Complete Guide on Buying Property in Dubai

When buying a property in Dubai, you have to follow the below steps.

• Legal Due Diligence
• Drafting and Signing a Sale and Purchase Agreement
• Obtaining a No Objection Certificate from the Developer
• Attending the Registrar Office for the transfer of ownership

We will discuss each of this in detail below.

Legal Due Diligence

The buyer should ask the seller or developer to accompany him to the Dubai Land Department (DLD) or give him a power of attorney to enquire about the property in order to confirm that the property is owned by the seller or the developer and is free of mortgages, liens or other charges.

Drafting and Signing a Sale and Purchase Agreement

It is important to inspect the property (if the property is completed) before signing the sale and purchase contract. The contracting parties must use the standard form of sale contract (Form F) and may add or attach to it their own terms and conditions, provided they do not conflict with the standard terms and conditions. In case a broker is representing a party in the sale transaction, the DLD’s standard form for the appointment of real estate brokers shall also be signed.

Obtaining a No Objection Certificate from the Developer

You must obtain a No Objection Certificate (“NOC”) from the developer of the project (if no owners association exists) to ensure that the seller has paid all the service charges relating to the Property you are purchasing and there are no offences under applicable regulations concerning jointly-owned properties. 

The developer may charge an administrative fee of AED 500 for the NOC.

Attending the Registrar Office for the transfer of ownership

The DLD carries out its property registration functions through support from a number of licensed trustee offices. The registrar at the trustee office checks all the documents required from the seller and buyer and enters them into a computer linked to the Land and Property Department. Once online approval is received from the Land Department, a new title deed will be issued in the name of the buyer. Transfers will be processed the same day if the parties submit their documents early and they are all in order.

Property Buying Process in Dubai

This is a very brief overview of the buying process, consult your agent for a more in-depth view:

The Offer – Once you find the home of your dreams you put in an offer. If that offer is accepted both you and the seller will sign an MOU “Memorandum of Understanding”. This is an agreement to enter into an SPA or “Sale and Purchase Agreement”. This is a slightly archaic process which has evolved to get round the issue that SPAs are often issued by developers.

The Deposit – When you sign the MOU (drafted by your agent) you and the seller both give over a deposit (usually 10% of the total purchase price). Make sure that the MOU states exactly what will and will not happen with the deposits (many MOUs are silent on when you or the seller would forfeit their deposit). Usually if you sign the MOU and then pull out of the deal (or delay) you will lose your deposit. Note - Be sure you can commit to the transfer date and final payment before you sign (e.g if your purchase is dependent on you selling a property you need this in the MOU). 

The Finance – If the buyer is using finance then their bank will value the property. If they find it is worth what they have agreed to lend then they will begin to process the payments. Finance deals take longer than cash deals and banks may take up to 30 days to advance the money. If the seller has a mortgage this process can take 60 days in total.

The Transfer – Once the money is ready the seller gets an NOC “No Objection Certificate” from the developer stating that the seller has paid all of his fees and the developer has no objection to the transfer. The Parties attend the signing (the banks may also be present) of the SPA and the money is handed over if there is no finance. At this stage if finance is being used the bank will only give a “Comfort Letter” stating they will pay once the developer has signed the SPA. The developer will take a few days to sign the SPA after which the buyer is registered as the new owner. The Seller or developer takes their copy of the SPA and the Comfort Letter to the bank to release the balance of the funds.

General Guidance

1. The owner of the property must attend (in person or through a representative acting pursuant to a duly notarized power of attorney) the Registrar at Dubai Land Department (Trustee offices).

2. For companies, proof of all authorized persons in buying or selling real estate on behalf of the company must be submitted either in the form of duly attested corporate documents, a power of attorney, or a partners’ resolution.

3. Foreign language documents must be attested and submitted with certified translations into Arabic. 

4. Real estate transactions must be registered within 60 days from the date of signature of the sale and purchase contract (or such other contract signed), subject to a fine, in addition to the registration fees, for late registration.

5. Any change in shareholders’ equity for the company which owns the real estate in Dubai is considered a transfer of the real estate requiring notification of the Dubai Land Department (DLD) and payment of the applicable fees.

6. The DLD does not allow foreign companies to own real estate directly, but such companies may own real estate in Dubai by establishing subsidiary companies in free zones in Dubai such as the Jebel Ali Free Zone (JAFZA) and Dubai Multi Commodities Centre (DMCC) among others.

7. It is important to visit the Dubai Land Department (DLD) and obtain their prior approval of the proposed transaction structure and the companies’ (buyer) documentation if any of the shareholders of such companies is a company incorporated and registered in a foreign jurisdiction.

8. Do not deal with real estate brokers who are not registered with RERA.

Rules on Real Estate Ownership for the United Arab Emirates and other Gulf Cooperation Council (GCC) nationals

Nationals of the United Arab Emirates and other the Gulf Cooperation Council countries (and companies wholly owned by them) and public joint stock companies are permitted to own freehold title to real estate and to acquire all types of real estate interests such as usufruct, musataha, and long-term leases up to 99 years anywhere in the Emirate of Dubai.

