UAE Car Deals and Power of Attorney: Why Buyers Remain Exposed Until Ownership Is Officially Transferred

In the UAE’s fast-moving second-hand car market, many buyers still rely on informal arrangements to complete transactions — but recent legal clarifications underline a crucial risk: a power of attorney, on its own, does not secure ownership of a vehicle. This distinction has significant consequences for buyers who assume that such authorisation is enough to protect their rights.

Under UAE law, a power of attorney issued by a vehicle owner merely grants another person the authority to act on their behalf, including the ability to sell or transfer the vehicle. However, this authorisation does not amount to a transfer of ownership. Legally, the vehicle continues to remain registered in the name of the original owner in the official records of the Roads and Transport Authority (RTA) until a formal transfer is completed.

This means that even after granting a power of attorney, the original owner retains full legal ownership of the vehicle. As a result, the seller is not prevented from selling the same car to another buyer. In the eyes of the law, the person whose name appears in the RTA registry continues to be the lawful owner, regardless of any private arrangements made through a power of attorney.

For buyers, this creates a clear vulnerability. Simply holding a power of attorney — even one that authorises the buyer to transfer the car into their own name — does not provide legal protection against resale to a third party. The only way to secure ownership is to ensure that the vehicle is officially transferred and registered under the buyer’s name with the RTA.

Failure to complete this registration step can lead to disputes, particularly if the seller resells the vehicle. In such situations, the initial buyer does have legal recourse. UAE law allows the affected party to approach the competent court to recover the amount paid. In addition to seeking a refund, the buyer may also claim compensation for any financial losses incurred as a result of the transaction.

However, pursuing such claims requires substantiated proof. The burden lies on the buyer to demonstrate that payment was made and that damages were suffered. This can be supported through various forms of evidence, including the power of attorney document itself, witness statements, and even digital communications such as WhatsApp messages that establish the terms of the deal.

The broader legal framework in the UAE consistently emphasises formal registration as the cornerstone of ownership in vehicle transactions. Informal agreements, while common in practice, do not override the authority of official records. This approach is designed to maintain clarity, prevent disputes, and protect the integrity of ownership records.

For prospective buyers, the takeaway is straightforward but critical: no matter the level of trust between parties, a vehicle purchase is not complete until it is formally registered in the buyer’s name. Relying solely on a power of attorney leaves room for legal complications and financial risk — a gap that can only be closed through proper transfer procedures.

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