Compare different types of loans and their interest rates: Fixed or variable rates? Lenders, who have their funding resources? Banks or non-bank financial companies? Review between different lenders until you find the one that will give you the best deal for your circumstances.

Avoid the Lenders Mortgage Insurance (LMI)

If your down payment is less than 25% of the cost of the property,  then you will have to pay an LMI.

LMI generally applies to residential mortgage loans in which the principal amount borrowed does not exceed 75% of the property's value. The Loan-to-Value Ratio (LVR) is calculated as the loan amount divided by the property's value.

For example, if your property is valued at AED 1 million and your loan is for AED 500,000 then your LVR is 50%. If the property's value falls below this level, you may be required to obtain additional insurance. This prerequisite is negotiable. With the mortgage provider, it will almost certainly increase your overall costs. Negotiate with your lender to pay a higher down payment to avoid the LMI requirement or to avoid paying the LMI altogether.

Consider obtaining a short-term loan. In most cases, choosing a shorter term than the standard 25-year period offered by most lenders will result in lower interest payments over the life of the loan. Because short-term loans have lower interest rates, which means you pay less interest overall.

UAE property investors prefer to be owners than pay ‘landlord mortgages’

Many people in the UAE are contemplating whether they should rent or buy. While the current market conditions favor purchasers, it is still a financially significant decision to forward with the transaction. It is the right time to acquire a home in Uae as property costs are economical. However, people are hesitant about long-term stays due to a lack of understanding.

Understand the market, and make a short list of alternatives based on budget and practicality. Find a trustworthy real estate agent to assist you through the process. As this is a significant financial commitment, prospective homebuyers must ensure that fully grasp the terms and fees involved. Ultimately each individual’s financial security is at stake in the end.

Affordable real estate services are favored by taxation, which helps in enhancing earnings even more. There is no property, income, or inheritance tax in the UAE, nor are there any stamp fees involved with purchasing a home. The only fee that applies is a 4% Dubai Land Department (DLD) transfer fee on the purchase price. This is frequently covered by the buyer and is a one-time cost compared to the annual taxes avoided. The favorable taxation conditions are unquestionably an advantage when considering purchasing property rather than renting.

The crucial factor in deciding whether to rent or buy property in the UAE is how long you want to stay in the country. If you are one among the mass, who have come to call it home, crunch the numbers, conduct your due diligence, assess market circumstances, and become a house owner in the lucrative UAE real estate market.

On the other hand, if you are unsure about the future and are open to relocation, rent a magnificent home in the UAE until you know what lies ahead.

For any enquiries or information, contact ask@tlr.ae or call us on +971526443004

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Can a buyer terminate a property purchase agreement in case of losing his job ?

A contract between the buyer and the seller of the property is known as an agreement to sell. The purchase agreement can be terminated in front of the court, however since losing your employment is not regarded as a force majeure, the burden for doing so will lie on the buyer.

According to Article 11 of Law No. (19) of 2020 Amending Law No. (13) of 2008 Regulating the interim Real Property Registrar in the Emirate of Dubai, the developer may terminate the off-plan sale agreement, retain up to forty percent (40%) of the value of the real property unit specified in the off-plan agreement, and refund any amounts above this to the buyer when the percentage of completion of the real property project exceeds eighty percent (80%).

The developer is entitled to retain up to forty percent (40%) of the value of the real property unit when the completion rate is between sixty percent (60%) and eighty percent (80%). When the completion percentage is less than 60%, the developer may keep up to twenty-five percent (25%) of the value of the real estate unit.

Despite the limitations and procedures described in the contracts governing termination and compensation, the buyer will still be permitted to institute a lawsuit. When the developer cancels the project as a result of a final reasoned decision by RERA (Real Estate Regulatory Authority), or when the developer has not begun work on the project for any reason beyond his control without negligence or omission on his part, the developer is required to refund all payments made by the purchaser under the procedures and guidelines outlined in Law No. (8) of 2007.

As for the new buyer, a person does not have the right to ask the Court to transfer the property purchase agreement to the new buyer, because you cannot compel the developer to enter into a contract with someone else. A person can politely resolve this issue with the developer so that he will agree to grant you a letter of No Objection so that he/she can sell the property to the buyer at the DLD (Dubai Land Department) and collect your payment from him.

Finally, the Rules and procedures outlined in this Article shall not be construed to bar the purchaser from seeking judicial relief, and the court shall make its decision after carefully considering the purchase agreement’s documentation.

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Should the developer register the off-plan property in the name of the purchaser?

Buying off-plan real estate refers to buying unconstructed property, during the planning phase or in the early stages of construction, usually directly from a developer.
The main incentive for purchasing off-plan property is the potential for capital growth and return on investment; such properties are typically sold at a discount to raise capital during the planning and building- stage of the project. 
When purchasing directly from a developer, a buyer usually needs 10%-20% of the sale price upfront when signing the Sale and Purchase Agreement (SPA), the remainder is usually spread across flexible payment plans which often include post-handover payments allowing buyers to maximize their return on investment. These distinguishing features make the off-plan property an appealing investment opportunity, with the expectation that once delivered, the property will be worth more than the price paid, resulting in significant financial returns for the buyer. 
The off-plan property includes villas, apartment developments, and commercial buildings. Whether you buy an off-plan or a pre-built home, there are always risks involved, and any return on investment is at the mercy of the property market. 
According to the law, a developer must register the off-plan property in the name of the purchaser, in the initial property register once it is sold. The buyer has the right to cancel the SPA if the property is not registered. 

This initial registration is a must as per Article (3) of Law no. (13) of 2008 Regulating Initial Property Registration, in Dubai. It states that all actions on off-plan property units shall be registered in the initial property register. Sale and all other legal actions that transfer or restrict ownership and any right based thereon shall be deemed null and void unless registered.
Dubai Law No. 19/2017, Amending Dubai Law No. 13/2008 (Regulating the Interim Real Property Register in the Emirate of Dubai), will affect those purchasers who, having purchased a unit off plan, breach the SPA. The new law has provided further requirements and more detail to the procedures which a developer is required to follow to enforce the SPA or cancel it, depending upon the circumstances.
After completing the project, the initial registration is turned into final registration provided that the buyer had fulfilled the obligation of price payment as per Article 8 of the same law. The developer shall register completed projects upon receiving the completion certificate from the competent authorities, including the sold units in the name of the buyers who have fulfilled their contractual obligations.
The buyer has the right to cancel the SPA and requests the developer to return the money, in the absence of initial registration, if the developer breaches the obligations imposed on him by Article 3 of the same law on bilateral contracts. 

If one of the parties does not perform contractual obligations, the other party may, after serving a formal notification to the debtor, demand the performance of the contract or its rescission, as per Article 272 of the UAE Civil Transactions Law.

Although property market conditions are out of a buyer’s control, if a buyer undertakes the necessary due diligence and obtains legal advice about the contents of the sale documents (reservation agreement and/or SPA), buying off the plan can be a very favourable way to get onto the property ladder and to start or increase his property portfolio and maximize returns on investment.

The Law Reporters was established with the principle of making legal content accessible to the masses and connecting people with lawyers in the UAE. Get in touch with our empanelled lawyers and law firms who will provide you with a comprehensive service in the UAE.

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Sharjah allows full real estate ownership to all nationalities.

Inheritance rights for freehold property are clearly outlined in Sharjah's amended real estate legislation, which will spark a new wave of purchases from non-Arab ex-pats.

 

Property purchases in designated freehold regions had already attracted a diverse range of nationalities throughout the year. However, the demographic composition is still largely favoring citizens of the GCC and the UAE. With the new legislation stating that everyone would be granted freehold rights and that inheritance rights will be a part of that, this may be the turning point in casting a larger net for buyers.

 

It was still unclear to some prospective buyers whether a property was freehold or subject to a 100-year lease. This has been made clear, and the Decree also provides full safeguards regarding heirloom rights. Furthermore, the amended statute states that the owner may transfer the property to "one of his first-degree relatives by what is established in the executive rules.”

 

The new edict refers to regions outside of Sharjah's free zones, which have previously been restricted to Emirati and GCC Nationals. The biggest difference is that it will permit ownership in real estate development regions and initiatives like Aljada, Al Mamsha, and Al Zahia.

 

Although demand has always outpaced supply up to this point, Sharjah has seen a steady increase in off-plan launches. However, things may change. The new rule expands the pool of potential purchasers for Sharjah, enables developers to sell there as well as outside, and will only contribute to the market's expansion story.

 

Non-Arabs were permitted to purchase real estate in Sharjah's designated neighborhoods on a 100-year leasehold basis beginning in 2014, provided they were UAE residents. The law was then updated in 2018, allowing any country to purchase in Sharjah without the requirement of a UAE resident visa. Only persons who are citizens of the UAE and citizens of the Cooperation Council for the Arab States of the Gulf" are allowed to own property in the emirate.

 

And as an exception, the following conditions may be met before transferring ownership to someone else: ownership with the Ruler's approval, transferring by way of inheritance due to a legal notice, Assignment to a first-degree relative of the owner according to the provisions of this law's executive regulations ownership of real estate development areas and initiatives that adhere to the Council's rules.

 

As long as they satisfy the requirements for foreign ownership, all asset 

classes will be covered by the new ownership decree. Even while residential real estate is very popular, allowing ownership of other assets kinds will help Sharjah's real estate market expand and diversify for both end users and investors. 

 

Sharjah reported AED 11.2 billion in real estate deals in the first six months, reflecting the optimistic feelings the UAE's broader real estate market has been experiencing over the past two years. And Sharjah real estate transactions reached AED 2 billion in August. These figures include designated freehold zones and cover all real estate and plot transactions throughout the emirate.

 

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Can the developer amend the sale purchase agreement unilaterally?

The UAE Civil Transactions Law Article 267 says that no party can revoke, modify or rescind a contract, except by mutual consent or court order. 

The developer does not have the right to amend the Sale and Purchase Agreement (SPA) unilaterally unless by a mutual agreement of such amendment. In a valid and binding contract, none of the contracting parties may revoke, modify or rescind it, except by mutual consent, order of the court, or a provision of the law.

In general, any party in bilateral contracts has the right to request for cancellation, however, the termination can only be finalised after an order of the Court.
Article 272 of the same law states that - 
In bilateral contracts, if one of the parties does not perform his contractual obligations, the other party may, after serving a formal notification to the debtor, demand the performance of the contract or its rescission. The court will decide whether the developer is late or not in the implementation of his contractual obligations, and whether this delay exceeds the limits to the extent that leads the buyer to request the termination of the contract, or not.

The SPA is a legally binding contract that will define the terms of an agreed-upon real estate transaction. Real estate contracts need to be amended for unforeseen reasons. 