Rules on Real Estate Ownership for Foreign Nationals

Foreign nationals are permitted to own freehold title to real estate in specifc areas designated for foreign ownership (“Designated Areas”). Freehold ownership is absolute and unrestricted by time and extends to the land and all buildings thereon. Foreign nationals are also permitted to acquire all types of real estate interests within the Designated Areas, including musataha, usufruct, and long-term leases up to 99 years.

Key Real Estate Laws and Regulations in the Emirate of Dubai

Real estate investment in Dubai is governed by a set of real estate laws and regulations aimed at protecting real estate investors’ interests. Below is an outline and brief summary of the key real estate laws in the Emirate of Dubai.

Law No. 7 of 2006 on Real Estate Registration in the Emirate of Dubai

This Law regulates real estate registration and ownership rights in the Emirate of Dubai. It provides for the right of UAE and other Gulf Cooperation Council nationals (and companies wholly owned by such nationals) to own real estate anywhere in Dubai and the right of foreign nationals to own freehold interests in real estate (as well as usufruct and leases up to 99 years) within areas designated for foreign ownership by the Ruler of Dubai. The Law further regulates the registration of real estate in Dubai on the Real Estate Register at the Dubai Land Department (DLD) as a guarantee to the owners of real property rights and specifes the powers of the DLD to enter and update all relevant records on the Real Estate Register. 

Regulation No. 3 of 2006 on the Designation of Areas in which Non-UAE nationals may Own Real Estate in the Emirate of Dubai

This Regulation identifes the areas where foreign nationals (non-UAE/GCC nationals) can own freehold land and property and other real property rights such as usufruct and long-term lease rights for up to a period of 99 years (“Designated Areas”). Further regulations have identifed additional Designated Areas for freehold ownership by foreign nationals. For more information on the location and boundaries of the Designated Areas in Dubai, please contact the Dubai Land Department. 

Law No. 8 of 2007 on Escrow Accounts for Real Estate Developments in the Emirate of Dubai

Pursuant to this Law, developers that intend to sell units of-plan in a real estate development project must open a separate escrow account for the project with an escrow agent (bank/fnancial institution) accredited by the Dubai Land Department (DLD). The developer must deposit in a project escrow account all amounts paid by the purchasers of of-plan units and loan payments funded by fnanciers for the purpose of construction of the real estate development project. The amounts deposited in the escrow account shall be allocated exclusively for the purposes of construction of the real estate development project and settlement of the project fnancing payments in accordance with the Law. Project escrow accounts are audited and monitored on a regular basis by the Real Estate Escrow Account Division of the Real Estate Regulatory Agency (RERA), the regulatory arm of the DLD. 

Law No. 13 of 2008 Regulating the Interim Real Estate Register, as amended by Law No. 9 of 2009

This Law sets out a mandatory requirement to register all disposals relating to of-plan real estate units (i.e., units under construction), including sale, long-term lease, musataha, mortgage and other disposals on the Interim Real Estate Register maintained by the Dubai Land Department (DLD), otherwise such disposals would be considered null and void.

Law No. 9 of 2009 further sets out a process for a developer to terminate an of-plan sales contract when a purchaser defaults on its payment obligations and authorizes the Real Estate Regulatory Agency (RERA) to cancel delayed projects.

Executive Council Resolution No. 6 of 2010 issuing the Implementing Regulations of Law No. 13 of 2008 Regulating the Interim Real Estate Register

This Resolution regulates the sale of real estate of-plan and requires developers to obtain approvals from the competent authorities before launching a project and before marketing and selling of-plan real estate units. Any sale or other disposal of of-plan real estate made by a developer or broker prior to all the requisite approvals being issued and the real estate development project being registered with the DLD is considered null and void. The Resolution further addresses a number of issues related to real estate development and of-plan sale including, inter alia, area measurement discrepancies, the responsibility of developers to register sale and other disposals of real estate in the Real Estate Register or the Interim Real Estate Register, as applicable and examples of termination events as a result of a developer or buyer default and the mechanism for cancellation of real estate development projects.

Law No. 27 of 2007 on the Ownership of Jointly-Owned Properties in the Emirate of Dubai

This Law governs the rights and obligations of owners of real estate units in jointlyowned properties (such as towers and residential and commercial complexes) and sets out provisions as to common areas in such properties (e.g., corridors, elevators, parking lots, etc.). It also provides for the establishment of owners associations entrusted with the management, operation, maintenance and repair of common areas. Also, pursuant to this Law, developers are held liable to repair structural defects for 10 (ten) years and minor defects for one (1) year from the date of obtaining the certifcate of building completion.

Law No. 14 of 2008 on Mortgages in the Emirate of Dubai

This Law regulates the conditions of creating a mortgage over real estate, including real estate units under construction and establishes a mandatory requirement to register, under pain of nullity, mortgages on the Real Estate Register (in the case of completed properties) or the Interim Real Estate Registry (for of-plan real estate units under construction), as applicable. The Law also outlines the procedure for mortgage enforcement in the event of the borrower’s default on the loan repayment.

