(Prateek Seth)
The law offers remedies for disputes in resale and off-plan transactions
Dubai’s real estate market has been marked by rapid growth and substantial foreign investment. To address this, Dubai Law No. 13/2008 on the Interim Real Estate Register, as amended by Dubai Law No. 9/2009, Dubai Law No. 19/2017, and Dubai Law No. 19/2020 (the “Law”), establishes key safeguards to protect both developers and buyers, particularly in off-plan property transactions. The Law provides a comprehensive legal framework for the registration and regulation of off-plan sales, promoting transparency and accountability. This article examines the Law’s critical provisions, amendments, and their practical impact on Dubai’s real estate sector.
Understanding the Interim Real Estate Register
Under Article 3 of the Law, all transactions related to off-plan real estate units must be registered in the Interim Real Estate Register before they can be legally recognized. This register, maintained by the Dubai Land Department (DLD), documents all off-plan sales and related legal actions, ensuring that both developers and buyers are protected until the property is completed and transferred to the Real Estate Register. The law clearly states that any sale or other legal actions concerning off-plan units are void if not recorded in the Interim Real Estate Register. This measure prevents fraudulent or unauthorized sales and ensures that the legal interests of all parties are safeguarded.
Key Developer Obligations
Before selling off-plan properties, developers must meet certain requirements outlined in Article 4 of the Law. These include receiving ownership of the land and obtaining necessary approvals from relevant authorities. Developers must also ensure that all off-plan real estate units are properly registered before any sales or legal actions, such as mortgages, can be conducted, as mandated by Article 6 of the Law. Additionally, if a developer wishes to engage a real estate broker to market the project, Article 9 of the Law requires that the developer first enter into a formal contract with the broker in compliance with Dubai Regulation No. 85/2006, which governs the registration of real estate brokers.
Re-Sale of Off-Plan Properties
Re-selling off-plan properties follows a structured process to ensure transparency and legality: Buyers and sellers must first apply for a No Objection Certificate (NOC) from the developer. The transaction is registered under the Oqood Management System, a platform developed by the DLD in conjunction with the Real Estate Regulatory Authority (RERA). The developer enters the buyer’s details into the system, and once the buyer pays the Oqood fees (4% of the property’s original price), a Certificate of Registration is issued. Upon completion of the property, and once the buyer has fulfilled all payment obligations, the property is transferred to the Real Estate Register in the buyer’s name. This process ensures that off-plan transactions are tracked from inception to completion, minimizing disputes and legal ambiguities.
Developer and Buyer Rights and Obligations
Developers and buyers both have clearly defined rights and obligations under Dubai Law No. 13/2008: Buyers are required to pay the purchase price, registration fees, and any costs associated with title deeds or NOC fees, unless otherwise agreed. Developers, while having no statutory obligations beyond registration, must comply with contractual commitments, especially regarding delivery timelines and accurate representations of the property. In case of disputes, Article 11 of the law provides a mechanism for developers to notify the DLD if a buyer defaults on their contractual obligations. Depending on the completion status of the project, developers can take various actions, such as requesting the DLD to auction the property or rescinding the sale and retaining a percentage of the unit’s value.
Legal Remedies for Disputes
The law provides several remedies for both resale and off-plan transactions. With regard to resale properties: Under Article 272 of Federal Law No. 5/1985, either party may terminate the contract if the other fails to fulfill their obligations. If termination occurs, the parties must restore what they have received, or compensation is awarded under Article 274 if restitution is not possible. In the case of off-plan properties, the Dubai Law No. 19/2017 amends Article 11 of the Law to allow developers to rescind the contract and deregister the sale in case of non-payment by the buyer, without needing to approach the courts. However, buyers can challenge such deregistration.
Conclusion
Dubai Law No. 13/2008 and its amendments establish a comprehensive legal framework for managing off-plan property sales in Dubai. By ensuring that all transactions are properly recorded in the Interim Real Estate Register, the law protects both developers and buyers from fraudulent dealings and legal uncertainties. The amendments introduced in subsequent years have strengthened the protections for investors while providing developers with clear guidelines for enforcing contractual obligations. As Dubai’s real estate market continues to grow, the legal safeguards established by this law will play a crucial role in maintaining investor confidence and market stability.
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