A standard amendment to the SPA might include information concerning changes or additions in price, date of delivery, inspection requirements, financing conditions, title policy provisions, etc. 

The amendment can be drafted to meet your specific needs for your deal. Typically, you would have an attorney draft up an amendment if it's not already included in the original SPA document. Once the amendment to a purchase and sale agreement is drafted, it will be signed by both parties to become legally binding.

The Law Reporters was established with the principle of making legal content accessible to the masses and connecting people with lawyers in the UAE. Get in touch with our empanelled lawyers and law firms who will provide you with a comprehensive service in the UAE.

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Dubai Land Department gives Residents Two-Week Time to Register their Cohabitants Through the Dubai Rest app

The Dubai Land Department (DLD) has notified all owners, developers, property management companies, and tenants to register the co-occupant details in the owned/leased properties within 2 weeks by following the 8-step process including adding personal details and the Emirates ID.

The registration must be done through the Dubai rest app once the registration is completed the co-occupants will automatically be updated on the tenancy contract.

The circular came into effect as the UAE government updated its rules to accommodate the evolving needs of the massive expatriate population as it is home to over 200 nationalities, and in the future attract more foreigners to live and work in the country.

Last year the UAE government relaxed family laws, to allow legal cohabitation of unmarried couples or unrelated flatmates and made changes to policies around divorce and inheritance, harassment and assault, and alcohol consumption. 
Recently the government has introduced progressive visa regulations that make it easier for foreigners to obtain residence visas which will be effective from next month.

Long-term visas are being granted to investors, entrepreneurs, start-up owners, exceptional talents, scientists, professionals in various fields, outstanding students and graduates, humanitarian pioneers, and frontline heroes who fulfil the specifications listed under each of these categories.
The benefits of the long-term visas will extend to immediate family members. Children can be sponsored by Golden Visa or Green Residence visa holder until the age of 25 which is raised from 18 years and with no age limit for unmarried daughters while children of determination are granted a residence permit, regardless of their age.

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Crypto-based purchases in Dubai’s real estate market - amidst troubled times in the market

Over the past 8 months, Bitcoin has fallen by nearly 57% year-to-date. It is safe to say that cryptocurrency shareholders currently have all-time low confidence in the market.

This class of assets exists due to disposable income, which has been steadily diminishing as a result of several factors – the post-pandemic economic effects, the Russian-Ukraine war, and now inflation.

It is unreasonable and possibly unprofitable for investors to keep holding on to crypto when it might lead to realized losses for them. Very few, and usually only the ultra-rich, can afford to wait till the market goes back to a successful curve. Thus, crypto investors who are expecting a downward trend in crypto will likely look to convert this extremely erratic asset into something which is quite the opposite – safe, stable, and secure: Property ownership in Dubai. 

Dubai is already a pioneer in the real estate industry, and thus it comes as no surprise that despite the downward trend in the crypto market, crypto-based transactions and inquiries related to property purchases have been on the rise recently. 

The reason to choose Dubai real estate market

Dubai far surpasses the likes of other excellent property investment opportunities available in countries such as the US, Australia, India, Singapore, Canada, and the UK. It is the optimum location for high-net-worth crypto traders, and a leading reason for that is the stellar advancements in technology and infrastructure.  

Real estate is emerging as the most popular choice among the industries where cryptocurrency is used, and Dubai is a well-established hotspot when it comes to the real estate market.

As a commercial and tourist hub, coupled with a reliable legal framework which supports stakeholders, it boasts a strong history and a bright future when it comes to this industry.

This has been further exacerbated by the establishment of the Virtual Assets Regulatory Authority, which will serve as a landmark in the virtual assets industry by providing regulation and supervision of virtual assets services.

This act establishes Dubai as a leading figure in the crypto hub as it opens doors to business growth through virtual assets, while also maintaining the balance by overseeing the concerns of consumer protection and prevention of financial crime and governance. 

This recent development has made Dubai an appealing location for crypto exchanges, and it is looked at favourably by investors who are looking for great returns in not only the material world but also the digital one.

Although cryptocurrency is not considered a legal tender in the Emirates as of yet, it is still accepted as a method of trading in several areas. Real estate is one of them, and the most popular choice as well. 

 Dubai real estate market  & Crypto

When purchasing luxury real estate, the crypto-rich often use cryptocurrency exclusively or divide the cost between cash and crypto. Over 40 million Americans own Bitcoin and seek uninterrupted and safe asset options to bring variety to their crypto portfolio.

Crypto provides a unique characteristic that allows users to speedily and safely make blockchain-based transactions.

This method forgoes the waiting period required in traditional bank transfers. However, for crypto to gain traction and popularity, there is still some acceptance and time needed.

Due to the benefits of using digital transactions as opposed to traditional ones, they are becoming more of a popular choice in the global property market.

Investors no longer need to deal with the hassles of currency conversions or transferring money to foreign banks. Advancement in technology has allowed investors to buy real estate in just a matter of a few weeks.

The transparency that comes with cryptocurrency such as Bitcoin also allows organizations to easily verify the validity of property investors who want to buy via this currency.

A way to avoid the risk of unpredictability in price, investors can set the price in fiat currency at Coinsfera when buying property via crypto, and then convert the money back to Bitcoin. They can then convert it back to fiat currency once the transaction is done. 

Another reason why crypto makes for a cautious choice in real estate investment is that, unlike traditional fiat money, the majority of cryptocurrencies have a finite supply which is dictated by a framework which works according to the elliptic curve.

This means that inflation cannot cause the governing body or entity from losing value. Thus, if one is looking for a long-term and dependable store of value, crypto is the way to go. 

Further, owing to the cryptographic structure, governing bodies or entities do not have the authority to access or tax cryptocurrencies if they don’t have the owner’s consent.

Therefore, those that are worried about the adverse effects of hyper-inflationary occurrences or times of economic crises, will find crypto attractive. Bitcoin, in specific, is deflated and resistant to censorship, which is why it is widely regarded as digital gold and has garnered much attention.

 The future of crypto in this market

The biggest roadblock is that most developers aren’t yet familiar with how crypto can change the property investment landscape. Crypto is still an emerging asset class and continues to compete with the predominant traditional methods of trading.

This financial framework is still establishing its foundation, and as it does so, stakeholders in the industry will discover how crypto can be effectively utilized in the sale and purchase of the property. 

As this asset class grows, there will be overarching implications about how far this technological real estate revolution can continue to develop, and about all the stakeholders such as developers, governance, investors, etc. that are affiliated with crypto. 

The future and acceptance of crypto in the real estate business rely on convenience, strengthened security, and an expanded marketplace.

The effects of crypto payments as a fast-growing alternative will affect property transactions in exciting ways which both buyers and sellers should keep an eye out for. 

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What rights does Tenant have in case of demolition or considerable renovation in Dubai?

Tenants in Dubai have the right to automatically renew their lease once the contractual period is over. This is a matter of public policy and has been provided for in Article 25(2) of the Tenancy Law, as well as previous decisions by the RSDC (Rental Disputes Settlement Centre). However, this automatic renewal principle has an exception that the landlord can refuse the renewal of the lease, and file for an eviction notice after the completion of the lease period. This exception can be applied in certain circumstances, of which demolition or renovation of the property is one. 

In the case of demolition 

Firstly, demolition requires approval from relevant authorities in Dubai. The landlord must have evidence that they have obtained all the necessary documents and licenses from the relevant authorities. Only then can they go ahead with the demolition.

The tenant may file a case with the RDSC (Rental Disputes Settlement Centre) if they are not satisfied with the claim of demolition which requires them to vacate the property. The landlord will then be required to present satisfactory evidence that substantiates the claim. The evidence may be in the form of prior approval by the Dubai Municipality regarding the demolition. 

Article 25 of Dubai’s Rental Law provides that an eviction notice has to be served by the landlord, which also states the reason for demolition. This must be delivered to the tenant 12 months before the date of eviction. The notice has to be communicated to the tenant through a Notary Public, or by registered post. Failure to comply with the 12-month notice period will result in the landlord not being allowed to evict the tenant after the tenancy contract. 

In the case of renovation

The notice period for eviction in case of renovation is different compared to that in the case of demolition. The landlord must inform the tenant 90 days before the expiration of the tenancy contract that the lease will not be renewed due to renovation/restoration purposes. 

However, it is important to note that the renovation must be of the kind that requires the tenant to move out. Accordingly, the landlord must present a technical report issued by the Dubai Municipality or approved by it which supports the claim that the renovation cannot be carried out while the tenant living in the property. 

Right of first refusal

Article 29 of Dubai’s rental law - Law No. (33) of 2008, provides that the tenant has the right to return to the property after the completion of renovation or reconstruction. The right to the first refusal means that before anybody else is given the lease for the restored property, the last tenant has the right to make an offer to renew the lease or to buy the property they resided in before renovation or demolition. This is a common clause in most tenancy contracts. 

The right to the first refusal must be exercised by the tenant within 30 days from the date that they are notified by the landlord. If the 30 days go by without the tenant making an offer, the landlord is free to make offers to others. Similarly, if the offer is declined, then the landlord may accept offers from other prospective tenants. 

The rental committee of Dubai has the authority to resolve any dispute or disagreement regarding the new rent amount.

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Moving Out When the Lease is Still Active in Dubai: How to ENSURE you do not Have to Pay the Penalty for Violating the Lease?

A tenancy contract is a rental agreement between a tenant and Landlord that must be signed before receiving the keys to the Property. A tenancy contract is mainly a legally binding agreement that allows the tenants to use the Property for a set period.

According to Article 4 of the Dubai Tenancy Law, the relationship between the Landlord and the tenant will be protected by a written Lease Contract that should be signed by both parties. The Real Estate Regulatory Agency (RERA) will record any lease agreements for real property that are subject to the provisions of this statute, as well as any amendments to those requirements. Unless a Lease Contract is registered with RERA under the applicable laws, companies are not permitted to investigate a dispute or claim or take any action regarding it. Article 6 of the Dubai Tenancy Law states that if a Rental Contract's term expires but the tenant continues to live in the Property without the Landlord's approval, the Lease Contract will be renewed for one year.

 According to Article 7 of Law No. (26) of 2007, neither the Landlord nor the tenant may cancel the lease agreement without the other party's approval. Initially, tenants and landlords in Dubai were required to provide a 90-day notice if the rental agreement was not renewed.

However, with the passage of Law, Law No. (33) of 2008, which changed several provisions of Law 26 of 2007, the 90-day notice period is no longer necessary if either party does not intend to extend the lease. Instead, this rule was revised in Dubai to give precedence to the requirements contained in rental agreements. Therefore, tenants need to be informed of the notice time stipulated in the rental agreement. Instead, Dubai's rental law has been modified to emphasize the terms of leasing agreements. Therefore, tenants must ensure they are aware of the notice period provided in the rental agreement. 