Regulation No. 85 of 2006 Concerning the Real Estate Brokers Register in the Emirate of Dubai

This Regulation governs the licensing and regulation of real estate brokers and the monitoring of their activities by the Real Estate Regulatory Agency (RERA). It also sets out the requirements for registration of brokers and their rights and duties towards investors.

Law No. 7 of 2013 on the Dubai Land Department

This Law defnes the responsibilities, functions and objectives of the Dubai Land Department, including the implementation of best practices in real estate registration, improving registration procedures, enhancing the real estate regulatory environment, and promoting real estate investment. As per the Law, the mandate of the Dubai Land Department is to serve the Dubai Government’s strategic objectives for the real estate sector and develop land registration procedures in line with international best practices as part of a broader strategic framework to plan and develop an integrated real estate strategy that is fully compatible with the highest international standards. The strategy will also help to improve the sector’s control and monitoring procedures, oversee and develop its leasing regulations, and encourage investments by establishing appropriate environments to promote the role of real estate in Dubai’s comprehensive development plan.

Law No. 16 of 2007 on the Establishment of the Real Estate Regulatory Agency (RERA)

This Law defnes the role of the Real Estate Regulatory Agency (commonly known as “RERA”) and its powers to regulate the real estate sector, including licensing developers, brokers and real estate management companies and other real estate professionals and monitoring and overseeing their activities. (RERA) is considered as the regulatory arm of the DLD. 

Executive Council Resolution No. 30 of 2013 on the Adoption of Fees of the Dubai Land Department

This Resolution sets out fees for the registration of real estate disposals on the Real Estate Register, including the registration of of-plan sales of real estate units and completed units, as well as fees for all types of services provided by the Dubai Land Department (DLD) and the fnes that would apply if fees are not paid on time.

Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants, as amended by Law No. 33 of 2008

This Law regulates the relationship between landlords and tenants of all types of real estate (residential, commercial, industrial or otherwise) in the Emirate of Dubai. The Law explains the rights and obligations of tenants and landlords regarding the use and maintenance of the leased property and provides for a mandatory renewal of all leases, except in certain limited circumstances defned by the Law. The Law also spells out violations for which landlords may evict tenants and establishes a rent determination mechanism and a Rental Disputes Center for the resolution of rental disputes (with the option for parties to refer their disputes to arbitration)

Real Estate Government Departments and Agencies

The Dubai Land Department (DLD) was established in 1960 to handle all matters related to the registration of sales and purchases of land and approve, organize and document transactions concerning registered land and real estate in Dubai. With the development of the real estate sector in Dubai, the powers and functions of the DLD expanded and today the DLD is regulated by Law No. 7 of 2013.

The DLD ofers more than 26 main services and 216 sub-services to customers in the real estate sector, including land and title registration, registration and licensing of real estate professionals, and developing a regulatory framework to attract and efectively manage investments in the real estate sector while disseminating awareness and knowledge on applicable legislation. Furthermore, the DLD compiles and publishes, on its website, information about real estate purchase and sale transactions on a weekly and monthly basis to allow investors to keep track of current real estate prices in Dubai.

The Dubai Land Department aims to provide an investment-friendly environment based on international best practices that safeguard the interests of all stakeholders in the real estate market.

The Dubai Land Department’s afliated organizations and departments:

Real Estate Registration Agency (RERA) – Regulatory Arm The Real Estate Regulatory Agency (commonly known as “RERA”) is responsible for putting legal frameworks and mechanisms in place to regulate the activities of real estate development and brokerage companies and owners associations. Moreover, It issues licenses to developers and brokers and rules and regulations for the registration of of-plan sales in Dubai. RERA monitors all development projects on a fnancial and technical level in order to protect the wider interests of the market and investors alike. RERA also plays an active role in monitoring the compliance of developers, brokers and other licensed real estate professionals with applicable laws and regulations and imposing penalties for violations, including cancellation of stalled projects.

Real Estate Investment Management and Promotion Center (Investment Arm) - The Real Estate Investment Management and Promotion Center is the investment arm of the DLD responsible for supporting local and foreign real estate investment companies and the development of a regulatory environment for real estate investment while enhancing market activity through the promotion of direct and long-term investments. It also plays an active role in promoting a stable and secure environment, while contributing to the building of a green economy to achieve sustainable development. The Center’s “Tanmia programme” is a key initiative that matches stalled projects with suitable investors hoping to enter the sector. 

Rental Disputes Center (RDC) - The Rental Disputes Center is the competent judicial authority for all rental disputes between landlords and tenants in Dubai, including real estate leases in free zones (except free zones which have their own dispute settlement committees or courts). The Center employs fast and efcient methods of resolving claims and considering applications for interim or summary measures. The Center also decides appeals taken from decisions and judgments which may be appealed and its decisions are fnal and enforceable against the parties.

Dubai Real Estate Institute (DREI) - Educational Arm The Dubai Real Estate Institute seeks to promote real estate knowledge by ofering internationally recognized educational programs and training courses to real estate professionals including brokers, surveyors and appraisers with the aim of creating a world-class real estate environment. The Institute is stafed by faculty with a vast range of academic and practical expertise.