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RERA Manual January 2020

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100% found this document useful (1 vote)

10K views306 pages

RERA Manual January 2020

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ybqq6c2jyn

We take content rights seriously. If you suspect this is your content, claim it here.

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CERTIFIED TRAINING

for REAL ESTATE BROKERS

FOUNDATION PROGRAM

Dubai Real Estate Institute - P.O. Box : 1166,Dubai,UAE - Tel : 04 2030456 - www.drei.gov.ae
Module 1
History and Development

‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or
transmitted without our prior written consent.
26-Jan-20

Module 1
History and Development

Objectives

Introducing:
 Key UAE and Dubai rulers.
 Some of Dubai’s real estate projects and developments.

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26-Jan-20

HH Zayed bin Sulṭan Al Nahyan was the principal driving force behind the
formation of the United Arab Emirates; the Ruler of Abu Dhabi and first President
of the UAE, a post which he held for over 33 years.

"I had many dreams. I dreamt

of our land keeping pace with
the growth of the modern
world.”

HH Sheikh Khalifa bin Zayed bin Sultan Al Nahyan is the President of the UAE and
Ruler of Abu Dhabi. He succeeded to the position of Emir of Abu Dhabi at the
moment of his father's death, after a royal family meeting, thereby becoming the
President of the UAE the next day.

Our people have managed in 36 years to

bring about achievements that went
beyond
conception and imagination: a model
experience of federation, an outstanding
human development, a modern
infrastructure, basic modern services,
great economic successes, educated man,
prosperity, well-being, and security.

2
26-Jan-20

HH Sheikh Mohammed bin Rashid Al Maktoum is the Prime Minister and Vice
President of the UAE, minister of Defense and ruler of Dubai. He has held those
positions since January–February 2006, when he succeeded his elder brother, HH
Sheikh Maktoum bin Rashid Al Maktoum.

One could talk endlessly of the

UAE’s achievements, there are
so many in all fields of life.
However, the greatest of them
is the deep-rooted sense of
unity in the hearts and souls of
our citizens, which is a unique
and wonderful national
achievement.

Development of real estate market in Dubai during past

decades
1990 Today

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26-Jan-20

Dubai has the largest population and is the second largest emirate after Abu Dhabi
with an area of 4,114 km² (1,588 mi²).

‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of theseIt took isDubai
materials vested in11 years
DREI. to accomplish
These materials should not bewhat
copied,other
reproduced countries didwithout
or transmitted in 200 years.
our prior written consent.

Insights into Dubai Projects

4
26-Jan-20

Business Bay
Business Bay is part of the vision of His Highness Sheikh Mohammed Bin Rashed Al
Maktoum, UAE Vice President, Prime Minister, Minister of Defense, and Ruler of
Dubai. Business Bay will have upwards of 240 buildings, comprising commercial and
residential developments. The infrastructure of Business Bay has been completed in
2008, and the entire development is expected to be completed between 2012-2015.

Business Bay is considered a “city” within the city of Dubai

Burj Khalifa

Burj Khalifa (Arabic: ‫برج خليفة‬, Khalifa Tower), known as Burj Dubai prior to its
inauguration, is a skyscraper in Dubai, United Arab Emirates, and is the tallest man-
made structure in the world, at 829.8 m (2,722 ft)

5
26-Jan-20

Palm Jumeirah
It is one of three planned islands called the Palm Islands (Palm Jumeirah, Palm Jebel
Ali and Palm Deira) which would have extended into the Arabian Gulf, increasing
Dubai's shoreline by a total of 520 kilometers (320 mi). The Palm Jumeirah is the
smallest and the original of three Palm Islands originally under development by
Nakheel. It is located on the Jumeirah coastal area of the emirate of Dubai, in the
United Arab Emirates (UAE).

Dubai Marina

Dubai Marina is an artificial canal city, built along a two mile (3 km) stretch of
Arabian Gulf shoreline. When the entire development is complete, it will
accommodate more than 120,000 people in residential towers and villas. It is located
on Interchange 5 between Jebel Ali Port and the area which hosts Dubai Internet
City, Dubai Media City, and the American University of Dubai. The first phase of this
project has been completed. Dubai Marina was inspired by the Concord Pacific Place
development along False Creek in Vancouver, BC, Canada.

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26-Jan-20

Dubai World Central - Al Maktoum International Airport

With a projected annual capacity of 160 million passengers and 12 million tons
(12,000,000 long tons; 13,000,000 short tons) of freight. The new airport will cover
an area of 55,000 acres (220 km2). The airport is referred to as "the world’s first
purpose-built aerotropolis“. Located in Jebel Ali, 37 km south west of Dubai, that
opened on 27 June 2010. It will be the main part of Dubai World Central, a planned
residential, commercial and logistics complex scheme.World Central is the world's
first truly integrated logistics platform, with most transport modes, logistics and
value-added services, including manufacturing and assembly, in a single free
economic zone.
Upon completion, DWC will become the world’s largest airport. The airport forms the
heart of a greater project also called Dubai World Central.

The World Islands

A development by Nakheel, a collection of 300 private islands in the shape of

continents located off the coast of Dubai, The World reinvents the earth and offers
the ultimate in privacy and exclusivity Each island will range from 250,000 to
900,000 square feet in size, with 50 to 100 meters of water between each island. It is
9 kilometers in length and 6 kilometers in width, surrounded by an oval shaped
breakwater. The only means of transportation between the islands will be by marine
or air transport.

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26-Jan-20

Dubai Waterfront
Dubai Waterfront will extend Dubai coastal line by 820 kilometers (492 miles), which
is 12 times the current length of Dubai's coastline, and will cover an area of over 81
million squared meters (266 million square feet). It is intended to be the world's
largest beachfront development and the largest man-made development. It will be
larger than Manhattan or Beirut and is being built to be Dubai's premium luxury
district. The development will feature over 100 different waterfront developments
and over 150 planned communities. The various key development areas of Dubai
Waterfront can be seen the aerial map below.

8
Module 2
The Business of a Broker

Module 2
The Business of a Broker

Objectives

Introducing:
 Broker’s definition.
 Updates on what brokers need to know.
 “Trakheesi” System overview.
 Brokerage offices ranking system.
 Categories of real estate broker cards.

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26-Jan-20

What is a broker?

A broker is a licensed person who, for a fee, acts to mediate between parties
involved in a real estate transaction, being either owners/sellers, buyers, landlords
or tenants.

• What do Brokers need to know?

I am interested in becoming licensed to sell / lease real estate in Dubai.

Where do I begin?

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• When you become licensed, what identification will you have?

 Certificate issued by DREI.

 RERA Smart Broker ID with your BRN.

• How often should you renew the license?

 Annually.

• When should you apply for renewal?

 At least 30 days prior to expiry of your broker ID.

What is the “Trakheesi” System?

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26-Jan-20

Trakheesi is a web application meant for Real Estate Offices for managing Real
estate Broker operations.

It enables the Real Estate Office Admin/Broker to perform

operations/procedures such as:

o Issuing a broker card,

o Updating broker information,
o Renewing a broker card,
o Replacing a broker card with the new one
o Cancelling broker card
o Issue Advertisement Permits
o Register on Dubai REST & Dubai Broker Apps.

Trakheesi Contact Information:

P.O. Box: 1166 Dubai, UAE
Phone: 600555556
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
email: [email protected]
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

4
26-Jan-20

Brokerage Offices Ranking System

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26-Jan-20

Objective of the Brokerage Offices Ranking Project

• To enhance the efficiency of real estate service providers (brokers in particular) in

accordance with set policies for the real estate sector based on RERA’s strategic
plan.

