Having a solid understanding of how real estate sales work and the law governing them is essential. An agent in Dubai has to do more than simply show clients properties and share listings.
From an agent’s perspective, Dubai’s typical real estate sales process looks like this:
- Inventory Sourcing
- Promote Your Inventory
- Identify And Qualify Potential Buyers
- Offers Are Made By Buyers
- Offer Accepted By Seller
- Contracts Are Signed By Both Buyers And Sellers
- Transfer Of Ownership Is Scheduled For The Property
Key Real Estate Sales Terminology You Should Know
- Listing: Broker-owner agreement that authorizes the broker to advertise the property on behalf of the owner.
- Open Listing: A seller’s agreement in which more than one agent is appointed by the seller.
- Exclusive Listing: Single-broker agreement whereby a seller appoints as well as authorizes a single broker to represent them in the sale of their property.
- Commission: A percentage of the sale price that is usually earned from the real estate transaction.
- Distress Sale: Fast-moving sales involve the sale of a property, asset, or stock as soon as possible.
- Service Charge: Typically, this is a service fee that is collected in conjunction with the purchase of the main item or service.
- Valuation: This is an estimate of the value of a property produced by a professional.
- Lender Pre-Approval: An authorization by the lender to lend money to a borrower.
- Liability: An obligation or debt owed to someone.
- Down Payment: Buyers pay an initial deposit at the beginning of the real estate transaction.
- Comparative Market Analysis: The process of estimating a property’s value based on the recent sales of similar properties.
- Escrow Account: Until the predetermined conditions are met, funds cannot be released from a legal holding account.
- Mortgage: The purchase or maintenance of land, home, or other types of property can be undertaken with this type of loan.
- Equity: You own how much of your home.
- Title Deed: Deeds or documents that reflect property ownership.
- Foreclosure: In the event of non-payment of a mortgage, the mortgagee is forced to take possession of the property.
- Principal: In the case of a loan or investment, the original amount borrowed.
- Oqood: A contract between a property developer and a buyer is registered with this document.
- Asset: Individuals, corporations, or countries own or control economic resources in the hope of gaining benefits from them in the future.
Across the emirates, all real estate transactions are governed by Dubai Land Department. A legal framework is provided by RERA (Real Estate Regulatory Agency), which operates under the DLD. Some important real estate laws in Dubai are as follows:
- Law No. 21 of 2013: Special jurisdiction committee formed to liquidate Dubai properties canceled.
- Law No. 13 of 2008: Ensures that off-plan properties are sold and marketed.
- Law No. 14 of 2008: Security for debts arising from mortgages on property and units of property.
- Law No. 27 of 2007: Manages the ownership of properties owned jointly (owner’s associations).
- Law No. 85 of 2006: Sets the requirements for real estate brokers in Dubai to practice their profession and hold a license.
- Law No. 7 of 2006: Ensures that completed real estate transactions must be registered.
Streamlining the real estate transaction process for all stakeholders in Dubai is made possible through the RERA. Below is a list of forms:
- Form U: An agreement between the seller or buyer and the broker is terminated.
- Form I: Two brokers’ agreements.
- Form F: An agreement between a buyer and a seller.
- Form B: A contract between a buyer and a broker.
- Form A: The buyer’s and seller’s agreement in electronic form.
Types Of Ownership In Dubai
| Lease-Hold Properties | Freehold Properties | Non-Freehold Properties |
| Individual Owns Property For Limited Period | Individual Owns Property In Full | GCC National Owns Land Or Property In Full |
| Up To 99 Years Ownership | For Life Ownership | Ownership For Life |
| Example: Green Community (DIP) | Example: Dubai Hills Estate | Sheikh Zayed Road |
Types Of Sales In Dubai
-
Direct Developer Sales:
- The sale of construction-in-progress properties.
- The property is directly sourced from the developer.
- The developer pays the commission.
- If it’s under construction, you can’t mortgage it.
- Listed as Oqood (under construction) in the DLD.
-
Secondary Market Sales
- Property that is ready for sale.
- Owner-sourced.
- Buyers or sellers pay commission.
- Mortgages can be obtained for these properties.
- It is registered as a title deed with DLD.
-
Direct Sales
- Ready Properties.
- Directly sourced by developers.
- The developer is to pay the commission.
- It is registered as a title deed with DLD.
Developer’s Obligations
- Each project must be accompanied by proof of ownership and an escrow account.
- In the trust account, 5% of the funds are used for marketing.
- Developers are required to complete 20% of the construction before selling a project or provide RERA with a bank guarantee for 20% of the construction value.
- Fees for administration and NOC may be charged by the developer. AED 5K is the minimum charge.
- In some cases, developers charge an extra fee for a service, such as an urgent NOC issuance fee.
- Before allowing a broker to market the developer’s project, the developer must have a contract with the broker.
Developer’s Termination Rights For Buyer’s Default
- A written notice shall be provided by the developer to the buyer.
- A developer should contact the DLD if a buyer does not comply.
- Default notices will be issued to buyers by the DLD, allowing them 30 days to correct the problem.
- The DLD has the right to deregister the unit if the default persists beyond the 30-day notice period, and the developer can cancel the contract with the buyer if the default persists beyond that period.
Canceled Projects
- Developers must refund the full amount paid by buyers in the event that a project is canceled by RERA.
- To oversee canceled projects in Dubai, a special judicial committee was formed.
- Liquidation of canceled projects’ assets is handled by it.
- Projects that have been canceled and not those that have been paused or delayed matters are looked after by it.
- Liquidates real estate projects and settles debts after liquidation expenses have been deducted.