In case of early termination

As per Article 7 of the Dubai Tenancy Law, the tenancy agreement cannot be ended unilaterally by any party, but it can be mutually terminated by the tenant and the Landlord throughout the length of the agreement. According to Article 4 (1) of the modified Dubai Tenancy Law, the tenancy agreement binds both the Landlord and the tenant. A tenant must comply with the stipulations of the lease agreement and, in rare instances, may be obliged to pay two months' rent as a penalty for early termination of the agreement.

Unless a particular early termination clause is incorporated in the lease, the Landlord is not compelled by law to repay any rent to a tenant who decides to vacate the premises early. In the emirates of Dubai, there is no common law or guiding concept governing the termination of a lease early. The tenant should instead request contract wording that provides a notice time and penalty amount in the case of early termination. Law 26 of 2007 of the Real Estate Regulatory Authority, which regulates landlord-tenant interactions, does not have an item allowing for early contract cancellation but rather governs the relationship between the parties during the duration of the contract. Tenants must be informed that the Dubai tenancy law does not permit early lease cancellation. The rental law applies to landlord-tenant relationships solely for the duration of the contract.

 Recommendations for Resolving Damages Due to an Early Lease Termination

The first advice would be to locate an early termination clause in the rental agreement. Tenants must ensure that an escape provision is included when entering a lease. This will save them a great deal of time and work if they find themselves in the position of needing to terminate a lease agreement early. If the rental agreement in Dubai does not include a clause for early termination, the Landlord has the right to seek reimbursement for the tenant's early dismissal and breach of contract. 

This implies that if the tenant wishes to terminate the lease agreement early, they may be required to lose the rent for the remaining time of the contract or pay the Landlord some form of compensation.

One must contact the Landlord if such a clause is missing from the rental agreement. Following this, the individual can explain the reasons for the lease termination. Alternately, the tenant can offer to find a new tenant for the Landlord to minimize financial loss. The tenant will likely be compelled to reimburse the Landlord if they are unable to locate a replacement tenant quickly. 

In conclusion, a tenant must make sure there is an early termination clause in the rental contract. In a case where the rental contract does not have the clause, the tenant can try to escape the penalty for early termination by negotiating with the Landlord and finding the Landlord a replacement tenant.

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Sheikh Zayed Housing Program: New instructions issued by UAE Central Bank

All banks and finance businesses doing business in the UAE have received a notice from the Central Bank of the UAE (CBUAE) about home loans given to recipients of the Home Finance of the Sheikh Zayed Housing Program (SZHP).

In accordance with SZHP and in accordance with Article (5) of the Regulations Regarding Mortgage Loans, released in 2013, the notice included information about the CBUAE judgement.

In accordance with the aforementioned decision, the maximum debt burden ratio that beneficiaries of the SZHP's Home Finance Program may have is now 60%. Previously, this ratio was 50% of their total salary or any other income from a known specific source. The judgement further stipulated that UAE nationals with long-term loans will be given the option to apply for SZHP housing loans after demonstrating their ability to pay within the DBR cap of 60%.

After determining their ability to repay, up to a maximum DBR of 50%, and after obtaining from them a no-objection statement to increase the monthly deductions against the housing loan, banks are permitted to raise the DBR for retirees and senior UAE nationals from 30% to 50% so they can benefit from SZHP housing loans.

In addition, the Federal Government has decided to relax the rule requiring SZHP house loan customers to put down 15% of the whole cost of housing loans for which their profit and interest are guaranteed. The first property of the UAE national, which will be constructed or acquired with funding, will serve as his principal residence.

The UAE national will be required to pay the difference in the payable ratio of the down payment of 15% required by the regulations, from his own resources and not from other lending sources, should the loan amount exceed the amount of loan profit/interest of which the Federal Government guarantees and pays.

In light of the new federal government housing loan policy that the Cabinet approved to provide financing for housing loans in collaboration with the private sector and national banks, the CBUAE is keen to support the UAE government's efforts to achieve happiness, housing stability, and provide comfort and well-being for its citizens. This will shorten the time that housing applications must wait.

The CBUAE's Mortgage Loans Regulation strives to protect consumers and the financial industry by establishing minimum acceptable requirements for mortgage collaterals. By using appropriate and cutting-edge rules, it also strives to encourage financial stability and contribute to the market for mortgage loans in the United Arab Emirates' sound development and organisation.

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Dubai’s Crypto Currency and Real Estate Scenario

Dubai is an emerging crypto hub and in recent times, there has been a significant upsurge in the users of the currency owing to its popularity in the entire United Arab Emirates (UAE).

Dubai holds a “unique position” as a “growing crypto hub.” The major reasons for the growth of crypto in the region are the government regulations for the safety of stakeholders which fosters the interest of the citizens and the astonishing investment opportunities. 

The data from YouGov’s “The Future of Financial Services Report” summarises the high interest of UAE residents in this digital currency and also highlights the 67% of residents who are inclined towards investing in crypto in the upcoming five years. 

Speculating the bright future of cryptocurrencies, Dubai established the Virtual Assets Regulatory Authority (VARA) to sketch the playground for a virtual asset sector, consolidating its position as a prominent crypto hub. 

VARA was instituted under the provisions of Law Number 4 of 2022 and came into effect from 11th March 2022, intending to create an advanced legal framework to protect investors and govern the virtual asset industry.

Though the law still needs to be evaluated for its implication, this first step towards the development of cryptocurrencies is still a commendable step for a better future. 

Dubai is further known for its vastly spread luxurious real estate market which is one of the most lucrative lands for property investment due to its exorbitant stability and potential, strong legal system to protect stakeholders, and spectacular progress trajectory which developed because it emerged as a major global centre for trade and tourism. 

The Dubai real estate market has been able to open flood gates for investments by accepting payments through cryptocurrencies. 

On one hand, where crypto investors want to convert their assets into much safer and reliable resources, on the other, Dubai wants to develop as a crypto hub in the near future and hence both complement each other to realize and achieve their goals as cryptocurrency transactions are even safer and quicker as they work on a blockchain and are protected because of their cryptographic structure. 

This revolutionary step became possible only because of the enactment of the Dubai Virtual Asset Regulation Law (Law Number 4 of 2022) which would not only contribute to the development of greater trust among participants in this asset class but also develop and establish UAE and Dubai’s position as vital players in orienting the future of virtual assets globally.

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Abu Dhabi tenant to pay Dh 30,000 for illegally dividing and subletting villa

A tenant in Abu Dhabi has been charged to pay Dh 300,000 in compensation for partitioning the villa he was leasing, and further subletting it to four different families. The landlord sued the tenant for damaging his villa. The grounds for damage are that the tenant illegally divided his house and rented it to four parties without his permission. The plaintiff has argued that this act violates the Abu Dhabi housing laws. 

The landlord has asked the court to forcefully evict the tenant from his villa. Additionally, he demands that the defendant pays him Dh 300,000 in reparations which amounts to the cost required to renovate and maintain the villa after the damages done by the tenant. 

The tenant denied the landlord’s claims in court and countered that this case had been dismissed by a former court order. However, the judge did not entertain this claim. 

An engineering expert reports that by dividing the villa into four portions, the defendant had made modifications and additions, the renovation and maintenance of which exceeded Dh 300,000. 

The Abu Dhabi Family Court and for Civil and Administrative Claims ruled in favour of the plaintiff and decided that the tenant had violated housing rules, and was also to be held liable for damaging the villas by the alterations made. 

As a result, the tenant was ordered to reimburse the landlord with Dh 300,000 and bear the landlord’s legal expenses. 

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AED 1.9 billion worth of real estate was transacted in Sharjah in June 2022: SRERD

According to a report by the Sharjah Real Estate Registration Department (SRERD) for June 2022, 747 real estate sales transactions of AED 1.9 billion were completed in 106 locations of the Emirate of Sharjah, with a total area exceeding 6 million square feet. 358 mortgage transactions totalling AED 764 million are included in the statistics. Residential, commercial, industrial, and agricultural areas made up more than 6 million square feet of real estate sales in the emirate in June.

Abdulaziz Ahmed Al Shamsi, Director General of SRERD, said, "Despite being impacted by the global economic conditions since last February, the sector has maintained an upward momentum in growth and a positive recovery pace. It has benefited from the increased appetite of investors to conduct real estate transactions. Companies and individuals seek to invest in real estate as it is a safe bet for capital and an ideal way to achieve a decent lifestyle." He further added, "These results are in line with the strategic vision of the Emirate of Sharjah in the areas of economic and social development, enhancing financial sustainability, stimulating the macroeconomy, and providing adequate housing for citizens and residents alike, something that embodies what was recently confirmed by H.H. Dr. Sheikh Sultan bin Muhammad Al Qasimi, Supreme Council Member and Ruler of Sharjah, when he said that housing has a special value, as it is part of the Sharjah Emirate programme, which includes five main items, including housing, employment or source of income."

The department completed 2,521 transactions all over the previous month, with 747 of those being sales and accounting for 29.6% of the total. Mortgage transactions made up 358, or 14.2% of all transactions, while the remaining transactions made up 1,416, or 56.2 per cent.

There were 239 transactions involving vacant land, broken down by type of property (32 per cent). As opposed to separated towers, which accounted for 331 trades, developed lands constituted 177 transactions (23.7 per cent) (44.3 per cent).

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Dubai Land Department And Emirates NBD Announces Strategic Partnership To Automate Rent Collection In Dubai

Rent collection via the Central Bank of the UAE's Direct Debit System (UAEDDS) will soon be enabled, thereby automating, and digitising the traditional rental cheque payments system to help the rental market. By removing the administrative tasks needed to manually manage post-dated checks, this partnership between Emirates NBD and the Dubai Land Department (DLD) will not only benefit landlords and property management firms but is also in line with the Dubai Government's vision for paperless payment ecosystems and the Dubai 10X initiative. Apart from offering a quick and hassle-free digital alternative, tenants will also be able to avail of flexible payment plans from the landlord or property management companies. 

Foreigners who seek to invest in real estate in Dubai can now easily open non-resident savings accounts with Emirates NBD, which will make it easier for them to make their purchases and manage their real estate and rent collection.

H.E. Sultan Butti bin Mejren, Director General of DLD said: “The real estate industry in the UAE is one of the best and most competitive in the world, and as part of our mission to present a regulatory environment in service of tenants and property owners, we have partnered with Emirates NBD in line with our efforts to fully digitalise our services as per the Dubai Paperless Strategy. Such collaborations will help facilitate and streamline the processes involved in the property market by employing progressive machinations on the path towards replacing the legacy systems in place.”