Objective:
Enhance efficiencies of real
estate service providers
(brokers) in accordance with
set policies for real estate
sector and based on the
strategic plan of RERA by
creating ranking for
brokerage offices

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26-Jan-20

RANKING CATEGORIES
Four criteria were adopted for ranking of brokerage offices

Gold
Category
From 91%
- 100%
General Silver
Category Category
From 0% - From 81%
70% - 90%
Bronze
Category
From 71%
- 80%

15% Experience of the brokerage office

30% Number of transactions (Sale) carried by the office

40% Commitment to real estate regulations & laws

10% Structure

5% Community Service (Initiatives & Emiratisation)

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26-Jan-20

Standards Years Weight Explanation

1 – 5 years 1 Point
Brokerage
The points are given from the date of obtaining the
Office 6 – 9 Years 3 Points
license
Experience
10 years 6 Points
1 – 5 years 1 Point
The points are given according to the average years of
Broker
6 – 9 years 3 Points experience of working brokers
Experience
10 years 6 Points
Number of 1–2 1 Point The points are given from the date of obtaining the license
Branches 3–4 3 Point
Total - 15

This standard is based on number and value of sale transactions carried

by the brokerage office in the LD’s database and on monthly basis

Weight Total number of transactions Weight Value of sale transaction

5% +2 3% 2 Million
10% +5
5% 2 – 4 Million
15% +8
20% + 15 10% +4 Million

The above sub-criteria represents 20% The above sub-criteria represents 10%

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26-Jan-20

This Criteria is calculated by the number of registered

warning and irregularities committed by the brokerage office

Warning 15% Irregularities 25%

0 15% 0 25%

1-2 10% 1-2 10%

3+ 0% 3+ 0%

The above sub-criteria represents 15% The above sub-criteria represents 25%

This criteria is based on four sub categories

Sub-criteria Explanation Responsibility %

Documentation of sale records
1 Record of deals by the broker Data and Statistics Section 3%
by the office
Quality Systems by the Office Dubai Real Estate Institute
2 Quality systems 3%
(ISO) Director

3 Dedicated website for the office - 2%

4 Market case study - 2%

Note: A survey of Quality Systems will be sent out to brokers via e-mail,
once we receive a response we will decide the grade

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26-Jan-20

We propose to measure the ranking according to two sub-criteria

Sub-Criteria Explanation Responsibility %

Number of Emirati nationals working
1 Emiratisation Data and Statistics Section
in the office
5%
Corporate Social Responsibility
2 Initiatives
initiatives

Categories Of Real Estate Broker Cards

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26-Jan-20

Categories Of Real Estate Broker Cards:

● Blue card: Applied by Brokerage companies licensed by DED. Allows

Brokers to transact in Dubai, Free zone and sell for Developers, but
not Timeshare or short-term rentals.

● Green card: Applied by Developers. Brokers can only sell

Developer’s projects.

● Red card: Granted to only Timeshare properties.

●Yellow cards : Applied by Brokerage companies licensed by a FZ

authority. Allows Brokers to transact only in the FZ.

● Navy card: Issued for National Brokers.

● Grey card: Issued for Registration Trustees.

‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
● Brown
The Copyright card:
of these materials Issued for
is vested in DREI. TheseRE Valuators.
materials should not be copied, reproduced or transmitted without our prior written consent.

12
Module 3

Concepts, Definitions & Market

Players

Module 3
Concepts, Definitions &
Market Players

Objectives
Introducing:
 DLD, market regulators and educators.
 The main systems and registers.
 Registration Trustees.
 Types of Ownership: Freehold vs. Leasehold.

1
26-Jan-20

Dubai Land Department (DLD)

DLD was established on January 24th 1960 by Sheikh Rashid bin Saeed Al Maktoum
to oversee affairs related to lands and private properties in the Emirate of Dubai, to
register these lands and properties in a systematic and effective manner and to
safeguard the rights of people.

DLD’s vision is to position Dubai as the world’s premier real estate destination and a
byword for innovation, trust and happiness.

DLD’s mission is to create an innovative and sustainable real estate environment that
promotes Dubai as the world's happiest city through:
Smart services.
Professional human and financial resources.
Integrated real estate legislation.

DLD aims to do that by:

Developing and applying clear and transparent real estate regulations.
Providing distinctive and efficient real estate services that
help attract investment
Increasing real estate knowledge.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Real Estate Regulatory Agency (RERA)

The Real Estate Regulatory Agency was established as a result of a law issued by His
Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime
Minister and Ruler of Dubai, in 2007.
His Highness Sheikh Mohammed Bin Rashid Al Maktoum, has issued a new law
regulating the Real Estate Regulatory Agency (RERA). The new law issued, Law No. 4 of
2019, states RERA as a public institution, to come under the Dubai Land Department.
RERA is the regulatory arm of the Land Department, where the department sets
legislations to regulate the relationship between all contracting parties and to
organizes the exchange process of properties.
The new law includes restructuring the legal provisions of the agency,
which was established pursuant to Law No. (16) of 2007.
According to the new Law, the objectives of RERA include
contributing to the development of Dubai’s real estate sector within
an integrated system of regulatory and monetary procedures and
enhancing the sector’s contribution to Dubai’s economy. The
department provides many services to clients in Dubai, extending its
role to planning, organizing and evaluating operations related to real
estate license. It also monitor projects financially and technically to
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
protect investors.
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

2
26-Jan-20

Furthermore, RERA will work to provide a secure environment for real estate projects in
order to protect the rights of developers and investors, implement new projects and
programs that enable them to explore new real estate opportunities and promote
professional and ethical standards in the industry.

Pursuant to this Law, RERA is responsible for:

• Regulating and overseeing real estate development escrow accounts;
• Accrediting financial institutions that are qualified to manage real estate development
escrow accounts; and
• Approving regulations that govern development, brokerage and management of real
estate including joint property.

RERA also:
• Monitors real estate advertisements published in media outlets in the Emirate;
• Develops and launches awareness programs in collaboration with the Dubai Real Estate
Institute to educate the public about their rights and responsibilities; and
• Prepares and updates policies designed to balance supply and demand.

Dubai Land Department will replace RERA in registering real estate rental contracts and
regulating the relationship between property owners and tenants and any other matter
related to real estate ‫المعهد‬
rental‫ الخطية من‬contracts.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Dubai Real Estate Institute (DREI)

DREI is the educational arm of Dubai Land Department. DREI’s vision is to become
the leading international benchmark in spreading and sustaining real estate
knowledge.
DREI’s objectives are:

• Provision of advanced and high quality programs in collaboration with

internationally recognized universities.
• Publishing researches and provision of property related consultations to the
public and private sector.
• Enhancing communications among all stakeholders.
• Empowering society by disseminating real estate knowledge.

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26-Jan-20

Rental Dispute Settlement Center (RDC)

The Rental Dispute Center, based at Dubai Land Department was moved under the
umbrella of DLD through Decree No 26 of 2013. The Center employs mechanisms
characterized by flexibility, speed and efficiency to facilitate accuracy, impartiality
and transparency when dealing with settlement issues relating to rentals in Dubai
real estate market.

Law 6 of 2019 on the Ownership of Common Property:

New dispute resolution mechanism – the Rental Dispute Settlement Centre has
exclusive jurisdiction.
If a Unit Owner fails to pay service charges, and fails to remedy this within 30 days
following notice from the management body which has been approved by RERA,
then the management body can enforce their claim for unpaid service charges
before an execution judge in the Rental Dispute Settlement Centre.

The execution judge may, when necessary, sell the Unit through a public auction to
collect the amount of the
‫من المعهد‬ ‫ الخطية‬unpaid service
‫إنتاجها من دون الموافقة‬ ‫إستخدامها او إعادة‬charge.
,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Decree No. (21) of 2013

“Setting up a Special Judicial Committee for the liquidation of cancelled property

projects in the emirate of Dubai, and the settlement of rights disputes related to
such projects.”

The Special Judicial Committee is tasked with the settlement of disputes between
property developers and investors over cancelled projects, in addition to the
liquidation of projects that have been decisively cancelled by the Real Estate
Regulatory Agency (RERA) as per Law No. (13) of 2008 and its regulations. The
committee is made up of at least 3 judges from the Dubai Courts.

The settlement of rights disputes, grievances and complaints will be carried out
noting that settlement fees will be deducted.

