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Dubai is witnessing a slew of off-plan launches both in the luxury and affordable segments. Wary of delays in handovers, many investors are opting to go for ready-to-move-in houses. But are there enough safeguards for homeowners in case of developers missing the deadlines for handovers? How can you avoid getting into legal tangles if you are buying a house from the secondary market?
Saif Al Shamsi, Founder and Head of Litigation at The Legal Group (TLG), a UAE-based law firm, takes a closer look at the legal matters associated with buying properties in Dubai.
Delay in delivery
One of the most common hurdles that homeowners in Dubai face is a situation where a property is not delivered on time, wherein the developer stops construction for various reasons, the most common of the lot being a financial crunch.
Another reason for the stalling of projects is the purchaser defaulting on his payments to the escrow account.
A solution to this problem can present itself inthe hands of the DubaiLand Department (DLD). This department is expected to take action by transferring the construction of the property from the hands of a defaulting developer to the more capable hands of another who has more financial backing to continue the project.
In some cases where there is no possibility left to reconstruct or rebuild, the DLD can initiate a liquidation process and transfer the money to the investors.
The purchaser has the right to take legal action to terminate or claim money from the developer if the project is incomplete, especially if it is the developer’s fault and the purchaser has not defaulted on his payments at any point.
New laws like the escrow law have made the developer accountable for the construction of his project by the DLD. The escrow law ensures that any amount paid by the purchaser should be used only towards the construction of the project and not for any ancillary or private expenses.
I do not see the need for new laws to be enforced as I believe that the escrow law (and other laws relating to the same that are already in place) is enough to secure the interest and benefit of all parties involved, be it the homeowners or developers.
Due diligence when buying from secondary market
There are various procedures one can follow on the lines of due diligence when buying a ready-to-move-in house from a secondary market.
There are licensed snagging firms that inspect the conditions of any property. It is advisable that the services of such parties should be enlisted to inspect the unit you are interested in and ensure that there is no fault in its construction/facilities.
Documents/factors that need to be verified include:
a) The title deed which should be in the name of the selling party
b) There should be no mortgage or any right to a third party (or to confirm that it can be cleared)
c) Certificate of completion to verify the situation of the unit
d) No objection certificate (NOC) from the developer where it states that there is no due from the owner or the master developer
One should also check and ensure that a certificate is issued by the bank from where the first owner may have taken a loan, giving instruction to the DLD to clearly remove the mortgage from the ownership of the property.
One of the major legal developments in recent times is the new provision of wills registration at the Dubai International Financial Centre (DIFC) Wills and Probate Registry for non-Muslims.
The new provision is expected to boost the confidence of non-Muslims because of the hassle-free procedure involved in registering a will and freely disposing of their Dubai estate in the event of death.
The facilities from DIFC authorities enable the people to also notarise the will therein. Earlier, the distribution of a deceased’s real estate assets was guided by UAE federal law. In some cases, properties owned by non-Muslims were distributed as per Shari’a succession laws after the death of the owner.
Registering a will
In order to register a will with the DIFC Wills & Probate Service, the requirements include: you are not Muslim; you are over 21 years; if you require a guardianship provision included in the will, you should have minors living with you in Dubai; you have assets in Dubai.
Existing wills can be amended at any point in the lifetime of the person who is making the will. It is his complete prerogative when it comes to the amendments he chooses to make. A will may be amended by an application made to the authority that drafted it to cancel the existing will and reinstate the new one.
Source: S. Dhar, Special to Freehold