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The year 2014 has been a transition period for Dubai with a very good first half of the year characterized by many transactions and prices moving up balanced with the second half with the stabilization of prices and less transactions.
It has also been a year of educating sellers and buyers while improving the real estate regulations to suit the market requirements and needs.
Previously, there had been many gaps in the regulations, which led to the downfall of the market in 2008, and which were the reasons why it has taken so long for the Dubai real estate market to regain investor confidence.
All the new regulations in place, including the mortgage cap and increased transfer fee, have made the market more secure; so now, we need to adhere to and follow the new rules.
With the new standardized contracts from the Real Estate Regulatory Agency (RERA), we have ensured that agents are more upfront with their clients. The new forms have started to move the market in a positive direction where all transactions are carried out following a set process which ensures fewer problems.
A big gap in knowledge among buyers and sellers is evident when it is time to discuss deposit cheques. Who issues a deposit cheque? Is it cashable? When is it returned?
These are all questions that arise daily when dealing with buyers and sellers as well as the odd case wherein the buyer or the seller has had previous unfavorable experience, and it becomes difficult to change his or her opinion on and understanding of the process.
As per RERA, upon signing of the memorandum of understanding (MOU), a cheque is issued by the buyer in the name of the seller to be held by the seller's agent. The cheque is then returned to the buyer on transfer, or exchanged for a manager's cheque to be held until transfer when the seller receives his net selling price.
Now, the issue arises when the seller or seller's agent wants to cash the deposit and hold on to it.
First, if an issue should arise between the buyer and the seller, it must be noted that the buyer has cash in the seller's account until the matter is resolved. On the other hand, as long as it is agreed specifically between the buyer and the seller, then it is up to both parties and can be fine. In both situations though, it is of paramount importance that whatever agreement is in place should be specifically mentioned in the agreement either way.
Another misconception is as to whether sellers shall, at the time of signing the MOU, also issue a cheque for the buyer. This is negotiable between the buyer and the seller in a case-by-case scenario. Usually, with a cash buyer and a cash seller, it is the norm that sellers do not issue a cheque for the buyers as a deposit.
However, in more complicated situations where the seller has a mortgage or owes money on the property, it makes sense and makes the buyer feel comfortable that the seller proceeds with the transaction until complete.
Another major issue in the past was about the final payments for the transfer on transfer day and to whom should the payments be made payable. The purchase price has to be made in the name of the seller in the form of a manager's cheque. No power of attorney (POA) is allowed to collect cheques in one's name unless the seller is present at the transfer and he signs an undertaking. However, even with this, this is not allowed due to the Central Bank regulations.
All the other conditions are as per the buyer and seller agreement mediated by any RERA-approved agent.
Consider these few insights from an expert when buying a property
Source: Safura Abas, Special to Freehold
The writer is General Manager - Aston Pearl Real Estate