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26-Jan-20

BROKERS’ REGISTER

• Registered
ORN Broker Office
Office Registration
Number (ORN)

• Registered
BRN Broker/Agent
Broker Registration
Number (BRN)

• Special
Transaction
STR Register
• All Transaction
Agreements (STR)
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Proof of Ownership / Right to Reside

• Pre-Title
Registration ‘My
‘OQOOD’
Ownership
Certificate’

• Lease
‘EJARI’
Registration

TITLE • Issuance
DEED of the Title Deed

‘MOLLAK’
• ‘My Strata
Certificate’
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

5
26-Jan-20

Ejari.ae
All new leases must be registered with the Dubai Land Department.

According to clause # 14 of RERA’s “Unified Tenancy Contract” landlords are

responsible for registering the Tenancy Contract with Ejari immediately after the
lease is signed. However, it’s a common practice in Dubai that tenants pay the
related cost as it is required for visa renewals, connecting DEWA, Etisalat / Du
phone, etc…).

6
26-Jan-20

7
26-Jan-20

Common Property Register

REGISTRATION •Refer to Module 7

MOLLAK • Refer to Module 7

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26-Jan-20

DEVELOPER’ REGISTER

DEVELOPER • The Developer must be

registered with RERA

REGISTERED • The Project must be

WITH PROJECT
registered with RERA
RERA

ESCROW
• The Project Escrow A/C must be
Also an NOC given by RERA A/C
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
registered with RERA
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Master Developers

His Highness Sheikh Mohammed Bin Rashed Al

Maktoum promoted the development of real
estate through the creation of Emaar.

Emaar developed Burj Khalifa, the tallest

building in the world, after the 3.5km long Dubai
Marina, set to be the focus of the New Dubai, a
high-rise city within a city and home to
thousands of residents.

Nakheel became well known with The Palm

Jumeirah, a 5km long, reclaimed island shaped
like a palm tree, which achieved international
fame.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

9
26-Jan-20

What is the profession of Registration Trustee?

The aim of this service is to execute and complete client’s transactions outside
DLD’s working hours through a number of offices licensed by the DLD, in order
to facilitate and accelerate the process of property registration for investors.

The new system will accelerate the transaction processing. The Tabu system is
responsible for conducting many real estate procedures such as Selling,
registering Mortgages …… on a daily basis.

The trustee must be a legally qualified UAE national.

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26-Jan-20

Property Ownership Types

There are two types of real estate ownership in Dubai:

1- Leasehold (also known as long-term lease): Under this type, the buyer
holds the property anywhere over 10 up to 99 years after which time the
property is returned to the land owner. In 2001, the Dubai government
agreed to allow expats to own real estate on such basis. This was limited to
particular projects in Dubai.

2. Freehold: It is where the buyer becomes the owner of the property and
the land forever. In May 2002, the crown prince of Dubai, Sheikh
Mohammed bin Rashid Al Maktoum, issued a decree allowing foreigners to
buy property on freehold basis. This is limited to specific areas in Dubai,
known as designated areas. Sheikh Maktoum's decree sparked a real
estate boom in Dubai's property sector.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Leasehold Vs. Freehold

Important facts:

• In Freehold you own the property and land FOREVER. Foreign nationals are permitted to own
freehold property in “designated areas” approved by the Ruler of Dubai from time to time.
Presently, there are over 24 designated areas approved for foreign ownership. (Regulation
No. 3 of 2006)

• In Leasehold you own the property, but not the land. Leasehold ownership is anywhere from
over 10 years up to 99 years. Foreign nationals are only permitted to enter into a long term
lease of all properties located in “designated areas” of Dubai as determined by the Ruler of
Dubai. Long leases cannot exceed 99 years and must be registered in the Real Property
Register in the Dubai Land Department pursuant to the requirements of Article 9 of Dubai
Law No. 7 of 2006.

• It is important to note that the Tenancy Laws are not applicable over long term leases
(leasehold) and the RDC does not have jurisdiction over long term lease disputes.

• Citizens of the GCC are not considered foreigners.

• Both ownership (freehold and leasehold) types give the flexibility to owners to live-in, rent
out, modify, sell and for inheritance by heirs ( In Leasehold it will be based on the remaining
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
life of the lease).
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

11
Module 4
Sales Process & Agreements

Module 4
Sales Process & Agreements

Objectives

Introducing:
 Sales process/cycle.
 Sales models.
 Important general knowledge.

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Sales Process

How does the real estate sales process proceed?

Typically, a starting point is when a real estate owner decides to sell.

He or she tries to get names of brokers who are experienced and successful
in selling the given type of property.

The real estate owner interviews brokers, discusses the situation, and offers
a listing to one or sometimes more than one broker.

The owner becomes a principal.

The broker is an agent of the principal.

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26-Jan-20

What is a listing?

A listing is a contract between an owner and a broker

authorizing the broker to find a buyer or a tenant who is willing
to buy or lease the property under the terms of the listing.

Must a listing be in writing?

Must it have a fixed termination or expiration date?

The Real Estate Brokerage Contract between Broker and Seller (Contract A) is
accessible through the DUBAI REST APP under the DUBAI BROKERS.

What are the different types of listings?

1. Exclusive Listings (only 1 broker)

2. Open Listings (more than 1 broker)

What are the differences between them?

In each type, who gets the commission?

If the listing is exclusive with one agent, the system won’t allow another listing
agreement (contract A) to be created for the duration of the exclusivity period.

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26-Jan-20

Why would an owner give a broker an exclusive listing?

This type of listing guarantees the broker gets the commission if the property sells
regardless of who sells it.

It gives the broker more incentive to sell, with less risk of wasted time and money.

With non-exclusive listings, a broker may be reluctant to spend time or money to

advertise or show the property because another broker may sell the property and
collect the commission.

THE AGENT WHO HAS VALID AND CURRENT “EXCLUSIVE” AGREEMENTS WITH
SELLERS… WILL ATTRACT MORE SALES AS THE BUYERS AND THEIR AGENTS WILL
KNOW, YOUR SELLERS ARE SERIOUS AND HAVE LISTENED TO YOUR ADVICE.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

When does a listing expire?

 What is the maximum validity for a listing?

 Are there other types of listings?

One of these is called net listing, where the broker’s commission is the amount
by which the selling price exceeds an agreed-upon (net) price to the seller (Top
off commission).

This is illegal because it can create a conflict of interest for the broker, at the
same time it is against the code of ethics.

4
26-Jan-20

What is the listing price of real estate?

The listing price, as the name implies, is the price put on a property when it is
listed or placed in the market.
This price is chosen by the seller, usually with advice from the broker.

It is the same as the asking price, that is, the price the seller hopes to get,
it is generally considered a starting point for negotiations between the seller
and a prospective buyer and consequently may be set artificially high.

What is the agreement between Seller and Broker? Contract A

LISTING AGENT

.
Meet ……

The Seller
. After completing Contract A
on Dubai-REST App , a link
The Listing Agent to access Contract A is sent
does their to the Seller. If approved by
homework (CMA) the Seller, the contract is
& research…… considered valid and
electronic signature is
honored.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

5
26-Jan-20

Once Contract A is signed between Seller and Broker, the Broker can then
advertise/market the property after applying for and receiving the advertising
permit from RERA through Trakheesi or Dubai-REST App.

Cancellation and extension of Contract A can be done through the Dubai-REST

App.

6
26-Jan-20

You can then begin marketing the property

FOR SALE
By-Law No. (85) of 2006, Chapter (4) Article (26) states The Brokerage
contract shall be in writing and shall state the names of the contracting
parties, specifications of the Real Property and the Brokerage conditions.
The contract shall be registered in the real estate register.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

7
26-Jan-20

A FEW tips …….

BROKERS SHOULD UPDATE THEIR OWN E-MAILS AND MOBILE NUMBERS IN

TRAKHEESI SO THEY CAN MANAGE THEIR CLIENTS’ REQUESTS ON THE
DUBAI-REST APP.

A FEW tips …….

MANAGING THE VOLUME OF LISTINGS IS UP TO YOU, THE LISTING BROKER.

HOWEVER DO NOT MISLEAD SELLERS, DO NOT MISLEAD BUYERS OR OTHER
BROKERS. IF YOU CANNOT MANAGE THE LISTING EFFECTIVELY TO GET THE
JOB DONE, DO NOT LIST THE PROPERTY.
HAVE THE INTEGRITY TO WALK AWAY!

