A guide on gifting property to a relative

A guide on gifting property to a relativeImage Credit: Supplied

Did you know it is possible to transfer some or all of your Dubai property rights without paying the normal transfer fees at the Dubai Land Department (DLD)?

If not, you are not alone. This tends to play the second fiddle to the more-documented selling or buying procedures in Dubai. There is much less information available for those, who simply wish to change details of ownership and/or gift a property to a relative.

What is a gift transfer?

From a legal perspective, changing names on a title deed is considered a transfer of ownership, so the normal procedures apply at DLD. If, however, the parties are relatives, there are some important distinctions.

The Hiba process (Arabic meaning gift) enables first-degree relatives to transfer all or part of their property rights by means of a donation, grant or gift at the DLD.

Who is eligible?

The DLD specifies that a gift transfer can take place between first-degree relatives — parent and child or husband and wife relationship only. An attested and translated marriage certificate (husband or wife) or birth certificate (children) must be obtained.

Why would I want to gift my property to a relative?

In most instances, gift transfers take place for inheritance purposes. In Dubai, this has never been a straight forward topic given the inclusion of Sharia. For non-Muslims in particular, it can cause financial and emotional difficulties for families as well as disputes and even legal cases regarding rights to ownership.

As such, many property owners transfer some or all of the title to their spouse or children in order to simplify succession rights. The aim is to remove the legal uncertainly and ambiguity seen in the old UAE laws and Sharia principles that many people still do not fully understand.

While the recent Dubai International Finacial Centre Wills and Probate Registry has introduced some important changes for non-Muslims with assets in Dubai, it is still relatively untested. It is also more expensive, so many owners choose to gift their property rights to a chosen relative rather than creating a will or leaving it for the courts to decide.

Other less common reasons include removing one of the parties following a marriage separation or divorce settlement or with one buying the other out rather than selling the property to someone else.

Title deed, affection plan and valuation certificate

A title deed is required after which an affection plan (an official site plan) and valuation certificate must be obtained from the DLD. This determines the property value to calculate the appropriate transfer fees. For an apartment or a villa, a valuation certificate costs Dh 4,020 and takes seven to 10 days to process.

No-objection certificate

As with a sale or purchase, a no-objection certificate (NOC) from the developer is required to show that there is no objection to the transfer or debt on the property. NOC fees vary in cost (Dh500-Dh5,000) and it takes 3-10 days to process, depending on the developer.

Transfer fees

Perhaps most importantly, the transfer fees for a gift are 0.125 per cent of the property valuation plus Dh530 or a minimum of Dh2,530. This is significantly different from the normal 4 per cent transfer fees (plus Dh580).

As with sales or purchases, there are also registration trustee fees, Dh2,000 or Dh 4,000, depending on whether the valuation is below or above Dh2 million.

For example, for a Dh1 million valuation, the gift transfer fees would be Dh2,530 (minimum). The equivalent for a sale or purchase would be Dh40,580.

Final transfer of title

The whole process takes two to three weeks to complete. All parties need to attend in person or be represented by a Power of Attorney (POA). The POA must specifically mention the gift transfer, documents must be translated into Arabic and attested by the Dubai Notary or UAE Embassy in the country of issue. A POA can represent both the person giving and the person receiving the gift.

At the final transfer, all documents and fees will be submitted and a new title deed will be issued.

Things to note

Siblings: Siblings are not considered first-degree relatives for the purposes of gift transfers. While the reason behind this is unclear, one way to circumvent it is one sibling transfering his property share to his parent as a gift and the parent subsequently transfering the share to the other sibling. This would mean two gift transfers (and double costs) but this involves lower transfer fees than a sale/purchase.

Off-plan: The process does differ for off-plan property. If the unit has not been pre-registered with the DLD, you can do an internal assignment or ''name change'' with the developer. If the unit has been pre-registered and the appropriate fees paid, the process is much the same as a transfer; depending on whether you have the Oqood or the Delayed Sale document.

Mortgages: Gift transfers on mortgaged properties are uncommon. In such cases, the title documents are held by the respective bank and are only released upon full settlement of the outstanding liability.

Companies: Gift transfers for companies are more complicated. Full legally attested and translated company documents must be presented and DLD approval is required.

Part-sales: Finally, let's say you wish to transfer a share of your property to a friend or a colleague? This will, of course, not be treated as a gift and you will not be required to pay the full transfer fees. You only pay the transfer fees based on the percentage of share being transferred. All of the other normal requirements will apply.

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Source: Philip Smith, Special to Property WeeklyPW

The author is Managing Partner of Your POA Dubai, which specializes in representing clients as Power of Attorney for property-related matters
in Dubai

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