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A thorough background check on the developer and a careful assessment of the sales purchase agreement and the title deed of the property are essential steps before buying a property. Robert Pacella of Saleh Alobeidli Advocates and Legal Consultants explains the processes to ensure the smooth transfer of ownership of a property from the seller to the buyer.
The term conveyancing broadly means the area of law which deals with the transfer of ownership of an asset from the seller to the buyer. A legal professional dealing with a property transaction must consider several points to plan conveyance appropriately.
The type of legal title is significant. Legal title really means “what is the accepted form of evidence which proves who owns a property.” Each UAE emirate has a degree of freedom to decide on its system of legal title and there are differences in the implementation of legal title registers among each of the emirates as well as different types of legal titles used; for example, freehold versus leasehold titles.
Dubai, in particular, has a well-developed set of electronic registries for legal titles of properties in the emir ate. The registries are held by the Dubai Land Department and constitute what can be regarded as the highest form of evidence of legal title for a given property.
The approach to legal title has evolved and improved over the past years, largely as a response to market requirements and realities.
For example, buyers should be aware that it is common for the legal title of an under-construction property to be vastly different from that of a completed property. In Dubai, there is a distinct and separate title system (the Oqood title system) which records sales of under-construction properties. This registry records a “staged-payment purchase” where the buyer makes progressive payments towards the full purchase price during the construction over time. It is used to provide buyers with the surety that they are afforded legal recognition during the construction phase.
Depending on the type of legal title under consideration, the steps to convey title will vary somewhat.
It is also important to be sure that the property is freely transferable. For example, the property might be subject to “restrictive covenants” which prevent transfer until the restrictive conditions have been met. You also need to be aware of and consider any mortgages, finance, court orders or oth er attachments to the title of the property which need to be dealt with during the conveyance.
If the buyer, seller (or sometimes both) have both taken finance for the property, the process of conveyancing is more complicated and requires more time to complete a transfer. Banks and finance companies operating in the UAE are regulated by the UAE Central Bank, but each is free to develop its own products, procedures and requirements based on its own particular business model. Consequently, there is considerable variation in the way dealings must be conducted with the various financiers who currently offer finance in the UAE marketplace.
Where the seller of a property currently has finance, that finance must be discharged quite early during the transfer process, well before the title transfer can take place. The period between the discharge (payment) of a seller’s finance and title transfer must be carefully managed, both within the sale-purchase agreement as well as through the use of legal procedures where available.
In Dubai, it is a usual practice to place a “notation on title” for a property when clearing a seller’s finance to protect the buyer until title transfer has been completed. However, there are situations where a buyer and seller wish to transact but there is, as yet, no registered legal title; thus, this type of title notation is not yet possible. That is not to say that people should avoid these types of transactions, but there is a need to take a different approach to adequately protect the parties.
In any transaction where finance is involved, it is essential to have a sales purchase agreement which covers all possible outcomes so that both parties understand their obligations and it is clear what remedies are available in the event of a breakdown.
• Conveyancing as a legal discipline is now available only through licensed law firms in the UAE. Anyone who is looking for property conveyancing services in the UAE should approach a licensed law firm. Not all law firms offer conveyancing, however, as it is quite a specialised discipline. Speak to a firm which has accrued a lot of practical experience in conveyancing and you will usually find they offer a more cost-effective service since they are familiar with the process and can accurately estimate their time accordingly. Where possible, look for a fixed price for the conveyance service.
Source: S. Dhar, Special to Freehold