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26-Jan-20

Who is a qualified buyer?

He or she is someone,

• Of legal age (21 years or older)

• Mentally capable

who is in the market (that is, who is willing or seeking to buy), who gives some
evidence of being financially able to buy a property within a specific price range.

The Real Estate Brokerage Contract between Broker and Buyer (Contract B)
is accessible through the DUBAI REST APP under the DUBAI BROKERS.

What is the agreement between Buyer and Broker? Contract B.

Contract B is accessible through the Dubai-REST App:

• Buyer sends the request “to buy” to Broker.
• Broker fills out and completes contract B.
• The link to approve contract B is sent to the Buyer by sms or email ( for
international buyers).

9
26-Jan-20

A FEW tips …….

THE QUICKER YOU SECURE YOUR BUYER’S AGREEMENTS ON THE DUBAI-REST

APP…. THE BETTER YOUR BUSINESS WILL BE.
BUYER WILL BE ABLE TO LIST WITH MANY AGENTS.
YOUR SUCCESS DEPENDS ON skills, communication, trust, & their confidence
in YOU.

TAKE GOOD CARE OF YOUR ‘REAL’ BUYERS

Real Estate Sale Cycle

10
26-Jan-20

7. Contract
settles 1. We
and the list the Contract 1 Contract A
property property
is SOLD Seller & Seller’s Agent

THE REAL ESTATE

2. We
Contract 2 Contract B
6. A contract
exists on
PROPERTY attract
the property
Buyers by Buyer & Buyer’s Agent
marketing
SALE
CYCLE Contract 3 Contract F
Buyer & Seller
5. Offer is 3. We
accepted qualify
by the potential
Seller Buyers

4. Buyer
makes an
Offer
to Buy
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

The Buyer’s Broker has communicated the request for the Listing (Seller’s) Agent to
prepare FORM F as an “offer”.

• The Listing Broker logs into the Dubai-REST App, accesses contract B either by:
• Scanning the bar code assigned to contract B.
• Entering the QR number assigned to contract B.
• Selecting contract B from his/her pending contracts.
• If contract B is not available, the listing broker can add a buyer by:
• Inserting buyer’s passport number.
• Scanning buyer’s emirates ID.
• Selecting the buyer’s ID number from the system, if he/she happens to be an
existing owner in the system.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

11
26-Jan-20

At NO TIME will the Listing Broker/Seller be able to see the Buyer’s or his
broker’s details
NOR
The Buyer’s Broker/Buyer can see the Seller’s or his Listing broker’s details

UNTIL Contract F is signed and approved by BOTH PARTIES!

TRUST RULE APPLIES

• Valid contracts A and B are mandatory in order for the Seller’s broker to
initiate contract F.
• Upon approval of contract F by Buyer and Seller, “F” shall appear with most
of the information required already inserted:

• Property information will be fetched form Contract A.

• Owners information will be fetched from Contract A.
• Buyers information will be fetched from Contract B. However buyers information will
appear in Contract F only in case both contracts A & B are created by the same broker.
• Brokers information will be fetched from Contract B, in case both contracts are created by
different brokers.
• If property is rented, tenancy information will be fetched form contract A.
• Commission of broker A will be fetched from contract A.
• Commission of broker B will be fetched from contract B .
• Documents will be cloned from both contracts A & B with no ability to edit, delete or
update. However the broker who will create contract F should have the ability to attach any
additional required documents within contract F.
• Before final approval of contract F by sellers & Buyers, Sellers should not be able to view
the buyers information & vice versa.

• Broker B should not be able to view sellers information before final approval of contract F
by sellers & Buyers.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
• Sellers & Buyers final approval of contract F should block the property.
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

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26-Jan-20

• Extra terms and conditions can be added to contract F as requested and formulated by
the parties.
• Contract F can be cancelled or extended subject to approval from both parties of the
agreement.
• Once contract F is signed by both parties, the property gets “flagged” in the system for
the “duration of reservation” until the property:

• Either gets transferred from seller to buyer and buyer gets his title deed/Oqood
certificate
OR
• The transaction gets cancelled by the parties.

Sales Models

13
26-Jan-20

A. Cash Buyer – Mortgage Free Property

This is usually the fastest, easiest type of transaction

1. Buyer and Seller sign Form F:

• Buyer submits a Booking Deposit.
• Seller issues a Security Cheque against the booking deposit.
2. Seller applies for the NOC from Master Developer.
3. Buyer and Seller go to Registration Trustee to transfer the property Title
Deed/Oqood.

If a property does not have a Title Deed:

Seller must apply and pay 4% of the original price of the property to issue the
original Title Deed before the Title Deed can be transferred to the Buyer.

If a property is “off plan”; the Seller must register Oqood and pay 4% of selling price
before he can sell the property.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

14
26-Jan-20

B. Cash Buyer – Mortgaged Property

Cash Buyer- Delayed Sale and/or Off Plan Property

• When there is an existing mortgage/loan on the property, the outstanding loan amount must be
settled prior to transfer of Title Deed to the Buyer.

Step1- Blocking of the Property.

This is done to secure the payments made by the Buyer when settling the mortgage of the Seller on a
mortgaged property or when the Buyer settles the pending payments on delayed sale and/or off plan
properties, to the developer on behalf of the Seller).

Required documents:
• Liability letter from bank/developer (in Arabic) addressed to DLD. It should include the following:
– Details of the property as mentioned on the title deed.
– Outstanding balance of the Seller’s mortgage on a mortgaged property (from the bank) or
outstanding balance of the Seller’s payments on delayed sale or off plan properties ( from
the developer).
– An undertaking statement from the bank to release the mortgage once the outstanding
balance of the mortgage on the property is settled. This should be stated and included in the
liability letter.
Liability Letter has a fixed validity period upon which time, the Buyer should be advised to be ready to
settle the mortgage by the end of this validity period, which could range between 7 – 15 days.
The Bank may charge for early settlement of the loan, Seller pays for this as well, unless agreed
‫ دون الموافقة الخطية من المعهد‬differently between
‫إستخدامها او إعادة إنتاجها من‬ ,‫ و اليجوز نسخها‬parties.
‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

15
26-Jan-20

• Form F signed by the Seller and Buyer.

• Updated copy of the title deed.

• No objection certificate (NOC) from developer (before submitting the cheques).
• Emirates ID ( if Seller and Buyer are residents of the UAE/Original passport ( if
Seller and Buyer are not residents of the UAE).
• The following Manager cheques issued by the Buyer distributed as follows:
• A manager cheque payable to the bank to settle the outstanding mortgage.
• A manager cheque payable to the Seller for the remaining balance.
• A manager cheque payable to Dubai Land Department for the transfer and
registration fees split as follows (unless agreed otherwise):
• Transfer fee for Seller = 2% + AED 20
• Transfer Fee for Buyer = 2% + AED 20
• Registration fees for Buyer:
For land: AED 250 (Ownership) + 20 + 120 (Map) + 20 = 410
For unit: AED 250 (Ownership) + 20 + 250 (Map) + 20 = 540
Plus admin fees of AED 1000 +20 to DLD in order to reserve/block the property
for 30 days.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

RT Fees:

• AED 4,000 for completed property, if the price of the property is AED 500,000 or more. If the
property is off-plan, the fee is AED 5,000.

• AED 2,000 if the price of the property is less than AED 500,000. If the property is off-plan, the
fee is AED 3,500.

The Seller takes the check payable to the bank to release the mortgage and obtain the
clearance/release letters. Both Seller and Buyer may be required to be present at the bank.

Step 2-Unblocking of the Property and Transfer of Ownership from Seller to Buyer.
Both Parties return to registration trustee/DLD to unblock the property to complete the sale and
issue new title deed in the name of the Buyer.

Required Documents:

• Original title deed.

• Mortgage release Letters from the bank to DLD, Developer and Seller.
DLD Fees:
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
• AED 1,290 mortgage
The Copyright release
of these materials is vested fees. (Fees
in DREI. These may
materials should differ forreproduced
not be copied, Islamic banks).
or transmitted without our prior written consent.