Hesham Abdulla Al Qassim, Vice Chairman and Managing Director of Emirates NBD, said, “Emirates NBD is delighted to partner with Dubai Land Department on these strategic initiatives that will help in providing landlords and tenants with an easier, automated rent collection and management system as well as facilitate property purchases by new non-resident investors. As a leading bank in the UAE, Emirates NBD remains committed to supporting initiatives that will support the UAE’s long-term and strategic goals and in further strengthening Dubai’s standing as the investment destination of choice for international property investors.”

The partnership between the DLD and Emirates NBD is in line with the Dubai government's goal to digitise services and promote a cashless economy.

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Musataha Rights In The UAE

Real estate is a very important source of revenue for the UAE economy. For the further growth of the real estate as well as the economy, the concept of musataha rights has been introduced.
A musataha right is a vital tool for real estate development in the UAE. It empowers investors to establish safe investment projects and avoid the restrictions that are placed on owning land. 

Meaning of musataha rights in general terms - 

The acquisition of property rights other than the purchase of freehold land is a beneficial way of reducing the amount of expenditure. The musataha right is a popular way for investors to acquire such rights.

A musataha right is a specific type of investment partnership between the public and the private sectors, in which the design, build, finance, operations, along with market risks are transferred to the private sector.

A Musataha right allows its holder also known as ‘’musatahee’’ to develop upon and make use of land belonging to the other party. It permits the holder of the property right to own the assets, operate a project, as well as maintain it for a definite period. After the agreed period, the ownership of the project assets and land is transferred back to the Government.

Legal framework for musataha rights – 

Rights with regard to property ownership are ingrained in Federal Law Number (5) of 1985 also known as the “Civil Code”. Under the civil code, property right includes musataha rights
Article 1353 of the UAE Civil Code has defined musataha rights as: “A right in rem conferring upon the owner thereof the right to build a building […] on the land of another.”

Musataha agreement invariably is a right that entitles the real estate holders to construct invest, lease, sell, mortgage, or purchase a plot of land for a third party for a term up to 50 years with condition that such acts are not contravening any executive council resolutions.

This term of 50 years can be further extended by mutual agreement of the concerned parties. 

Musataha fees - 

The Dubai Land Department (the “DLD”) registration fee payable on a Musataha agreement is 1% of the total annual rent while in Abu Dhabi the registration fee payable on a Musataha agreement is 2% of the total annual rent. This fee is collected from the owner of the Musataha right unless agreed otherwise.

The musataha right is thus a very beneficial right as they secure revenue in respect of the land for fifty years or more in some cases and there is no need of spending a huge amount on purchasing the land. Before entering into the musataha form of arrangement is very important that necessary due diligence and legal documentation are done so that the rights and interests of both parties are safeguarded.

For any enquiries or information, contact info@thelawreporters.com or call us on +971 52 644 3004 

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What to do when Security Deposit is not Refunded in United Arab Emirates(UAE)

BY: SANIA KAUSHIK (Legal Research Intern, The Law Reporters)

The United Arab Emirates has a robust rental market, where tenants frequently hunt for better tenancy agreements when their leases expire. While Ejari contracts have made landlords’ and tenants’ lives easier, recovering the complete security deposit in the UAE can be challenging at times. 
Tenants can obtain their security deposit back from the landlord when they change residences. This happens frequently and without issue. However, there may be deductions for which the tenant is unprepared.

The Rental Law in UAE
- If the landlord so desires (which is frequently the case), the tenant may be required to pay a security deposit at the commencement of the rental agreement.
- The security rent deposit is intended to cover end-of-lease repairs for wear and tear on the property while the tenant resided there.
- When the tenant vacates the property, the landlord must repay the security deposit in full or what’s left after deductions to the tenant.

Primary Instructions for Receiving Security Deposit Refund in the UAE

1. Read the tenancy contract well
As a general rule, the landlord is required to restore the entire security deposit to the tenant if the tenant vacates the premises in an acceptable condition as stipulated in the rental contract. As a result, it is critical to read the tenancy contract in the UAE attentively. The contract covers certain facts (if not all) relevant to rental security deposit claims, in addition to describing each party’s rights and duties.

2. Always get a ‘check-in’ and ‘check-out’ report
Check-in and check-out reports are other essential documents as parts of the tenancy contracts. Photographic documentation of the property’s condition before and after the tenant moves in and out is included in these reports. The landlord should perform these reports in the presence of the renter and with the proof in hand.

It’s a lot easier to spot any anomalies in the property’s condition, as well as the level of damage and wear and tear. In the UAE, if the wear and tear are minor, the tenant is entitled to a full reimbursement of their security deposit. If disagreements persist regarding the repayment of the security deposit cheque, the tenant should file a formal complaint with the Dubai Rental Dispute Centre (RDC) of the Real Estate Regulatory Agency (RERA). RDC is a judicial arm of the Dubai Land Department that employs flexible processes to resolve rental disputes in the Emirate and other real estate-related matters.

3. Know the Rental Law
The landlord ought to refund the security deposit to the tenant at the time of vacating the flat, in accordance with Article 20 of Law No. 26 of 2007 regulating the relationship between landlords and tenants in the Emirate of Dubai (the ‘Rental Law’). The law states, “When entering into a lease contract, the landlord may obtain from the tenant a security deposit to ensure maintenance of the real property upon the expiry of the lease contract, provided that the landlord undertakes to refund such deposit or remainder thereof to the tenant upon the expiry of the lease contract.”

Based on the provision mentioned above under the rental law of the UAE, tenants are entitled to a refund of the security deposit. One may approach the Dubai Rental Dispute Centre (RDC) to file a complaint against the landlord with all the applicable documents, including a security deposit receipt.

Online Dispute Resolution 
In the UAE, the whole dispute resolution process can now be done online on the Abu Dhabi Judicial Department website. The tenants could fill out the Rental Claim Form and attach the relevant documents, including a copy of the rental agreement. 
There would not be any hearing, and if the judge is convinced with the evidence put forward, he will issue a payment order within three days. The tenant can then notify the landlord of the payment order.
If the landlord refuses to return the deposit, the tenant can file a complaint online with the Judicial Department’s enforcement division. Before intervening, the landlord would be given 14 days to comply with the order.

Recourse available to the Tenant
In the UAE, the property market is controlled by RERA, a division of the Land Department. Tenants can file a formal complaint with the Dubai Rental Dispute Centre for a fee of 3.5 per cent of the annual rent of the property, at least Dh500 ($136) and not more than Dh20,000 ($5,445) including administrative costs of roughly Dh320 ($87). The Arbitration Department will attempt to resolve the case within 15 days, but a lawsuit will be required if that fails. A verdict is to be expected within 30 days.

Deposit Dispute Helplines
One may refer to the deposit dispute helplines for further assistance.
Rental Disputes Settlement Centre - 800 4488.
Rent Dispute Settlement Committee - 800 2353.

 

For any enquiries or information, contact info@thelawreporters.com or call us on +971 52 644 3004 

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How to Deal with Steep Rent Increase in the UAE

In the United Arab Emirates, rental contracts normally last one year and are difficult to terminate. Housing regulations favour both the landlord and the tenant, therefore if the owner decides to break the lease early, the tenant is protected. 

Understanding the rental procedure in the UAE

The rental process and rules are essentially the same in all seven emirate states, however, slight discrepancies exist when it comes to legalizing contracts and paying deposits. The UAE is noted for its high salary offerings; however, a large portion of these salaries is used to cover the high cost of living. 

Lease Agreements

Lease agreements between a landlord and a tenant must be registered with the proper official in each emirate. Lease contracts must be registered in order to connect the rental property's utility services. This includes water, electricity, natural gas, as well as telecommunications. 

Abu Dhabi

Landlords in Abu Dhabi must record leasing contracts in the city's tenancy contract registration, the Tawtheeq system. A housing fee of 3% of the annual rent will be levied over the course of 12 months after the lease contract has been recorded. 

Dubai

Lease agreements must be registered with ‘Ejari’, the RERA's online platform, by landlords in Dubai. Tenants are responsible for paying Dubai Municipality housing fees, which are calculated at 5% of the annual rental rates. 

Sharjah

The Sharjah Municipality in Sharjah is where lease contracts are registered. 

Steep Increase in Rents

If a landlord hikes the rent of a particular property and the tenant find it to be high, the same can be challenged in the emirates. The various emirates have their own rules and regulations dealing with this aspect and they are as follows: 

  1. Dubai 

The requirements of Decree No. 43 of 2013, governing the rent increase for real property in the emirates of Dubai, apply to the rental increase in Dubai.

The equivalent average rent shall be computed in accordance with the "Rental Index" approved by the Real Estate Regulatory Agency (RERA), according to the stated Decree (Article 3). RERA is a regulatory department of the Dubai Land Department (DLD) that governs the landlord-tenant relationship. The Rental Index is determined by RERA, which has sole authority to define the average rent and, as a result, the percentage increase in rent in Dubai.

According to the Decree, the highest rental increase allowed is a 20% increase over the rent index. In order for a 20% rental increase to be allowed, the property must be more than 40% below the average rent rate as assessed by the RERA index.

The tenancy agreements in Dubai are governed by Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai (the 'Dubai Tenancy Law') and Law No. 33 of 2008 Amending Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai (the 'Amended Dubai Tenancy Law').

"RERA shall have the right to determine criteria relating to the percentage of Rent increase in the Emirate in keeping with the requirements of the prevailing economic condition in the Emirate," according to Article 10 of the Dubai Tenancy Law. 

  1. Abu Dhabi 

The Landlord and Tenant Law in Abu Dhabi permits a landlord to raise the rent by a maximum of 5% of the current rental sum. If the landlord raises the rent above this limit, the tenant may appeal to the Abu Dhabi Rent Committee for a rent ruling. The Landlord-Tenant Relationship in the Emirate of Abu Dhabi is governed by Abu Dhabi Law No. 20/2006.

"Article 16 of the abovementioned statute states that the Landlord may increase the rent by no more than 5% of the present rate on a yearly basis. Tenants, of course, have the right to file a complaint with the Rent Dispute Committee if they consider the increase is arbitrary or exceeds the statutory limit by more than 5%. 

  1. Sharjah 

Renters are protected from annual rental spikes under Sharjah's 2007 tenancy regulations, whereas tenants are protected from annual rent hikes under Sharjah's 2007 tenancy laws.

The law prohibits landlords from raising rent for the first three years after the tenancy contract is signed, and then for the next two years.

"The statute makes no provision for a percentage increase in rent. In the event of a dispute between the landlord and the tenant, the Rent Dispute Committee will set the rent, which will be based on market value. 

