If you’re planning to invest in property in the United Arab Emirates (UAE), it’s important to understand the intricacies of transferring ownership. While the process may seem complex, knowing the procedures involved can help you avoid legal complications down the line. In this article, we’ll guide you through the steps involved in transferring property ownership in the UAE.
Understanding the Different Types of Real Estate in the UAE
In the United Arab Emirates (UAE), there are various types of real estate that are recognized, each with its own set of rules and regulations. Understanding these different types of real estate is crucial for anyone who is considering investing in property in the UAE.
One of the most common types of real estate in the UAE is freehold. The term “freehold property” refers to properties situated in certain “designated areas” where non-UAE nationals are permitted to have complete ownership of the land. Essentially, a freehold property is an estate that is free from the control or ownership of any entity apart from the owner. This grants the owner complete and unrestricted ownership of the property, allowing them to use it for any purposes as long as it complies with the relevant local regulations.
Another type of real estate recognized in the UAE is usufruct. This is a right to use a property owned by another person for a limited period of time that does not exceed 99 years with the condition that the property does not undergo any change during this time. Usufruct can be a useful option for individuals or businesses that need to use a property for a specific purpose, such as operating a business or conducting a short-term project.
Musataha is another type of real estate that is recognized in the UAE. Musataha gives the holder the entitlement to build a structure or invest in, mortgage, lease, sell or purchase a plot of land that belongs to a third party for a maximum of 50 years. This option can be useful for developers who want to build on land that they do not own, but need to control for a specific period of time.
Understanding Who Can Purchase Property in the UAE
The UAE remains a highly desirable destination for foreign direct investment, which includes real estate. The country’s regulations permit a range of individuals and entities to purchase property, including UAE citizens, companies, expats, and non-residents. However, eligibility for property ownership is subject to certain conditions, such as visa status, location of the property, and the type of property being acquired. As a result, it is important for prospective property buyers to carefully review the applicable regulations and requirements before proceeding with a purchase.
The Legal Framework for Property Transfer in the UAE
In the UAE, the transfer of property between parties is governed by the Civil Code, which requires that all transfers be registered in accordance with the law. In the Emirate of Dubai, property registration is regulated by Law 7 of 2006, which stipulates that any action related to the creation, transfer, modification, or cancellation of a property right must be registered in the property register in order to have any legal effect.
It is important to note that the title deeds issued by the relevant authorities serve as conclusive evidence of property ownership under the Dubai real estate law. These documents establish an unassailable record of the rights and obligations of the parties involved, and are relied upon extensively in the transfer and financing of real estate transactions.
Transferring Property Ownership in the UAE
Transferring property ownership in the UAE involves several steps that must be completed in accordance with the law. Here’s a step-by-step guide to help you through the process:
Step 1: Due Diligence
To begin the property transfer process, it is essential to perform a due diligence check on the property to verify that the seller has the legal authority to sell it. This process usually entails reviewing the property’s title documents, inspecting the physical property, and examining the property register. By conducting due diligence, the buyer can ensure that the transaction is legally binding and that there are no legal issues with the property that could arise in the future.
Step 2: Create a Term Sheet & Contract of Sale
After conducting a thorough due diligence process, the buyer and seller can proceed to agree on the terms of the sale by drawing up a term sheet or memorandum of understanding. This document outlines the basic elements of the transaction and is valid for a limited period until the parties finalize the sale contract. The sale contract should include essential details, such as the property description, payment terms, governing law, dispute resolution, and termination clause. It’s important to note that the sale contract should comply with the general provisions set out in the Civil Code. Additionally, if the authorities have a standard sales contract template, the parties should use that, along with any necessary annexures to include additional terms.
Step 3: Pay the Transfer Fee and Register the Sale
The next step is to pay the transfer fee and register the sale. The transfer fee is usually around 4% of the sale price of the property, and it must be paid by the buyer.
To register the sale, both the buyer and seller must be present at the relevant office in each emirate, along with their legal representatives. The buyer will need to provide legal documents such as their passport and residency visa, while the seller will need to provide the original title deed and the NOC.
Step 4: Obtain the New Title Deed
After the transfer fee has been paid and the sale has been registered, the buyer can obtain the new title deed. This new title deed will reflect the change of ownership, and it is the legal document that proves ownership of the property.
CALL
LOCATE