16
26-Jan-20

C. Mortgaged Buyer – Mortgage Free Property

1. Buyer applies for financing.

– Recommend that Buyers have a pre-approval in place prior to looking at
properties.
2. Buyer and Seller sign form F:
 Buyer submits a Booking Deposit.
 Seller issues a Security Cheque against the Booking Deposit.
3. The Buyer’s bank conducts valuation (appraisal) of property (at Buyer’s expense).
4. Buyer’s bank issues Final Offer Letter to Buyer.
5. The Seller applies for NOC from Master Developer (both parties attend).
6. After NOC is issued:
– Buyer , Seller & Bank representative attend RT/DLD;
– Title Deed is transferred to the Buyer’s bank;
– Buyer’s bank holds the Title Deed of the property for the duration of the loan.
7. The mortgage must be registered against the property by the bank (at Buyer’s
expense) by paying 0.25% of the mortgage value to DLD.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
Note: Buyer’s Bank requires valid proof of ownership (Title Deed/Oqood) prior to valuation of the
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.
property.

17
26-Jan-20

D. Mortgaged Buyer – Mortgaged Property

D. MORTGAGED BUYER-MORTGAGED PROPERTY

1. Buyer and Seller sign Form F.
2. Buyer submits a Booking Deposit.
3. Seller issues a Security Cheque against the Booking Deposit.
4. Buyer’s bank conducts valuation of the property.
5. Buyer’s Bank issues Final Offer Letter to Buyer.
6. Seller applies for a Liability Letter from their bank (depends on each bank).
7. Once the Liability Letter is issued, it is sent to the Buyer’s bank.
8. Buyer’s bank will start the process of settling the existing mortgage.
9. Once existing Mortgage has been settled, original Title Deed held by the Seller’s
bank is released to the Buyer’s bank.
10. Seller requests NOC from Developer (both parties attend).
11. Seller submits a copy of the NOC to the Buyer's bank. The bank will then prepare
the final documentation for the transfer of the property.
12. Buyer, Seller, the Buyer's bank and the agent will meet at RT/DLD to transfer.
13. Buyer’s bank will either issue a cheque for the remaining amount to the Seller or
issue a Guarantee Letter for the same amount.
14. The Mortgage must be registered against the property by bank (paid by Buyer).
15. The Buyer's contribution will be paid to the Seller through a Manager's Cheque on
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
the day of transfer
The Copyright of these materials(for most
is vested banks).
in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

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26-Jan-20

D. MORTGAGED BUYER-MORTGAGED PROPERTY (cont’d)

• No two transactions are the same.
• Broker must perform due diligence in order to protect yourself and your
client. – Make sure you are well informed of all the required documents of
your client, and each step of the process.
• Do not expose your client, yourself and your company to risk.
• Ask if you have any questions, never assume.

Important General Knowledge

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26-Jan-20

• What is the agreement between buyer and seller?

• What are the terms and conditions contained within this agreement?
• Who design the terms and conditions?
• Can those terms and conditions be changed?
• How long should the transaction take to be completed?
Is that fixed?
• Can it be extended?
• What will be the case if either of the contracting
parties back off?
• What is a role of the broker in all the above?

What is a contract? Is it legally binding?

It is an agreement between legally competent parties in which one party agrees

to do something (or not to do something) in return for consideration (payment)
from the other contracting party.

What is a breach of contract?

What are the consequences?

20
26-Jan-20

Must a contract for the sale of real estate be in writing to be enforceable?

Yes.

Because of the economic importance of real estate, the law requires a contract
to be in writing to be enforceable.

A real estate contract must also include a description sufficient to locate the
property.

What is an addendum to a contract?

An addendum (plural: addenda) is something that is added as an

attachment.

What is an amendment to a contract?

It is a change, correction, or extension of an agreement that does not

change the basic thrust of the agreement.

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26-Jan-20

Is an amendment to a contract the same as an addendum?

No!

Usually an addendum is prepared with the original contract, While an

amendment is a later change.

What is meant by a valid contract?

A void contract?

A valid contract has legally binding force; it is legally sufficient and

authorized by the law.

A void contract cannot be enforced.

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26-Jan-20

 What is a power of attorney (POA)?

Power of Attorney (POA) – A legal appointment from one person (Grantor) to another
(Grantee) to act on Grantor’s behalf in his/her absence. The Grantee has authority to make
decisions and sign legal documents on behalf of Grantor.

 How is it legalized?

All POA’s need to be notarised and properly attested:

• If issued in Dubai, it must be notarized by the Notary Public.
• If issued abroad, it must be legalized through the UAE Embassy in that country, then
the Ministry of Foreign Affairs.
• The POA must be in Arabic. If there is an English translation, it must be stamped by a
licensed legal translator.
• For real estate purposes, Dubai Courts and DLD will only accept POA’s that are specific
to the subject property and limited in duration to 2 years.

 Can a broker accept a Power of Attorney?

NO, a Broker may NOT accept a POA in any real estate transaction.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

 What is flipping a real estate property?

 Who are speculators?

Flippers and speculators are buyers/investors who purchase real estate for the
sole purpose of making quick return and realizing an immediate gain.

23
26-Jan-20

What is escrow?
Escrow is an agreement between two or more parties providing that certain
money, instruments or property be placed with a third party (bank) for
safekeeping pending the fulfillment or performance of a specific act or
condition.

Who controls the developer’s escrow account?

DLD controls the developer’s escrow account. Money/funds are released from
the escrow account based on the certified progress of the Project.

What is developer’s escrow account?

The escrow account is required for each project under construction or off-plan
to be opened by the developer after he gets the approval from RERA to
construct the project. Monies received from investors/buyers are deposited into
the escrow account.

In whose name should the escrow account be?

Escrow account is ‫المعهد‬
opened under the project name for each and every project.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

 What is a down payment or a deposit cheque?

A down payment or deposit is the cheque that the buyer issues in order to reserve a
property. According to the "market norm", it is usually 10% of the selling price, but it will
always depend on price of the real estate property to be reserved.
 Can it be in cash? No, it should be payable in the form of a cheque.
 If in cheque, in whose name? The cheque should be in the name of the Seller.
 When does the seller receive the down payment?
The deposit (down payment) cheque is held by the brokerage company until the transfer date.
At transfer, and based on the agreement between the buyer and seller, the deposit cheque is
either returned to the buyer whereby the seller would expect the total amount due to him in the
form of a manager's cheque or the seller would accept the deposit cheque and as such would
only expect the balance to be paid in the form of a manager's cheque.

 What is a security cheque, in whose name is it issued?

A security cheque is the cheque issued by the seller in the name of the buyer as a security for
the buyer in case the seller defaults on the agreement. This is also held by the brokerage
company.
.

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26-Jan-20

Who gets the cheque if the deal go through, and it the deal does not materialize?
If the deal goes through, the brokerage company returns the security cheque to the seller.
However, if he defaults on the agreement and both parties had agreed on these terms, then
the security cheque is handed over to the buyer due to the seller's default. It is crucial that
defaulting clauses are drafted clearly under contract F so each party knows its rights and
obligations.

Tip: Make sure to get DLD involved prior to handing over any cheques in case of default by
either party.

What is a distress sale?

It is a sale of real estate where the seller is under compulsion, or forced to sell.

Can a broker advertise a distress sale?

25
26-Jan-20

What is meant by lender preapproval?

It is the practice by a lender of approving a borrower for a certain loan

amount.

This allows prospective homebuyers to shop with the knowledge, likely to

be shared with seller and broker to demonstrate their financial capability,
that the loan will be approved.

What is an asset?

It is something of value that one owns.

Assets can include land, houses, cars, furniture, cash, bank deposits and securities.

What is liability?

It is the opposite of asset; it is a debt or obligation that one owes.

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26-Jan-20

What is a commission?

It is the fee earned from a real estate transaction, usually a percentage of the
selling price.

Must a person be licensed broker to collect a commission from areal estate

transaction? Or any person who mediates in the deal?

How much should the commission be for a sale’s transaction?

How much is the commission for a lease?

Who pays the commission? Seller, buyer, landlord or tenant?

 When does a broker earn a commission?