  1. Ajman 

The Landlord-Tenant Relationship in the Emirate of Ajman is addressed by Ajman Emiri Decree No. 2/2017.

"According to Article 6 of the abovementioned law, the landlord is prohibited from increasing the lease amount for a period of three years from the date of the lease contract or the last time the rent was increased."

Furthermore, if the Landlord wants to raise the rent, he must give written notice at least two months before the lease term expires, and the increase cannot be more than 20% of the current rent. The Landlord may independently ask the Rent Dispute Committee to increase the rent over 20%, and the committee may grant approval in rare situations.

 

Rental Disputes 

The landlord must give the tenant ninety days' notice before the tenancy expires, informing them of the rental increase. If the tenant is not given this statutory notice period, the landlord is not authorised to raise the rent.

Furthermore, subject to the applicable proportion of the increase, the rental increase should be justified. The tenant has the right to reject the rental increase if the landlord does not respect these conditions. If an amicable resolution is not possible, the tenant should file a complaint with the Rental Dispute Settlement Centre (RDSC).

If a real estate agent fails to follow the RERA rent calculator, a complaint can be filed with the Rental Dispute Centre (RDC) against the landlord and the real estate business. The RDC may summon the appropriate landlord and real estate firm based on the complaint and determine the rent of the apartment that is payable upon renewal of the tenancy contract.

This is in compliance with Article 13 of the Amended Dubai Tenancy Law, which states: "For the purposes of renewing a Lease Contract, the Landlord and Tenant may alter any of its conditions and reconsider increasing or decreasing the Rent prior to the expiry of the Tenancy Contract." If the Landlord and Tenant are unable to reach an agreement, the Tribunal may determine the reasonable Rent based on the criteria set forth in Article 9 of this article."

Therefore, the steep rental increase can be adjudicated and the landlord can be questioned for wrongful decisions. Hence, a steep rent increase can be addressed by the best lawyers in the UAE and thus a person can be protected from the unfair rental hikes.

For any enquiries or information, contact info@thelawreporters.com or call us on +971 52 644 3004 

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Provisions for Leasing a Property in the UAE

The UAE has rental and ownership properties that range from high-rise flats and villas to small societies. Expatriates living in the UAE have a variety of rental possibilities. Dubai is the most expensive city while looking at house costs. Abu Dhabi is in close second place. Sharjah, Fujairah, and Al Ain are all less expensive. The country has laid down some rules and regulations that need to be followed to lease or rent a particular property.

 
● Searching for a property

Available accommodation can be searched using local newspapers and magazines, and registered real estate brokers and private property websites can be used. There are also properties available for rent directly from the owner. Many UAE companies provide accommodation for their employees; however, some just offer a stipend. Therefore, an individual can search for a place through the following means:
○ Simsari (a website of Ejari)
○ Property Finder
○ Bayut

● Rates of rent

The city-states of Dubai and Abu Dhabi attract so many expats; hence housing in the UAE is plentiful yet costly. Although the UAE's average rent has decreased by 30% in recent years, expats may still expect to pay roughly half of their earnings on rent alone.  
The cost of renting a home is determined by its location and size. Tenants can pay their rent in one lump sum or installments, depending on what the broker/landlord has agreed to. Some brokers may also charge a commission fee of up to 5% of the total rent.
To complete a lease contract, the renter must produce identification documents to the landlord and real estate agent. This includes: 
○ a copy of his passport
○ a valid residency visa
○ an Emirates ID
○ post-dated cheques (covering the agreed-upon lease duration)


How to register a lease agreement?

Landlord-tenant lease agreements must be registered with the appropriate authority in each emirate. To connect the utility services required for the rental property, lease contracts must be written. This covers utilities such as water, electricity, gas, and telecommunications.

Abu Dhabi

Landlords in Abu Dhabi must record leasing contracts in the city's tenancy contract registration, the Tawtheeq system. Landlords can use the Abu Dhabi City Municipality's website or Customer Service Centers to register lease contracts in 'Tawtheeq.'  A housing fee of 3% of the annual rent will be levied over 12 months after the lease contract has been recorded. This money will go toward the tenant's monthly water and power costs.

The Abu Dhabi tenancy law’s Article 7 also states that during the rental time, unless otherwise agreed, the landlord is responsible for maintaining the rented property and doing all necessary repairs, excluding rental maintenance. However, the following limitations to the tenant's remedies are present in Abu Dhabi:
a) Suppose a tenant fails to submit a disagreement to the Rental Dispute Centre within one month of being deprived of use or enjoyment of the rented property. In that case, he forfeits his right to do so unless the tenant can demonstrate an acceptable explanation for the delay (article 9).
b) In practice, the tenancy contract specifies the parties' respective repair and maintenance requirements.
c) When referring to the parties' respective maintenance obligations, tenancy contracts frequently employ "major maintenance" and "minor maintenance."

Dubai

Landlords in Dubai must register lease agreements with Ejari, the RERA's online platform. Tenants must pay Dubai Municipality housing fees, which are determined at 5% of the annual rental rates. The housing fees increase the monthly power and water expenses. 
Under Dubai's local law No. 43 of 2013, rental increases in the emirate can be imposed when the average rent in the region is compared to the RERA increase calculator.
According to the Dubai Tenancy Law:
a) Unless the parties agree differently, the landlord is responsible for the upkeep and repair of any flaws in the leased property that may affect the tenant's planned use of it (article 16).
b) The landlord is accountable for any defect, damage, deficit, or wear and tear to the leased property caused by any cause other than the tenant's fault (article 17).
c) The tenant shall return the rented item to the landlord in the same condition he received, except for everyday wear and tear (article 21).

 Sharjah

Lease contracts are filed with the Sharjah Municipality in Sharjah. The Rent Regulation Department handles the leasing contracts in Sharjah.
Disputes Over Rentals

Whenever a dispute arises during the rent period, the landlords and tenants can contact the following:

The Rent Dispute Settlement Committee in Abu Dhabi

The Committees Department for Settling Rental Disputes are specialized in urgently adjudicating the disputes arising concerning rental relations between the contracting parties in the rental agreement.

The Rental Dispute Section, Sharjah Municipality for disputes 
The Rent Regulation Department is in charge of attestation of rental agreements, landlord cards approval, and building naming in Sharjah. The agency is also in charge of resolving leasing problems, sending them to a competent committee for resolution, and enforcing court orders.   

Important things to know while renting a property in the UAE

○ In the United Arab Emirates, tenancy agreements are for a year.
○ The contract will be drawn up in four to five working days. The agent completes the documentation in cooperation with the landlord.
○ For the tenancy contract to be written out, you must send a copy of your passport and a copy of your resident visa.
○ A security deposit is also required. Please keep the receipt safe since you'll need it when you apply for a refund at the end of your term.
○ Contracts are enforceable for a year, so if you leave early, you'll have to pay the penalty, which is normally two months' rent plus two months' notice. 

For any enquiries or information, contact info@thelawreporters.com or call us on +971 52 644 3004

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Owning A Dream in UAE for Expats

Buying or renting houses and having a roof over one's head is one of the most basic necessities in life and here are the ways expats can own houses in UAE.

BUYING REAL ESTATE IN ABU DHABI :

According to Law No. (19) of 2005 on real estate ownership, expatriates are only allowed to own real estate in the form of apartments through various methods of ownership.

The Abu Dhabi government offers four main systems that allow foreigners to own real estate in the emirate:
1. Property system- Specific ownership entities foreigners to own property such as villas and apartments without land for a period of about 99 years.
2. Musataha system- Foreigners can own residential units within certain investment areas under “musataha” contracts for a period of 50 years and have the option to have a renewable agreement        of  the two parties for a similar period, which enables construction on unused land. 
    Musataha contracts entitle the owner to enjoy the use of the property and build it or change it during a specified period of years.
3. Benefit system- Foreigners can own residential units within certain investment areas under “usufruct” contracts for a period of 99 years. The usufruct contract entitles the owner to enjoy the use         of    the property and its facilities without the ability to change it.
4. Long term rental system- this system states the right to rent units for an initial period of no less than 25 years.

Freehold areas in Abu Dhabi
Nine areas wherein foreigners are allowed to own real estate:
● Lol
● Mariah
● REM
● Saadiyat
● Yass Island
● Masdar City
● Country
● And Saih Al-Sedira
● Al Raha Beach

In April 2019, His Highness Sheikh Khalifa, in his capacity as Ruler of the Emirate of Abu Dhabi, issued a law, amending some provisions of Law No. 19 of 2005 on real estate ownership, granting non-nationals the ownership of real estate located within investment areas and making any disposal of them.

The new law stipulates replacing the texts of Articles 3 and 4 of the law, as the new Article (3) states that the right to own real estate is limited to the following categories:
● Citizens, the natural legal persons
● Public shareholding companies, with shares held by non-nationals is not more than 49%
● Any person on whom a decision is issued by the crown prince or the chairman of the executive council.

The law stipulates that non-citizen, whether natural or legal persons, have the right to own and acquire all the original and dependent rights in kind over real estate located within the investment areas, and they have the right to take any action on these real estate properties. 
And the new Article (4) stipulates that whoever has a usufruct or a musataha right for a period of more than ten years, without the owner’s permission, can dispose of this right, including its mortgage. 

BUYING REAL ESTATE IN DUBAI:
Foreigners in Dubai are allowed to:
● Have ownership in freehold areas
● acquisition of the right to own real estate is an absolute ownership that is not restricted by time
● The right to usufruct the real estate, or the right to lease it for a period not exceeding 99 years in the areas specified by the land department.
Article 3 of Legislation No. 3 of 2006 regarding defining the areas for non-nationals to own real estate in the Emirate of Dubai, refers to the areas designated for freehold ownership (pages 115-117). Title deeds of real estate owned in the Emirate of Dubai are issued by the Land Department, and there is no age requirement for ownership in the Emirate.

BUYING REAL ESTATE IN SHARJAH:
To own property, one needs to sign a usufruct contract. The period of usufruct shall be a maximum of 100 years from the date of signing the usufruct contract with the Real Estate Registration Department in Sharjah.
This shall be done after attaining a license to purchase property in the specified areas with the permission of the ruler and the condition he determines. This process shall be approved by Executive Council Resolution No. 26 of 2014 regarding the use of real estate in the Emirate of Sharjah


CONCLUSION : 
The  property market tends to fluctuate from time to time but By and large, it is a stable sector with reliable rental and resale values. However, with growing numbers of new developments, there is a lot of choice. 

By Kairavi Shah

For any enquiries or information, contact info@thelawreporters.com or call us on +971 52 644 3004

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New Law for Expropriated Property in Dubai

The expropriated property owners in UAE shall now be provided with full and fair compensation. A new law was passed in Dubai on the expropriation of private property for public use. The new law was passed by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the United Arab Emirates and Ruler of Dubai.

expropriation refers to the action by the state or an authority of taking property from its owner for public use or benefit.

