Ask the Agent - What will happen if a freehold title deed holder has died?

Ask the Agent - What will happen if a freehold title deed holder has died?Dhiren Gupta, Managing Director, 4C Mortgage Consultancy

- What will happen if a freehold title deed holder has died? Will the asset be transferred to his wife or son?

Ideally, having a legal heir by drafting a will would somehow reduce the complication; the property can be reassigned to the heir if the title deed holder has expired. You need to collect the legal notification letter and death certificate from the courts and submit them with the original title deed, heir's passport, Emirates ID and visa page copy to the Dubai Land Department. As per UAE law, it will not be considered as a gifted property. It will be transferred as per Sharia law. The transfer will be executed with a minimal transfer fee of Dh2,000 which includes a property transfer fee of Dh1,000, new title deed fee of Dh250 and property affection plan fee of Dh250 depending on the type of the property. The whole process should not take more than a month. However, it is advisable to have a legal consultant by your side to make the entire process hassle-free for you.

- Is it a good time to invest in an off-plan project? As a foreign investor, can I get a mortgage on my purchase?

Definitely, as the emirates are dotted with off-plan projects that entice more investors. In Dubai, with RERA regulations in place, the buyers' interests are safeguarded as the construction cycle of projects are being strictly monitored by the authorities. Similarly, to safeguard investors' rights and ensure legal proceedings are not delayed, Abu Dhabi also recently issued a new property law which will take effect in 2016. It states that if the project is delayed or not completed, the Department of Municipal Affairs (DMA) will take stringent actions and investors can cancel their contract and get a refund.

In terms of mortgage, ensure you take a prior bank approval before finalising everything to also check if your selected developer is registered with the bank. And since it is an under-construction project, the bank will only finance 50% of the property value. The initial payment and other fees should come from your own pocket.

- Is it legal for a brokerage firm to charge both buyer and seller 2% commission on the sale/purchase of freehold property?

It is always better that a seller or a property developer appoint a broker through a written agreement which pre-defines the fees and conditions. There is no cap on broker's commission, but it normally ranges from 2-5% of the purchase price. However, 2% is the normal fee or commission paid to brokers/real estate agents by the buyer and the seller, but again this is negotiable, so definitely you can work with the agents on the commission fee. Only a broker that meets the licencing requirements can market real estate. The buyer and the seller both have the right to conduct thorough due diligence on the real estate agency and the agent so that they will not get trapped in any fraudulent activities. If you are a seller, you have all the right to negotiate the commission fee.

- I bought a property in Dubai which is registered in my company's name and currently rented. Can I get the equity release on my property?

This can be a complex process as the ownership of the property is in the company's name; however, you can still get the equity release on the property. The credit assessment process would be similar to like having it on an individual's name. The bank will conduct due diligence and lend up to 60% of the property's market value. The company needs to pay the mortgage registration fee at the DLD and take a lien of the original property ownership documents with the concerned bank. The bank can also ask for personal guarantees from stakeholders in the company as additional security. In a commercial mortgage, finance rates are higher, which can be in the range of 4.99- 7.5%, while the tenure of the loan could be lower. So, check the best rates by doing some research, or appoint an independent mortgage advisor to help you seek the best commercial offering and rate in the market.

- Question of the Week: I am a first-time home buyer. Should I buy a property directly from the developer, or shop around in the secondary market? Which will ensure the best deal in the current market?

If we look at the current market dynamics, the secondary market sales of ready properties have seen adverse effects due to the meltdown of overall business sentiments in the UAE. Prices have corrected in almost all prominent areas, which can be an influential factor in deciding whether to opt for ready or off-plan project. Moreover, you can take advantage of eye-catching and economical price offerings on off-plan projects by property developers who may offer post-handover payment plans to ease the financial stress. However, it depends on your monetary conditions and your inclinations.

If you are buying a property as an end-user and want to stay in that house for a long term, then you can try to identify the best deals available in your target location in the secondary market. Finance options of up to 75% of the market value are also readily available. As the property rental index is constant, you can enjoy healthier monthly cash flows.

But if you are looking at an investment point of view, off-plan would be the best option as it can give you a high yield in the long term with flexible payment selections. Finance options are restricted to 50% of the property value with only few lenders.

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Source: Dhiren Gupta, Special to Freehold

The author is Managing Director - 4C Mortgage Consultancy

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