 When does the broker collect the commission cheque?
 When does the broker cash the commission earned?
 Can commission be paid in cash?
 In whose name should the commission cheque be?
 Can a broker represent both a buyer and a seller?
 Can a broker represent both landlord and tenant?
 What will be the commission in this case?
 Who will pay the commission?

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26-Jan-20

What is the difference between real estate (real property) and personal
property?

Real estate or real property is everything more or less permanently affixed

to land.

Personal property is everything else.

Mention the main differences between both real and personal properties:

 Unique (No Similarity)

 Long lived
 Immobile
 Transfer fee to be paid every time a sale of real property takes place

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26-Jan-20

• How much is the transfer fee?

4% of the Selling Price (as per market price).

• Who pays the transfer fees?

By law – 2% & Buyer 2% Seller unless agreed upon otherwise.

• To whom is it paid?
Transfer fees are paid by manager’s cheque to DLD at RT’s office or DLD.

• Can cash be accepted?

No, only by Manager’s Check, Noqodi or credit card.

• What is needed to prove the ownership of a real estate property?

1. Title deed for finished properties
2. Oqood for off-plan properties.

• Can a broker initiate a contract between seller and buyer without the
existence of a proof of ownership?
Absolutely NOT! A broker must exercise due diligence.

• Can a mortgaged property be transferred at the RT/DLD?

The Seller’s mortgage would need to be settled first BEFORE the transfer
of the property can be done from the Seller to the Buyer.

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26-Jan-20

What is a Valuation?

It has 3 meanings:
 A professional opinion or estimate of the value of property.
 The act or process of estimating value.
 The report that describes the process and data used to provide the
value.

When a broker should make sure that an official certified valuation is

available prior to transaction?

When the property is gifted, in order to determine the value of the

property to calculate the transfer fees.

Valuation is also done by banks to approve mortgages.

NO TRANSACTIONS ARE PERMITTED

UNLESS THE PROEPRTY HAS EITHER

A. THE TITLE DEED ISSUED or

B. THE PROPERTY IS REGISTERED ON THE INTERIM REGISTER.

ALL REGISTRERED BROKERS AND AGENTS ARE REQUIRED TO KEEP THEMSELVES

UPDATED, RERA WILL NOT CALL OR RING over 7,000 AGENTS IN THE MARKET
TO UPDATE THEM WITH EVERY CHANGE!
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

30
26-Jan-20

Who should be present in person at the transfer:

 BUYER or registered POA
 SELLER or registered POA
 BUYER’S AGENT
 SELLER’S AGENT
 BUYER’S BANK
 SELLER’S BANK (May not be applicable)

31
Module 5
Leasing Process and Rental
Agreements

Module 5
Leasing Process and Rental
Agreements
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Objectives

Introducing:
 Leasing Brokers.
 Lease process.
 Elements of a lease agreement.
 Ejari.
 Rental Dispute Center (RDC).
 Short-Term lease.
 Tenancy-regulating legislations.
 Course review questions.
 The ABC of renting.

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26-Jan-20

Leasing Brokers

Freehold

Freehold title of property is the most superior form of real property right and
allows its owner to enjoy and occupy the land or property in perpetuity, and
is evidenced by a title deed issued by the Dubai Land Department.

Foreign nationals are permitted to own freehold property in “designated

areas” approved by the Ruler of Dubai from time to time.

Presently, there are over 24 designated areas approved for foreign

ownership. (Regulation No. 3 of 2006)

2
26-Jan-20

Usufruct Rights

When an owner of a building, unit or plot is eligible to enter into a usufruct

agreement with a tenant permitting the tenant to use the leased property
provided such property remains in its original condition subject to fair wear
and tear.

A usufruct typically terminates upon expiry of 50 years unless agreed

otherwise between the parties.

Destruction of the leased property or waiver by the usufructuary or

termination by court order due to misuse are some of the other grounds of
termination.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Musataha Rights

Musataha rights are very similar to usufruct but grants an additional

development right to the musataha holder.

The maximum term of a musataha is 50 years, unless otherwise agreed,

Either party has the right to terminate the musataha by two years prior notice.

Termination of the musataha occurs upon expiry of the musataha period as

agreed between the parties.

Unless agreed otherwise, payment default by the musataha holder for a period
of two years is also considered a ground for termination.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

3
26-Jan-20

Long term lease (Leasehold)

It is defined as a long term lease for a term of more than 10 years and up to 99
years.

Long leases cannot exceed 99 years and must be registered in the Real Property
Register in the Dubai Land Department

It is important to note that the Tenancy Laws are not applicable over long term
leases and the Rental Dispute Settlement Centre does not have jurisdiction
over long term lease disputes.

Fees

The Dubai Land Department charges the following fees for registration of the
various property rights:

Freehold 4% of the total value of the sale contract

Long leases 4% of the total rent value

Usufruct agreements 2% of the property value

Musataha agreements 1% of the total musataha value

4
26-Jan-20

Leasing Process

Step 1: Landlord puts the property up for rent

In order for a Landlord to do this he/she can either list the

property himself/herself or go through a broker.

Whilst it’s true that the Tenant will end up saving money by
not having to pay commission, the deal should be considerably
smoother with a broker involved.

Once the “Lease Brokerage Agreement between Owner and

Broker” is signed , the Broker can then advertise/market the
property after applying for and receiving the advertising
permit from RERA through Trakheesi.

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26-Jan-20

In order to create a proper listing the Landlord will have to clearly state the
following:

• Rental Amount (e.g. AED 100,000 per annum).

• Number of Cheques (e.g. Payable in 4 cheques over the rental period).
• Security Deposit (usually 5% of the rental amount but is sometimes more if
the property is furnished).
• Does the Property come furnished or unfurnished?
• How and when can the unit be accessed?
• Desired starting date of the rental period.
• Any other special conditions the Landlord may have.

Step 2: Viewing the Unit

This is the obvious step of the process – the potential tenant just needs to
make sure that he finds a unit that is suitable for them.

A couple of the points to look-out for include:

- Access to and from the building/development.
- Noise in the area.
- Facilities.
- Access to extra parking.

Should a broker find a unit that the tenant likes, take an extra moment to
write down the DEWA number (found next to the main door of the
apartment/villa) as the tenant will need this when the DEWA is changed into
his/her name.

Brokers remember to complete RERA’s “Property Viewing Form” .

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26-Jan-20

Step 3: Making an Offer

Should the tenant decide to go for a particular unit, then he/she may
choose to negotiate the rental amount (a common bargaining tool used in
this process is the number of cheques– Some tenants offer to pay in one
or two cheques if the landlord agrees to drop the rental amount).

This process is just a question of speaking with the broker and/or landlord
and finding a position that is suitable for both parties.

Note that there may be other conditions that should be clarified at this
point such as when the contract will start, its duration, and deposit
amount.

Step 4: Securing the Unit

In order to secure the unit the broker will ask the tenant to provide a
refundable security deposit (usually 5% of the rental amount), which can be
paid by a current dated cheque.

The cheque is made payable to the landlord but is held by the broker until the
deal has been finalized.

The broker should in return provide the tenant with a receipt for the deposit.

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26-Jan-20

Step 5: Drafting the Contract

At this point the broker will send a copy of both the Tenancy Contract and
its Addendum, with all information regarding the rental (including any
special/additional conditions agreed by both parties).

Both parties will have the chance to read through the contract and advise
if there are any changes that they would like to make to the addendum.

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26-Jan-20

Step 6: Signing the Contract and Collecting the Keys

Once both parties are happy with the contract, the broker will first obtain
the tenant’s signature on the contract and the cheques for the rental
amount and the agency commission.

The broker will in turn provide the tenant with receipts for the cheques
obtained.

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26-Jan-20

The broker will then meet the landlord so that he/she can countersign the
contract, collect the cheques (sign an acknowledgement receipt for the cheques
received), handover the keys for the unit and sign a DEWA registration form in
case the property has not yet been properly registered in the Landlord’s name.