Special development zones and free zones, such as the Dubai International Financial Centre, are also covered by this law.

The new law governs the terms and conditions under which buildings and facilities, both completed and under construction, can be expropriated.

According to a decision issued by the Chairman of the Court of His Highness, the Ruler of Dubai, it also lays out the parameters for compensating property owners whose properties are expropriated.

According to the legislation, if only a section of a property is expropriated and the remaining portion becomes unfit for use due to Dubai's construction laws and regulations, the owner will receive full compensation if he or she does not want to keep it and combine it with an adjacent property.

The law establishes a permanent committee known as the 'Expropriation Committee,' which will monitor matters relating to property expropriation in the Emirate. The composition of the committee, its members, decision-making processes, and expropriation procedures shall be decided by the Chairman of the Court of His Highness, the Ruler of Dubai.

The Committee is governed by Dubai Government’s Councils and Committees under Decree No. (28) of 2015.

The Expropriation Committee is responsible for examining expropriation requests, including requests to analyze the practicality of expropriating a property to satisfy project goals. Alternatives to expropriating a property for a project, such as land grants, may be proposed by the Committee.

It will also determine if a planned project requires full or partial expropriation, as well as the amount of compensation to be paid for expropriated property. The Committee's jurisdiction is superseded by orders issued by the Dubai Ruler to expropriate property in Dubai.

Any expropriation of property shall be decided separately by the Chairman of the Court of His Highness, the Ruler of Dubai.

If the expropriation affects property owned by a municipal or federal government entity, compensation will be granted in accordance with the Committee's approved legislation and procedures.

Expropriations of property carried out before to the new Law's enactment should follow all procedures and offer compensation in accordance with previously established terms and conditions within a year of the new legislation's enactment.

The Chairman of the Court of His Highness, the Ruler of Dubai, has the authority to extend the deadline by six months. If the deadline is not met, compensation will be resolved under the new Law's provisions.

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How to know if your landlord has a clean rental track contract in the UAE?

When deciding to rent a house, finding the right landlord is just as important as the right house. As a tenant in the UAE, you can investigate a landlord’s past rental track contract to see if there have been any rental cases filed against them. This can be done by requesting a Rental Good Conduct (RGC) Certificate from the Dubai Land Department (DLD).

An RGC Certificate, as introduced by the Rental Dispute Centre in 2018, is a certification service which allows the rental agreement parties to inquire about each other with their consent. By this practice, the landlord can know how committed the tenant is or has been to previous landlords, and similarly, the tenant can know how the landlord deals with their tenants and if they have been subjected to any tenancy provisions. Thus, this certificate acts as a way to promote mutual trust and knowledge between tenants and landlords and leads to lesser friction between them. Through an RGC Certificate, one can ask for information about a prospective tenant, or a prospective lessee. One can also report a rent-related dispute, have a record of active eviction cases, and get familiar with the real estate laws in Dubai.

How does the RGC Certificate lessen conflict?
One of the major advantages of the RGC is that it can effectively reduce conflict between a landlord and tenant. This is because the RGC provides information about a prospective lessor and lessee’s history and background with rental dealings, and it allows a person to adjudge whether they want to make a deal with the person after looking at their record. 

The RGC also plays a governing and supervisory role as it prompts lessors and lessees to behave respectfully and peacefully when dealing with each other since this will reflect on the certificate. It is also a preventive measure since it makes it easier for the parties to the rental contract to perform procedures. Lastly, the certificate is also beneficial in garnering attention to the rules and regulations in rental matters. 


How to obtain an RGC Certificate?
This certificate can be issued by both landlords and tenants, with the consent of the other party. Once approval has been given, one can either get the certificate online on the website dubailand.gov.ae, or the official DLD mobile app – Dubai REST.

If applying through the website:
1. Go to the following link:
https://dubailand.gov.ae/en/rdc/rental-good-conduct-certificate/#/.
2. Click on “Access this service.”
3. There will be 3 options: inquiry on the tenant, inquiry on leaser, and inquiry on request status. Click on the category you wish to apply for.

To inquire about an individual leaser, enter their name, phone number, Emirates ID, and email address. Click submit.

To inquire about a company, enter the following information: Licence issuer – the Emirate, Licence source – the Emirate’s Economic Department, Licence number. Then enter personal details which are the same as for individual leaser. Once the required information has been submitted, you will receive a reference number. If the person you an inquiring about has their information in the DLD system, go to the application form and enter the reference number. Their track record will be visible to you. 

For any enquiries or information, contact info@thelawreporters.com or call us on +971 52 644 3004 

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How to Terminate Sale and Purchase Agreements in the UAE

While signing an agreement for Sale or Purchase of a property, it is quite pertinent to carefully read the terms and read between the lines, to get a full grasp on the rights included and what needs to be given attention. As far as contracts in the UAE is concerned, a Sale Purchase Agreement is key to the finalization of sale of Real Estate and any other moveable or immovable asset. A Sale and Purchase Agreement (hereinafter: “SPA”) is a contract that facilitates business transactions. These contracts are governed by Federal Law No. (5) Of 1985 on the Civil Transactions Law of the United Arab Emirates (hereinafter: “The Civil Transactions Law”). This article seeks to delve into one of the aspects relating to Sale Purchase Agreements – Termination.

Termination

Termination of an SPA denotes the end of the agreement between the parties as well as their contractual relationship. Common motivations to terminate SPAs include non-performance of contractual obligations, delay in possession or transfer of title, failure to provide payments, misrepresentation, fraud, mistake and unforeseen circumstances or force majeure.

Within the real estate sphere, if developers fail to perform their duties under an SPA, the purchaser can terminate the agreement and be recompensed for the consideration given while purchasing the land. Pursuing this mode, however, requires the purchaser to have completed their obligations and prove that they have done so. Most contracts in this arena mention an Anticipated Completion Date which indicates the date on which the buyer must receive possession of the property from the developer. This date can be extended for up to twelve months. A claim to cancel an SPA can be unsuccessful if it is brought before this period has elapsed. The seller can utilize force majeure as a defence against an action for termination initiated by the purchaser where they have not complied with their contractual duties.

Article 1 of Dubai Law No. 19 of 2017, which amended Article 11 of Dubai Law No. 13/2008, also provides developers with an opportunity to terminate an SPA with a defaulting purchaser. This method operates through the Dubai Land Department and the Dubai Economic Department.

Article 267 of the Civil Transactions Law provides that a contract may be terminated through mutual agreement, judicial order, prior agreement among the parties, or owing to statutory mandate. Here are the ways in which a SPA can be terminated in the UAE.

Mutual agreement

According to Article 268 of the Civil Transactions Law, parties to a contract retain the right to revoke the agreement and end their contractual relationship provided both parties consent to this conclusion. It entitles parties to be restored to their original position prior to the contract. This mode of termination is termed Iqala and it denotes the end of the contract and the relationship between the parties as well as the formation of a new agreement with regards to the third party.

Judicial order

This method of termination is applicable, in accordance with Article 272 of the Civil Transactions Law, when one party refrains from performing their contractual obligations in a bilateral contract. Prior to seeking judicial recourse, the defaulting party must be notified by the other party following which, the latter can initiate proceedings against the former. The resulting court order may instruct the defaulting party to comply with their contractual obligations, defer performance for a certain period, or cancel the agreement entirely, requiring the payment of damages.

Prior agreement

Article 271 of the Civil Transactions Law stipulates that parties may insert a clause in the contract, agreeing to its cancellation upon non-performance by either party. The inclusion of such a condition makes termination mandatory and precludes judicial action. Despite prior agreement being enshrined within the agreement, the other party must provide the defaulting party with a notice before enforcing the clause.

Termination due to force majeure

In the circumstance that undertaking the contract becomes impossible for reasons outside the parties’ control, the contract will automatically come to an end. This mode of cancellation is detailed under Article 273 of the Civil Transactions Law and requires the fulfilment of certain conditions. These entail that performing the content of the agreement is impossible and that the impossibility is not caused by or is unrelated to the concerned parties. Additionally, the impossibility must occur following the contract’s conclusion and it must concern the contract as a whole.

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India: Kerala HC Criticizes State Govt for Inaction in Inter-Denominational Land Disputes

Calling out the State’s argument of Helplessness, the High Court criticized the Government for inaction in the inter-denominational land dispute between orthodox and jacobite denominations of Christian community. The court noted that the Supreme Court of India in their final ruling in 2017 had granted the Orthodox group the power to govern 1,100 churches and parishes under the Malankara Orthodox Syrian Church, and that the Jacobites had no claim to any of them. The government's argument of complications arising if the order is carried out was not accepted since the government was interpreted to have necessary mechanism to implement the same. This has been a key socio-political and legal issue, and an action in favour of any community in specific would result in political repercussions for political parties vying for attention from the communities, both of which are of significant proportion across constituencies in the State.

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Adverse Possession: Why Asserting Your Ownership Over Property is Important

The Social Contract is thought to have laid the groundwork for our legal system and government. People from the State of Nature banded together and urged the government for better protection of basic rights, i.e., rights granted by nature: (1) The right to life, (2) the right to liberty, and (3) the right to property. An individual or group of individuals (government) vested with the authority to protect each individual's rights. But what if the law itself vests the right of ownership of your property to a trespasser? Is it even plausible? Yes! This is something we will learn about in this article.
The doctrine of adverse possession is discussed in this article. Many of us may be familiar with the legal jargon that can force your property out of your hands, but others may not. As a result, we need a deeper grasp of the doctrine of Adverse Possession. The doctrine of adverse possession as well as the requirements for asserting adverse possession in a court of law has been delved into here. Finally, it discusses the benefits and drawbacks of the notion of adverse possession.

The Doctrine of Adverse Possession

Adverse possession is one among the four ways by which ownership can be acquired i.e., ownership by operation of law. It is revamping of actual possession, without rights of ownership, into the true ownership after a period of time as defined by law. Adverse possession is described as unimpeded and continuous actual possession of a property for against the original owner's rights and interests.
It has been a long time since the doctrine was established. “If a chieftain or a person leaves his house, garden, and field and someone else takes possession of it and uses it for three years, and then the main owner returns and claims his house, garden, and field, it shall not be granted to him, but the person who has taken custody of it and used it shall continue to use it,” - the Code of Hammurabi, written around 2000 B.C. In England, the adverse possession was formalised prematurely in the Statute of Westminster. Presently, every jurisdiction recognises this doctrine.

