Exploring the legal side of UAE property

Property LegislatureSunil Thacker, Partner, Sunil Thacker Associates

But on the other end of the spectrum, tales of woe from small-time buyers and renters abound as property prices escalated from previous lows, with salary increases lagging far behind.

Rising property prices normally lead to rent hikes, and such drastic spikes in rental rates characteristic of property in key locations usually means a higher possibility of disputes arising between renters and their landlord. But real estate disagreements are not exclusive to this kind of scenario. Problems between land owners and developers, disputes among property investors in the case of partnerships, and other forms of conflict also occur.

Sunil Thaker of STA enlightens us on the current legal scene surrounding UAE property.

Common property disputes in the UAE

Real property disputes may arise from a number of conflicting or commercial situations, and although some of these disputes may be categorized under a common type of dispute, we do come across instances where the matter is different, unique, and at times, complex.

Property disputes can broadly be categorized as i) disputes between land owners and developers; ii) disputes between developers and buyers; iii) disputes between buyers and sellers; iv) joint venture disputes; and v) rental disputes.

Disputes may arise from default of either or both the parties, contentious commercial terms, breach of contract, or claims for compensation. As a matter of practice, newer forms of disputes may arise occasionally. Take for instance a case where a property buyer books a villa and makes a down payment towards the unit acquired. Acting in trust, the buyer makes all necessary payments to the developer. The property gets delayed and is eventually completed. The buyer visits to make an inspection of his property and is surprised to see a water sub-station erected in the garden premises.

Property regulations requiring further refinement

The recent amendment to the mortgage cap and increased registration fees have promoted healthy business practices in addition to curbing the flipping of properties by investors.

Investors continue to adopt traditional memoranda of understanding (MOUs), and it is important that parties consider appointing attorneys to draft legally binding agreements.

In sale and purchase transactions, parties may also consider appointing a snag and inspect company, and attach a copy of the snagging report to the agreement.

Although the strata law and new guidelines have been issued, additional rules and policies to be applied to homeowners associations are also expected. Parties should consider the appointment of escrow agents instead of traditional guarantee cheques exchanged between them.

Local property regulations compared with those in more mature markets (e.g. New York, Hong Kong, London, etc. )

There are, across the world, varied different institutions of property, radically different ways of separating the land space, and developing rights in consonance with other legal, economic and social institutions. These differences are brought into the limelight when one pays attention to the sometimes subtle differences in policies and regulations that govern them.

The legal environment for investors is indeed critical making legal implications significant. From a legal perspective, UAE property has clearly exceeded several other jurisdictions in terms of development.

The laws in the UAE are indeed positive; nevertheless, they still do require further refinement to be truly effective in addressing unique industry concerns, and to be more accurate.

Some common types of property disputes
• Forfeiture and lease renewals
• Breaches of contract
• Rent arrears and service charge disputes
• Business tenancy renewals
• Consent to assignments and subleasing
• Disputes with owners of neighboring properties over boundaries, trespass, nuisance, adverse possession
• Dilapidations and repairs
• Residential possession actions/rent recovery for commercial landlords





Source: Lovely Claire CD, Special to Freehold
The writer is a freelancer

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