The landlord will keep one of the signed original contracts and the broker will
bring one of the other signed contracts to the Tenant along with the keys (the
tenant will also sign a handover form that he/she is receiving ‘x’ amount of keys,
access cards, parking bay slots, etc…). The handover form should also be used
and signed by the Tenant to acknowledge the condition of the property and the
items handed over to Tenant. That way, at the end of the lease, it can be used to
compare condition and return of items - in case something needs to be deducted
from the Security Deposit.

Note that one of the three original contracts will remain with the Brokerage
Company, so that the broker can keep it in their records and help register the
property with Ejari.

Law 4 of 2019 – Concerning the Real Estate Regulatory Agency

•Announced on 15 September 2019

•This Law repeals Law 16 of 2007 Establishing the Real Estate Regulatory
Agency

•Dubai Land Department will replace RERA in registering real estate rental
contracts and regulating the relationship between property owners and
tenants and any other matter related to real estate rental contracts.

10
26-Jan-20

Step 7: EJARI Registration

According to clause # 14 of RERA’s “Unified Tenancy Contract” landlords are responsible for registering
the Tenancy Contract with Ejari immediately after the lease is signed. However, it’s a common practice in
Dubai that Tenants do the registration and pay the related cost as it is required for visa renewals,
connecting DEWA, Etisalat / Du phone, etc…).
In order to do the registration the following is required:
• Original Unified Tenancy Contract.
• Title deed and/or affection plan: If the Title Deed document is not available (for example, because the
property is newly built), provide the affection plan issued by the Dubai Municipality. In compliance with
RERA regulations, Ejari offices only accept Affection Plans issued by the Dubai Municipality.
• DEWA number (found on the side on the property’s entrance).
• Copy of the Tenant’s passport (with pages that show the signatures). Tenant must have a valid UAE
Visa (pink color sticker on passport) and this document should be valid at the moment of document
submission.
• Tenant’s Emirates ID.
• Trade license copy or DED’s initial approval in case of a commercial tenancy contract.

Ejari registration Fees- to be paid to DLD through any of the authorized property management companies
DLD approved centers.
Ejari fee: AED 155
Knowledge fee: AED 10
Innovation fee: AED 10
Typing charges: AED 40 ‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
Total fees =The
AED 215of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.
Copyright

Step 8: Connecting DEWA in Tenant’s name

Now that the Tenant has a signed copy of the Tenancy Contract and has
registered the Tenancy Contract in Ejari, he/she can connect DEWA.

Fees payable to DEWA:

- AED 2,000 + AED 20 (for apartments) or AED 4,000 + AED 20 (for villas) as a
refundable deposit.
- AED 110 +AED 20 for connection fees.

11
26-Jan-20

Step 9: Move-in form

Some developers (e.g. Emaar) require the Tenant to submit a move-in

form to the developer’s office before Security allows the Tenant to
move into the property.

The documents required are as follows:

- EJARI Certificate
- Passport and visa copy of the Tenant
- Tenancy Contract copy
- Move-in form filled out

Tenants and Landlords KNOW YOUR RIGHTS:

• You may visit Rental Dispute Center (RDC) website (www.rdc.gov.ae) and use
“Smart Judge App Service” in case of any rental dispute between the parties.

• Law No. 26 of 2007 regulating the relationship between landlords and tenants.

• Law No. 33 of 2008 amending law 26 of year 2007.

• Law No. 43 of 2013 determining rent increases for properties.

12
26-Jan-20

Only deal with a Registered Broker!

Only a resident of UAE can sign a lease agreement and connect the utility services.

The fixed term tenancy must be governed by a written tenancy contract agreement
with all the relevant information and must be registered in DLD by Law
(www.Ejari.ae).

In Dubai, when on a visit visa, a tenant cannot sign a fixed term tenancy agreement.

There are some Registered Brokers who have access to ‘short-term lease
accommodation’. These brokers are licensed by DTCM (Department of Tourism and
Commerce Marketing).

It is your responsibility as a broker to explain the law and clarify all issues.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

In Dubai, the broker commission is a percentage of one year rent

amount.

The norm is 5% of ONE year rent

(No charges on renewals)

This is the service fee to the broker, payable upon signing a rental
contract between the parties..

13
26-Jan-20

Elements of Lease Agreement

On signing the lease, the following documents are required:

Tenants:

• Copy of their passport.

• Copy of their UAE residency visa, or a letter from the employer stating that the visa is
being processed.
•Emirates ID.
• Lease Brokerage Agreement between Broker and Tenant.
• Cheques in landlord’s name.
• Property Viewing form.

14
26-Jan-20

On signing the lease, the following documents are required:

Landlord/Broker:

•Copy of the title deed or affection plan.

•Copy of the landlord's passport (and residence visa if applicable).
•Copy of the Broker’s ID card.
•Receipt on company letterhead for any monies paid (rent and commissions).
• Lease brokerage Agreement between Owner and Broker.
• Copy of POA and passport copies if applicable.

It's a Legal Contract & Requires Competent Parties:

A lease agreement is a legal and binding contract between the

landlord or owner and the tenant.

To be binding, it requires that the signing parties be of legal age,

mentally capable and competent to enter into an agreement.

If your tenant is a student and under the age of consent (under 21),
you will want to get the signature of a parent or legal guardian as
well.

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26-Jan-20

An Adequate Description of the Property:

It might seem obvious, but you cannot over-describe the property

being rented.

The address, complete with a unit or apartment number may be all

that you need.

However, it never hurts to give the apartment project name, building

number, or any other information that makes this leased property
unique from all others.

Length and Time Frame of the Lease:

It isn't enough to just specify a time frame, as in "six months."

Have a beginning date and exact ending date.

One more step is also important in case of eviction, to make it clear

to both parties what are the laws governing this act, as well as
what does a notice/ letter for eviction mean.

16
26-Jan-20

Renewal Terms:

It should be clear that renewal of the lease is granted by the law.

This area may also include mention of increases in rent upon renewals. This is
ok provided appropriate notice periods and rent caps as per RERA Index are
respected. Notices regarding rent increases must be given to the tenant at
least 90 days prior to the expiration of the Lease term.

Security Deposits and Rent Payments:

The Security Deposit:

•An amount of money paid in advance.

•Held in reserve.
•In the event that Tenant fails on a contractual obligation (under the Lease).

If the Landlord sells his property, It is advisable for the landlord (Seller) to
handover the deposit to the new landlord (Buyer) at the time of transferring
the property to the buyer’s name. That being said, the new landlord (Buyer)
will then refund the security deposit to the tenant at the termination of the
lease unless the Tenant fails on a contractual obligation (under the Lease).

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26-Jan-20

Use and Occupancy Agreements:

Don't just assume that a residential unit will be used for residential purposes.

Make it clear to the tenant that it is against the lease agreement to change the
property activity, which might lead to eviction.
How many people can occupy the unit.
State a number, or you may find the local fraternity living there.

Landlord Rights of Entry and Inspection:

The longer the lease, the greater the likelihood that the landlord will want
to enter and inspect for property condition.

State landlord rights in the lease, including the notice to be given, usually
a legal requirement.

When repairs must be made, be clear as to how repair persons will gain
entry and who is authorized.

Remind landlord that the tenant's privacy is important to them.

18
26-Jan-20

If Possible, A Waiver of Notices:

Again, you may want to include a waiver of notices. This simply states that
it is the tenant's responsibility to know when their lease expires, rents are
due, or any other deadlines or due dates.
This waives the landlord of the responsibility of notification in each
instance.

It's All About Clear Language and the Law:

Most real estate investors, owners and landlords get a lawyer to draft the
addendum to the lease agreement.

This is a good practice, as you do not want to be in violation of your

tenant's rights or Emirate laws.

Whether you do-it-yourself or get a lawyer, knowing the elements of a

good lease document will help you to avoid many negative aspects of
landlord-tenant relations.

Protecting your rights is as important as doing the same for your tenants.

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26-Jan-20

As a general point:

It is worth noting that users could face criminal action if unmarried men and
women stay together in private residences or hotels.

Training on Using EJARI

There is a training program for using EJARI in order to qualify people who
need to use it.

Arrangements have been made with Dubai Real Estate Institute in this regard
in order to send registered persons to be trained and awarded certificates.