The requirements for claiming adverse possession

Because adverse possession is such a serious matter, it was subjected to stringent guidelines. The following are the qualifications and requirements for adverse possession:
- There should be full and actual possession: Actual possession of a bale of land is one which turns into ownership. Thus, a person in question needs to have actual possession of the property. Actual possession of a piece of land denotes power over that land, allowing it to be renovated or restyled at the whim of the proprietor. The change must be noticeable and significant. For example, a person who owns a business adjacent to a vacant plot of property, whose owner lives in another nation, utilises the adjacent land as a storage area for extra items in his shop without altering or changing the adjacent land. This usage of contiguous land alone will not constitute actual possession.
- There should be open and exposed: Ownership is a right in rem, which means that no one else has the right to interfere with the enjoyment of that right. As a result, adverse possession, which is the right of ownership developed over time, necessitates that a reasonable man in society be aware of it. It should not be a secret possession. There is no adverse possession if it is done secretly, but it must be done openly.
- It must be hostile to the original or true owner and exclusiveness: The true owner must be barred from using the property; not in a violent sense - but in the sense that he cannot be a partial user of the property or piece of ground over which adverse possession is asserted. Adverse possession necessitates that the land be exclusively owned by the individual claiming adverse possession. There will be no generous land sharing with the general public or the original owner.
- Continuous possession and Statutory period: A possession doesn’t qualify as adverse possession if it is not continuous or intermittent. There is a framed time limit by a State by law, known as statutory period. So, the possession is required to be continuous while that statutory time period completed. The statutory period can be as long as 12 years to 20 years depending on different jurisdictions. For example, in India there has to be 12years of adverse possession, and 30 in case of government property. Numerous jurisdictions as well permit an adverse possessor to "boot on" his or her adverse possession period than that of a previous possessor. If an owner is insane, infant or lacks capacity, then the statutory period will not begin but if any of these above mentioned conditioned is suffered by true owner during the continuity of statutory period i.e., the condition affects the owner during the statutory period, then the statutory period will not be tolled and will continue uninterrupted.
- Absence of permission: The true owner should not have granted permission to the possessor claiming title through adverse possession to use the property in question. Possession is not deemed hostile if a proprietor has granted permission to utilise the property. As a result, the genuine owner need not be notified of adverse possession on his property.
- Absence of violence or legal measures: It is essential that the rightful owner has not exhausted all options for regaining possession of the property in question. That means the genuine owner should not have attempted to eject the adverse possessor from his property using physical violence or legal measures, such as going to court.

Merits of adverse possession

The rationale for adverse possession is one of the merits of adverse possession. The logic is that a piece of land or property should not be kept vacant for an extended period of time. The tittle of the property should not be left in question for longer duration. If society will flourish by the use of orphan land, when real or true owner does not use the land or property in question for a prolonged period. Furthermore, the adverse possession is justified on the principles of equity does not help those who sleep over their rights. A land is precious and should be used. If the owner is not caring for the property, it is preferable to hand it over to someone who will. As a result, the law mandates that the land be handed to someone who will care for it and be given the right to own it.

Demerits of adverse possession

Adverse possession provisions are equivalent to legalising theft, which encourages and legalises trespassing. This demonstrates an unfair rule that protects a trespasser while putting pressure on the true owner to renounce his title and right over the property or land just because he did not act quickly enough to retrieve something that is already his. While it is based on the idea that no one may claim justice and equity while sleeping on their rights, the doctrine legalises and protects someone who obtained land by trespassing. A windfall for a crooked party who has illegally seized the home of the rightful owner.
Furthermore, one flaw in the rule of adverse passion is the absence of objectivity in determining what constitutes open, continuous, hostile, exclusive, and actual. Due to their great subjectivity, it is difficult for courts to act wisely and allow them to legalise unlawful possession.

Conclusion

To summarise, the doctrine of adverse possession balances out the rights of both the genuine owner and the person who secures the long-term protection of the land. The owner is given enough time (the limitation period) to assert his/her rights, but it is his/her gross ignorance that may deteriorate property, where many people are homeless. As a result, such doctrine seems essential.

 

This article was contributed by Jatin Karela, Law Student at National Law University, Jodhpur

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Saudi Arabia: Brokerage Rules for Off-Plan Property Sales Introduced

Saudi Arabia has issued guidelines governing the licences of real estate brokers promoting small and medium-sized projects, according to reports, in an effort to improve transparency and credibility in the sector. Real estate brokers must have an electronic deed of ownership of the project they are marketing, according to the rules. To advertise off-plan developments, real estate agents must get the owner's or beneficiary's prior written approval, as well as the necessary authorities' statutory licences, engineering plans, and architectural designs approval. Saudi Arabia’s off-plan sale or rent program is known by the name Wafi.

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KSA: Expats Can Now Own Land In Saudi Arabia

Non-Saudis can now apply for a permit to buy a single property on the 'Absher' platform. Expats, who are legal residents, living in Saudi Arabia can now own one property in the Kingdom. The service could be accessed by accessing "My Services" (Khidmaty) on the Absher platform, then entering "Services" and "General Services", and from there to "Application for owning real estate for non-saudis". Expats must meet the following conditions in order to buy property in the Kingdom; they must have a valid and unexpired residency ID, the resident must provide all information about the property along with a copy of the title deed and they must not already own a property in the Kingdom

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UAE: Dubai Ruler Allots 4000 Plots for Emirati Housing Programme

The Ruler of Dubai has allotted 4000 land plots and has also increased the limit of interest-free housing loans to AED1 million, for eligible recipients. Housing and social infrastructure projects are one of the government's top priorities, according to H.H. Sheikh Mohammed. As part of the first phase of an Emirati housing scheme, 4,000 land plots and residences were allocated to Dubai residents at a cost of AED5.2 billion. Meeting the housing needs of Emiratis over the next 20 years is one of the primary objectives of our sustainable development strategies, says the Crown Prince of Dubai. H.H. Sheikh Mohammed bin Rashid recently approved the allocation of AED65 billion to a Dubai-based Emirati housing programme. Over the following two decades, the cash will be used to construct quality housing for Emiratis. This extensive housing plan is part of Dubai’s 2040 Urban Master Plan. The ruler has made moves to quadruple the amount of people benefiting out of these housing plans which are aimed at social wellbeing and cohesiveness.

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UAE: New Law On Real Estate Ownership In Umm Al Qaiwain

H.H. Sheikh Saud bin Rashid Al Mu'alla, Supreme Council Member and Ruler of Umm Al Qaiwain, has issued a new law on Real Estate Ownership in the Emirate of UAQ. and legal persons who are granted ownership as per a decree issued by H.H. Sheikh Saud. The law mandates the organisation of a committee known as "The Compensations Assessment Committee" in accordance with a prior Executive Council Resolution, as well as the regulation of such civil transactions in the emirate by the Civil Transactions Law. The law also states that all real estate rights acquired and/or granted under Law No. 3 of 2006 concerning real estate ownership and its amendments under Law No. 1 of 2009, as well as any other applicable law, regulation, or resolution, will remain in effect as long as they do not contradict the provisions of this law. Except in investment zones, the legislation states that Emirati citizens only have the right to own property in the emirate. The Law is referred to as Law No.1 of 2021 on real estate ownership in Umm Al Qaiwain, and shall come into force on the date issuance and publication in the Official Gazette.

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Renting a House in the UAE: Tenants Should Beware of These Issues

Legal issues associated with renting an apartment might be one of the very first questions that any expat might face in the UAE. It is pertinent to be mindful of the common legal mistakes that may lead to unexpected legal repercussions or exploitation. Here, we explore a few of the important issues associated with the Rent and Lease Contracts in the UAE.

Registration of Rental Agreements and Applicable Law

The rental agreements are governed by the respective laws of each Emirate. However, it has to be noted that the registration of the rental agreement is mandatory if you are to secure your rights. Hence, make sure you register the rental agreement. This has to be registered in the respective portal of the respective emirate; these portals include the Tawtheeq system in Abu Dhabi, RERA's Ejari in Dubai and Sharjah Municipality in Sharjah.

The rental agreements are governed by the respective real estate laws relating to the same in each Emirate. For instance, in Dubai they are governed by the Federal Decree-Law No. 26 of 2007- Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai, where the Rental Agreement for less than a year falls under short-term rental and is regulated by the Department of Dubai Tourism and Commerce Marketing. Also, while renting a property in Dubai, it is pertinent to note that rent capping was introduced in the year 2008 and rent increases have to fall within the limits prescribed. Rent value increase or amendments to any of tenancy contract conditions can only happen after two years elapse, and all the rents must be linked to the RERA Rent Index.

Terms of the Tenancy Agreement

Please make sure your rental agreement contains the signature of the landlord, description & address of the property, purpose of the lease, period of tenancy, rent value and mode of payment. Title deed is the document that verifies the ownership of a property and it is advised that even when you receive a title deed document, you need to verify the genuineness of the same. In Dubai, for example, you can do the same by installing Dubai Rest from your mobile app store or go to www.dubailand.gov.ae, and the application verifies the title deed on entry of relevant data. Here, it may be noted that the Rental Agreements or Contracts are usually entered for one year. While signing the rent agreement, the tenant has to have a copy of their passport and a copy of their UAE residency visa. Furthermore, a tenant needs to make sure that the landlord can present the following documents to be sure your landlord has the title, to avoid unexpected legal issues: a copy of the title deed or proof of ownership, a copy of the landlord's passport, a copy of the Estate Agent's Broker ID card, and a receipt on company letterhead for any monies paid

Terminating the Rental Agreement

The most common mistake done by the tenants who rented property in UAE is the non-termination of their Rental Agreement entered between them and the landlord, before vacating the property. Termination of tenancy contract before the end of the tenancy period can be done with sufficient notice as per the tenancy agreement. However, the tenant would be required to pay the remaining rent. Here, it has to be noted that as per Dubai's law applicable to tenancy given above, the tenancy renews automatically unless an objection is raised by the landlord. However, automatic renewal is subject to certain exceptions such as property demolition, sale of property etc.

One is always advised to cancel the Rent and Lease Contract registered through Ejari, and in accordance with the exit clause in the respective Rental Agreement. Unfortunately, unless an exit clause is not included in the Rental Agreement, the landlord is not obligated by law to let you off easily. However, it has to be noted that the tenant can be evicted by the landlord for reasons including using premises for illegal and immoral purposes, subletting without consent and non-payment of rent for 30 days since notification.

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Dubai rent freeze law to stabilise demand in Dubai real estate market

Dubai Land Department Mulling Over a Three Year Rent Freeze: Might Help Stabilize Real Estate Market

Dubai is proposing a three-year-long rent freeze, which would lock the rent for the said period from the date of signing the rental agreements; this is expected to bring a much needed certainty to the Dubai Real Estate market. The Dubai Land Department revealed recently that they are pondering over the same, and we may expect an approval of the same soon enough, since UAE has precedents of coming up with such innovative approaches to face crises.

