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Buying a property from the secondary market involves intricate paperwork to ensure a smooth transfer of ownership from the previous owner to the current one. Saif Al Shamsi, Founder and Head of Litigation, The Legal Group (TLG), provides a checklist of all the documents required in buying a property from the secondary market.
One can buy off-plan property from an individual who wants to sell his under-construction house. The documents that need to be reviewed when buying such from a secondary market are the first sale and purchase agreement (SPA) concluded between the developer and the first owner and a no objection certificate (NOC) from the developer allowing the first buyer to sell his unit.
The new owner must review the SPA and ensure that he is not liable for thefirst buyer’s dues to the developer. He should go through the receipts showing that the first owner has complied with his payment obligations.
He should also review the mortgage agreement (if any) and the receipts showing that the first owner has complied with his obligations towards the bank or the financial institution.
The document that needs to be checked in this case is the title deed to ensure that the property is owned by the seller in addition to the proof of payment completion by the first owner. The new owner must also check the completion certificate issued by the Dubai Land Department (DLD) showing the property details such as its exact dimensions. The new owner can compare the said certificate to the property details in the new SPA.
Moreover, the new owner must check whether there is any mortgage related to the property and the documents showing that all the mortgage dues are fulfilled. He should also review the lease agreement (if any) and amend it to incorporate the name of the new owner.
Getting a mortgage
The documents required to take a mortgage from a bank or financial institution are usually the application forms, documents showing the details of the property and bank statements.
The owner can ensure that the previous owner has completed all his dues by reviewing the payment certificate and the receipts of payment of the purchase price. The new owner should also check the completion of payment certificate and the receipts of mortgage dues.
Moreover, the new owner can avoid his liability for the dues of the previous owner by entering into a tripartite agreement with the first owner and the bank or financial institution and emphasising that he shall not be liable for the dues of the first owner.
There will be new paperwork involved if there are existing tenants of the property bought by the new owner.
The new contract will be the new SPA between the first buyer and the new owner which will state that the previous owner withdraws his rights regarding the lease agreement.
In addition, there will be an amended lease agreement between the tenant(s), the first owner and the new owner reflecting the change in ownership.
The documents involved are the SPA between the previous owner and new owner stating that the previous owner forfeits his rights to the ownership of the property, NOC from the developer to resell the property, the new SPA between the previous owner and new owner highlighting the terms and conditions of the transaction, mortgage agreement (if any), lease agreement (if any), title deed and certificate of payment completion.
The common legal issues encountered in property transactions in the secondary market include those arising from the developer’s refusal of issuing an NOC for the transfer of the title deed to the new owner due to the first owner’s failure to fulfill his obligations with the developer.
Such legal disputes might also result from the fact that the first owner failed to pay the dues of his mortgage agreement to the bank or the financial institution; therefore, the bank or financial institution is preventing the handover of the property to the new owner and forfeiting the property.
Source: S. Dhar, Special to Freehold