Ask the Agent

What is the procedure regarding PoAs for properties in Dubai?

In Dubai, the Court does not allow a general PoA for real estate matters. A PoA must be granted for specific purposes pertaining to a property only to allow the collection of a rent cheque or the signing of documents necessary to sell a property. It is limited to two years validity, but a PoA may or may not have an expressed expiry date.

It must either be signed before the Dubai Notary Public or legalised by the Ministry of Foreign Affairs (MOFA). If the owner is in Dubai, then a Notary Public must be used. If abroad, the owner needs to sign a PoA before a notary public in the foreign country and have it legalised at the UAE Embassy in that country to be attested, and then legalised at MOFA.

A bilingual (Arabic and English) PoA has to be stamped by a licensed legal translator then submitted to the Dubai Courts for notarisation and in case of inconsistency in the two versions, the Arabic version prevails.

Under what circumstances can a landlord demand eviction upon the expiry of the lease?

A landlord may demand eviction of a tenant upon expiry of the contract limited to the following cases:

If the premises require renovation or comprehensive maintenance, supported by a technical report issued or attested by Dubai Municipality, which cannot be executed while the tenant is in occupation.

If the landlord wishes to demolish the premises for reconstruction or to extend the premises, provided that necessary licences are obtained.

If the property owner wants to sell the leased property.

If the landlord wishes to personally use the premises. He cannot rent the property for at least two years for residential and three years for commercial properties.

The landlord must notify the tenant in writing through the Notary Public or via registered mail with reasons of eviction at least 12 months prior to the determined date of eviction.

I have just bought my first apartment and found that there are unpaid service charges due to the building’s Owners Association (OA). Am I liable for these charges?

Firstly, this is an unusual situation, as normally, the developer will not grant an NOC if there are outstanding service charges. An OA is established for the developer to hand over the responsibility for service charges. A penalty may be imposed at the rate of 12% per annum which is calculated daily if an owner fails to pay the dues on time after receiving the notice from the OA.

The OA has a lien on every unit for unpaid service fees. A lien would entitle a creditor to hold or sell a debtor’s property to repay a debt. There remains some doubt, though, in relation to the effects of the lien held by the OA and whether it would prevent an owner from selling his unit unless he pays the service charge arrears. Note that the lien attaches to the apartment and not to the owner. If the default is not remedied and the owner sells to a third party, the unit remains subject to the lien. Thus, it is crucial that any buyer ensures there are no service charge arrears when purchasing a property.

What is a developer entitled to receive due to defaulting property investors?

A developer’s entitlement to compensation, if a purchaser breaches any of his obligations, is contained in Article 15 of Decree 6 of 2010.

If the developer completed at least 80% of the project, the developer has two courses of action. He may retain the amount paid by the buyer then sell the property at public auction to recover the balance amounts payable to him. Alternatively, the developer can terminate the agreement and retain 40% of the value of the property. If the developer has completed 60% of construction, he may retain 40% of the purchase price. But if the developer has completed less than 60% of construction, the developer may retain 25% of the purchase price. If the developer has not commenced construction for reasons out of his control, he may retain 30% of the buyer’s payment.

In addition to the above, the developer may also sue the buyer for any further losses suffered by the developer as a result of the buyer’s breach of contract.

Question of the Week: As a foreigner, what are the rules regarding property ownership?

When issued on the 14th of March 2006, Law 7 of 2006 introduced the concept of ‘freehold title’, whereby the local real estate market became open to foreign ownership. Prior to this law, real property ownership in Dubai was limited to UAE nationals and GCC individuals as well as companies wholly owned by them, and publicly listed UAE / GCC companies.

Article 4 of 2006 paved the way for foreign ownership of real estate properties in Dubai. It allowed foreigners or companies to acquire freehold interest in designated areas in Regulation No. 3 of 2006, Regulation No. 1 of 2010 and Regulation No. 1 of 2011.

‘Freehold’ and ‘free zones’ have distinct meanings in real estate. Reference to a freehold property is a reference to a kind of interest in real estate; the holder of the freehold interest is the ‘owner’ of the property. In contrast, a ‘free zone’ is an area within Dubai that bestows certain economic rights and benefits to entities operating in the free zone.

When purchasing a property, seek a broker’s advice to assist in conducting due diligence by enquiring about the nature of the seller’s title and ascertain if the sale of the property is permitted to foreigners. Pinpoint the exact reason for the purchase – either for investment or to live in.

If investing, expats will, in the long run, be renting the property; thus it is necessary to find out what kind of property has the highest rental yield.

Source: Freehold

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