- There is no appeal process for the decisions of this committee.
Mortgages
- Home purchases are made possible by mortgages, which are agreements between borrowers and lenders.
- Creditors who mortgage their properties are referred to as mortgagees (lenders). The Central Bank must license it as a bank or financial institution.
- Mortgagors (borrowers) own rights under a contract of sale recorded in the real estate records.
- A Dubai Land Department registration is required for mortgages.
- Fees for registration are the responsibility of the mortgagor (borrower).
- Mortgages are registered with the DLD for 0.25% of the loan amount.
- As soon as the secured debt is repaid, the mortgage terminates.
Mortgages In Dubai
- A home mortgage in Dubai can be taken out by UAE nationals as well as ex-pats (both residents and non-residents).
- A home mortgage can be obtained by salaried individuals up to the age of 65, and by self-employed individuals up to the age of 70.
- A mortgage can be held for a maximum of 25 years.
- An applicant’s eligibility is determined by four factors: a minimum of six months’ stay in the UAE, the duration of the employment in the UAE, the annual income, and the credit history.
Power Of Attorney
Provisions Of Power Of Attorney
- Dubai Notary Public must notarize the POA if the grantor is in the UAE.
- POAs must be legalized by the UAE Embassy in the grantor’s country of residence and further legalized by the UAE Ministry of Foreign Affairs if the grantor is located outside of the UAE.
- If there are any discrepancies between the English and Arabic versions of the POA, the Arabic version will prevail.
- The validity of the POA is limited to two years and it must be dated.
- In order to grant POA for a specific property, the purpose must be specified.
- In the event of the death of the grantor, the power of attorney will lapse.
- POAs held by real estate brokers require the Grantor’s approval before use.
The Four Real Estate Models
-
Cash Buyer & Cash Seller
- Form F is signed by the buyer and the seller.
- The booking deposit is submitted by the buyer.
- Booking deposits are subject to a security check by the seller.
- An application to NOC is submitted by the seller to the master developer.
- In order to transfer the property title deed, the buyer and seller have to go to the Registration Trustee.
-
Mortgage Buyer & Cash Seller
- Pre-approval application by buyer.
- Form F is signed by both buyers and sellers.
- The booking deposit is submitted by the buyer.
- Booking deposits are checked for security by the seller.
- Property valuation is conducted by the buyer’s bank.
- A final offer letter is issued by the buyer’s bank.
- NOC is requested from the Master Developer by the seller.
- In order to transfer ownership of a property, buyers, sellers, and bank representatives visit the registration trustee.
-
Cash Seller & Mortgage Seller
- Bank liability letter to DLD blocking the property.
- Form A is signed by both buyer and seller.
- A No objection certificate must be obtained from the developer by the seller.
- In order to settle the outstanding loan amount, the buyer must issue a manager’s cheque payable to the bank.
- For the balance remaining, the buyer must issue a Manager’s cheque payable to the seller.
- A Manager’s Cheque must be issued by the buyer to the DLD to cover the transfer fees.
- For the release of the mortgage, the seller takes a cheque payable to the bank.
- A property blockage at Dubai Land Department needs to be unblocked and the property transferred.
-
Mortgage Buyer & Mortgage Property
- Form F is signed by the buyer and seller
- The booking deposit is submitted by the buyer
- Security Cheques are issued against booking deposits by the seller
- Property valuation is conducted by the buyer’s bank
- A final offer letter is issued by the buyer’s bank
- A Liability Letter is requested from the bank by the seller
- The buyer’s bank receives a liability letter
- Existing mortgages will be settled by the buyer’s bank
- The Buyer’s bank receives the original title deed
- Certificate of No Objection (NOC) requested by the seller
- A NOC is submitted to the bank of the buyer by the seller
- Representatives of the buyer, seller, and buyer’s bank
Fees
| Fees Type | Sales Price Percentage |
| DLD Registration Fee | 4 Percent |
| Registration Trustee Fee | AED2,000 – AED5,000 |
| NOC Fees | AED500 – AED5,000 |
| Brokerage Fees | 2 Percent |
Registration Trustee Fee is charged according to the property value and the extent of completion of the transfer. Only the manager’s cheque should be used for payments at the time of transfer. The transfer must take place with all participants present.
Owner’s Association
Owner’s Associations are non-profit organizations that manage common areas in multiple-titled properties, including buildings and communities. It is a separate legal identity and can be sued by itself. Movable assets can be owned and disposed of by it. Service agreements can be entered into by it.
Service Charges
A service charge is a recurring fee that covers the maintenance and upkeep of common areas within a residential building or community in Dubai. A property manager’s fees generally cover costs associated with security, cleaning and maintenance, landscaping, and other related services.
- Unpaid Service Charges: It is possible for Owners Association (OA) to impose a penalty of 12% per annum, calculated daily, on unit owners who fail to pay the service charges and do not remedy the following notice.
- Transferrable Service Charges: It is possible for new property owners to be charged daily pro-rata service charges.
Code Of Ethics
- Duties Towards Clients: Protecting and promoting the client’s interests.
- Duties Towards Realtors: The use of false or misleading statements regarding another real estate professional, their business, or their practices is prohibited.
- Duties Towards Public: Information about the property and the transaction should not be misinterpreted or concealed.
Study the market’s trends and price your inventory appropriately after fully understanding Dubai’s sales laws and processes. Houzon offers a series of in-house workshops designed for real estate professionals in the UAE that will boost your career in real estate. In addition to prospecting, time management, and communication, our trainers provide a number of seminars on various topics. Learn and grow with us!