This policy, if approved, is expected to cause properties to be valued fairly, while also reducing rental disputes. It is pertinent to note that neither the tenant nor the landlord would gain from the fluctuations, making the proposed law relevant to the prospects of both tenants and landlords. However, no official notifications on relevant dates have been released.

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AI Litigation For Land Disputes

The Rental Disputes Center (RDC) is working on a 'Court Probe' project, which is litigation without a judge, by using artificial intelligence technology to provide its services. RDC is the judicial arm of the Dubai Land Department (DLD) and its Director Judge Abdulqader Mousa, said that the project with the use of modern technologies, would ensure speed and accuracy. RDC had first implemented the remote litigation system in 2018, which did not require the personal presence of the parties to the conflict. The RDC is confident that such a specialised judicial system would contribute to enhancing the community’s confidence in the laws of Dubai,

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UAE's New Trust Law Ready Reckoner: Transforming Wealth Management

New Trust Law 

The New Trust Law enacted by the UAE is moving in the direction of a paradigm shift in wealth management, where the law leaves room for expanding wealth management services. The Ministry of Finance of the United Arab Emirates (MoF) has issued Federal Decree No. 19 of 2020 on trust assets. This development also marks the incorporation of the common law concept of trust into UAE civil law, and the ministry opined that this Trust Law is necessary to augment the advanced legislative structure of the UAE. This new law shall be a more efficient help to the sector of wealth management, as well as bring new tools for the management of funds and wealth. 

Key Provisions of the Law

The Federal Decree brings about a significant change in the UAE law as it recognises the concept of trust, which previously lacked clarity on how the courts of the UAE would interpret and apply trust agreements. For the first time, the creation of trust assets has been made possible, which allows the creation of trust assets in the same way as is generally understood in common law jurisdictions.

Trusts and Creation of Trusts: The law defines a trustee as the person in whom the discretionary powers, as per the trust instrument, resides in order to give effect to the beneficiary interest or the purpose of the trust, making it a wide definition for the powers that can be vested in a trustee. Furthermore, the law confers legal personality on the trust. The trust property, as per the decree law, is exhaustively defined to include "Any movable or immovable property and anything related to or deemed a part thereof, and any right which exists, or may exist, in or outside the State."

Trusts can be created, as per Chapter 2 of the Law, by means of a trust instrument, a will, the transfer of property from trust to trust, or by court order, subject to the requirements. These requirements, as per Article 6, includes, legal capacity and property ownership of the settlor, identification of the trustee, beneficiary and trust purpose, the property being identified or identifiable in due diligence, and the properties should not have any right on it by a third party. Here, as per Article 7 of the Law, the trust has to be registered by means of the trust instrument being entered into the register as per requirements of the law. The trust instrument must contain the declaration by the settlor, identifications of the requirements mentioned above, specifications on the trust name and duration, and the powers and functions of a trustee. A trust instrument sans the required information shall be invalid. The purpose of the trust has to be for the promotion of the interests of the beneficiary. The settlor or the trustee, as the case maybe, shall apply for the entry of the trust into the register, as per the provisions of Chapter 10 of the Law, and can access the register. However, the chapter puts a confidentiality obligation on the trustee, concerning data, information or documents related to the trust or its accounts. Chapters 3,4 and 5 of the law respectively elucidates the parties to the trust.

Settlor: The settlor, or the one disposing of the property to the trustee, as explained above must have the legal capacity as per the Civil Transactions Law. However, if this is a legal person, the competent authority has to sanction the disposing of properties. In cases of multiple settlors, the decision has to be unanimous. However, it has to be noted that the settlor is permitted to retain certain rights concerning the trust to himself, which may include the right to terminate or revoke the trust even.

Trustee: The law elucidates on the trustee, their duties and liabilities and powers. Here, it has to be noted that a trustee has complete power over the properties disposed of to him. However, if the instrument restricts his power, he can apply to the court and the court may allow additional powers to the extent to which it is necessary for the purpose of the trust. However, in addition to the capacity, the trustee has to have good repute as well. In case this is a legal person, the trustee has to be either a licensed trustee or a commercial company. Co-trustees, as provided by the instrument may exist. The trustee can be removed, may resign or apply for discharge, or his position might lapse owing to circumstances such as death.

Beneficiary: The beneficiary is an essential component of any trust, without which the trust shall be deemed void. The beneficiary has to be designated clearly, and shall be designated with name and allied details in case the person is a natural person. However, the beneficiary shall have no claim against the trustee, except for the rights under the trust properties. The beneficiary is entitled to trust benefits and has the right to require the trustee to perform his obligations. Furthermore, the beneficiary has the right to dispose, decline or assign the rights under the trust.

Changes Ushered in By the New Trust Law

The new trust law brings a right to transfer assets, as a financial covenant, to a trustee to manage and grow. The Trust Act allows companies and persons who hold capital and other assets to transfer them in the form of trust assets to a trustee responsible for managing them. Trust documents will be electronically recorded and a new system for the transfer of assets and movable property between trusts and their owners will be established to monitor them.  However, this applies only to the onshore areas and is not applicable to free zones, which have been expressly excluded and are governed by their own trust law regimes.

This will result in offering an environment of competition that will speed up both business and technology-based economies. The law will be beneficial to society, especially to the companies owned and run by families. They can proceed with long term planning based on the continuity of the asset of the companies. The new law brought up an integrated system, through which they are able to manage the wealth as trusts by a Trustee, appointed based on his qualification and experience.

The Ministry of Finance had signed a Memorandum of Understanding with the OECD to establish a partnership on tax issues and that the UAE was currently implementing a legal framework and mechanisms for the exchange of information. The new UAE Trust Law, adopted late last year, will help the UAE to be classified as a member of the OECD's Joint Reporting Standard (CRS) for Tax Conformity and Transparency. The UAE has also committed to sharing information with other countries under the Joint Reporting Framework.

The larger picture here makes the UAE's regulatory regime seem more appealing. The new trust law is part of the UAE's efforts to become a global leader in the development of its financial sector, and the country is increasingly demonstrating its ability to integrate sophisticated international business and financial practices. The decree and the law emphasise the forward-looking initiative to expand the legal framework to include a wide range of structuring options in the UAE.

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As Investments On Property Soars, Sale and Purchase Agreement (SPA) Assumes Significance in the UAE

Investments in property have shot through the roof in the UAE over the past decade and there are more investors in line to grab their share of land. The Sale and Purchase Agreement (SPA) offers several benefits to real estate investors on fronts of sale and purchase.

In Short, the buyer and seller enter into a Sale and Purchase Agreement after they both agree to buy or sell a particular movable or immovable property. The SPA is drafted between the two parties in order to confirm and seal a sale or purchase deal.

Since the SPA holds good in the best interests of the buyer and seller of the property, a well-drafted sale and purchase agreement is highly desirable. Building trust between the two parties is of utmost importance and hence, scrutiny of the SPA document holds great relevance in such cases. Top legal advisors in the UAE encourage the parties to scrutinize the SPA document so that it fits their deals.

The Emirates have various laws in place for the protection of buyers or sellers while also regulating transactions. In Dubai for instance, Law Number 7 of 2013 instituted the Dubai Land Department, Law Number 9 of 2009 governed the interim property register and Law Number 8 of 2007 stated that an escrow account has to be maintained by property developers.

Although the law offers protection to the interests of the buyers and sellers, in certain cases a lack of caution could get both the parties into trouble. A custom suited SPA draft can avoid legal complications since the clauses are clearly defined in reference to the property deal in question.

There are several tips that a buyer or seller must consider before signing the Sale and Purchase Agreement. We have listed them out below for your reference.

Reviewing the Developer’s License

A word of caution from legal advisors state the importance of reading the developer’s permits before purchase. The buyer has to review the licenses and permits so as to trust their property’s wellbeing. The Department of Land in Dubai has a list of developers registered with them that possess valid licenses.

 Registration Record of Property

The Real Estate Regulatory Department authorizes the various real-estate projects in the UAE. The website has a record of registered projects that could be referred to while making a valid purchase.

 Copy of Title Deed

The title deed holds a significant role to check if the actual owner of the property. After reviewing the title deed of the property, the buyer can also check on the rights awarded to the owner and verify if there were any restrictions placed. The buyer could also obtain a community declaration copy to understand the rights involved in the usage of that property.

Details of Essential Parties Involved in the SPA

Certain times, the SPA contract could include multiple parties. For instance, an SPA could involve the developer, manager and owner among others. A careful review of the SPA contract will help in unveiling the involved parties if there are any.

 Review the Payment Schedule

This is in general a document with all details regarding payments to be made and it holds great relevance to the purchase. As it is an important document, the buyer is obligated to review it extensively to get a clear idea about the payment schedule.

 Termination Clause

Another important step is to review the termination clause of the Sale and Purchase Agreement between the buyer and seller. Usually, the initial amount paid by the buyer is retained by the developer/seller in-case the agreement is terminated or the buyer doesn’t make expected payments. On the other hand, the seller is obligated to hand over the property without delay or fails to register the property with the concerned authorities.A careful examination of the termination clause is recommended since it contains highly relevant conditions involved in a purchase.

 Escrow Account Details

As per Law Number 8 of 2007, a registered developer has to maintain an escrow account to which, the investments made by sellers should be directed to. Failing to do so will attract heavy penalties on the developer. The buyer should obtain necessary details regarding the escrow account from the developer in order to safeguard the invested amount of money.

 Dispute Resolution Clause

The laws put into force in the UAE must be reviewed by the buying party as an additional cautionary measure. The dispute resolution clause has to be reviewed for resolving disputes through the UAE courts or arbitration centers. If at all the contract states arbitration, the buyer should get advice from arbitration lawyers available locally.

Authorized Signatory of Power or Attorney

Developers are entitled to authorize power of attorney in order to sign the SPA on behalf of them. These third-party signatories assigned by the developer are called authorized signatories. The buyer involved in such deals should review the power of attorney in detail to have a better understanding of the scheme.

Project Completion Date

The completion date refers to the date at which the developer has promised to complete the project. Every SPA is supposed to include the date at which the developer/seller must surrender the purchased property to the buyer. In several cases earlier, the project completion dates were ignored by buyers. Being unaware of the date makes the buyer lose rights of terminating the contract and seek compensation. A breach of this contract will have several legal consequences for the seller.

Since the Sale and Purchase Agreement has to be made for every sale or purchase of property, the buyer and seller should be well aware of the contract in order to make the whole process smooth. An established and trusted law firm could help out with all concerns regarding SPA in the UAE

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