Access to EJARI is given to the persons who have obtained the training
certificates that allow them to record data and issue tenancy contracts
directly through the website.

20
26-Jan-20

Rental Dispute Settlement Center (RDC)

The Rental Dispute Center, based at Dubai Land Department, has been
established through Decree issued in 2013.

The new Rental Dispute Settlement Center will employ new methods with
flexible mechanisms characterized by speed and efficiency.

They will facilitate greater accuracy, impartiality and transparency when dealing
with settlement issues and matters relating to Dubai's real estate market.

Rental Disputes Center website:

http://www.rdc.gov.ae/index.aspx

Dubai's Rental Dispute Settlement Center located at Dubai Land

Department has replaced the earlier Dubai Municipality Rent
Committee effective from 17/11/2013.

If either tenant or landlord has a dispute over rent, which cannot be

negotiated themselves, the legal option is to bring the case to RDC.

RDC is authorized by Dubai Government to provide a judicial

system that can deal with rental disputes and settle legal issues in
a quick, transparent and professional manner.

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26-Jan-20

RDC Fees & Documents

Plaintiff to pay 3.5% of annual rent with a minimum of AED 500 and a
maximum ceiling of AED 15,000 in case of financial compensation request, and
AED 20,000 in case of eviction.

Other fees may be levied by RDC on plaintiff for summoning experts, payment
of expert’s fee, fee for deposit of rent with RDC etc.

Plaintiff may have to separately pay for a newspaper advertisement in a local

newspaper, in case the defendant fails to show up for a committee hearing.

Fixed term lease

UAE and GCC and foreign nationals are permitted to enter into fixed term
leases not exceeding 10 years in all areas of Dubai.

Such leases create a right and must be registered with DLD pursuant to ‘Dubai
Law No. 26 of 2007 amended by the law No. 33 of 2008, regulating the
relationship between landlords and tenants in the Emirate of Dubai’ (“Tenancy
Laws”).

The applicable laws are silent regarding the validity of an unregistered leases,
however if not registered then various problems may arise relating to renewal
of residency visa, obtaining a utilities account from DEWA, filing a case at the
Rental Dispute Settlement Center, or serving a notice through Notary Public to
the other contracting party.

22
26-Jan-20

Short term lease (less than 6 months)

Especially for those on visit visa

Only brokers holding permission from The Department of

Tourism & Commerce Marketing (DTCM) can mediate such short
term rentals

Regulation issued under Decree No. (41) of 2013, regulating activity of leasing out
holiday homes

Leasing apartments on a short-term basis in Dubai should be licensed now, or a

fine of up to Dh100,000 could be imposed.

A regulation issued under Decree No. (41) of 2013, regulating the activity of leasing
out holiday homes in Dubai, stipulates offenders can face fines of up to Dh100,000
if they have repeated the same violation within one year from the date of the
previous offence.

“The amount of the fine will be doubled, provided the fine does not exceed
Dh100,000.

23
26-Jan-20

Example of calculating the increase in property rent rate in the Emirate of Dubai
according to the fees:

Average rent in the official index = AED 80,000

Current rate stated in the lease contract = AED 60,000
Calculating the decrease in rent below the average rent in the official index

80,000 - 60,000 x 100

80,000

Decrease in rent below the average rent in the official index – 25%
Upon referral to the cases stated in the Decree, the rate in this case will be from 21-
30%, which allows an increase of 10%
Increase in rent= 60,000 x 10% = AED 6,000
Rent after increase: 60,000 + 6000 = AED 66,000

The answers to the following questions

Are already covered during this session
Let’s try to answer them

24
26-Jan-20

Can a landlord rent his property at any rent value?

Can he increase the rent by any level?

Can he increase the rent any time?

Can he rent the property to anyone?

Can he evict the tenant anytime?

Can he evict the tenant at the end of the contract?

How long should the lease agreement be?

What is a security deposit cheque?

In whose name should it be?

Which laws govern and control the relationship

Between landlord and tenant?

Who pays the broker’s commission?

Can a registered broker mediate a rental agreement

for a tenancy seeker on a visit visa?

25
26-Jan-20

What documents should the broker obtain from landlord?

What documents should the broker obtain from tenant?

What should the broker make sure of in the lease agreement?

What are the elements of a lease agreement?

When can the registered broker earn his/her commission?

When can the registered broker cash his commission cheque?

In whose name should the commission cheque be issued?

Can a registered broker mediate the rents of

either residential and/or commercial properties?

Are residential and commercial properties

covered under the same laws?

Does the registered broker require different license

for either residential and/or commercial properties?

Can the registered broker mediate the rents

of free zone properties?

26
26-Jan-20

Should the broker have an agreement with the landlord?

Should the broker have an agreement with the tenant?

Could above agreements be verbal?

Or should they be in writing?

How much should be the commission for

the registered broker in case of rentals?

Who pays the commission?

Can the commission be in cash?

What steps can the broker pursue in case

the landlord and/or tenant don’t pay his/her commission?

Should the registered broker prepare a viewing

and inspection agreement?

27
26-Jan-20

What is Ejari registration?

Where do landlord and tenant go to resolve their disputes?

Do we have a unified tenancy contract in place?

Can an addendum be attached to the unified tenancy

contract?

Who is responsible for the maintenance during

the period of the leasing contract?

In case of the existence of POA from either party,

what will be the responsibility of the registered broker?

The ABC’s of leasing

Source/Gulf News

What should you advise your tenant client?

28
26-Jan-20

AWARENESS is key. Tenants and landlords must familiarize themselves

with at least three laws covering renting property in Dubai to know
their rights and responsibilities.

Make sure to read Law No (33) of 2008 that amended Law No (26) of
2007. Both regulate the relationship between landlords and tenants.
Landlords can’t increase your rent on a whim according to Decree No
(43) of 2013.

If he does so, you can file a case on this or any other dispute with the
Rent Committee based on Decree No (26) of 2013.

BROKERS you are dealing with must be registered with the Real
Estate Regulatory Agency (RERA) within the Dubai Land
Department. If your broker cannot show you his Broker ID card
before the transaction, find someone else.

An ‘under-process ID’ is no excuse, according to RERA. Numerous

cases have been reported of fly-by-night brokers who duped
unsuspecting tenants of thousands and up to millions of dirhams in
rent.

29
26-Jan-20

CONTRACTS of lease must be registered with Ejari (Arabic for ‘my

rent’).

Do not rely on the tenancy contract (blue sheet) issued by brokers. Use
RERA’s Unified Tenancy Contract.

Registering with Ejari gives you a legalized tenancy contract, the ability
to safeguard your rights and to fully audit transactions when disputes
arise.

DEPOSITS such as security deposits should be stated in your tenancy

contract. It is usually the equivalent of four weeks’ rent. It is refundable
when you leave the property.

Some landlords deduct a certain amount from the deposit for the
repainting of the flat and minor repairs. But you can hire someone on
your own terms to do this beforehand so you can return the property in
its original state and get your full deposit.

30
26-Jan-20

EVICTION You may be evicted after your contract expires, but only if
the owner wants to demolish or sell the property, if he needs to
make comprehensive maintenance, which makes it impossible for
you to stay there, or if the owner or his first-degree relatives need
to live there.

Note that all these require a notice from a notary public or

registered post 12 months in advance. All evictions have to have a
reason by law, according to RERA.

FAMILIES cannot share a villa in Dubai. Overcrowding is also prohibited in

flats.
According to Trakheesi, the regulatory agency that supervises freehold
properties like International City,
only one person per 200 square feet is allowed to occupy an apartment —
or a maximum of three tenants per studio,
five per one-bedroom flat
and seven in a two-bedroom apartment.

31
26-Jan-20

GO to different property sites and broker houses before

making the deal, don’t stick with just one.

Chances are deals vary from one broker to the next.

A resident once revealed that she got two different offers
from two different brokers for the same flat.

Obviously, she picked the more reasonable one.

HOME or contents insurance is an important investment that you

need to make right after moving in.
In emergency cases such as fire or floods that could damage your
property, the landlord is not responsible for the damages unless
stated in the contract, which isn’t usually the case.
The main structure of residential buildings in Dubai is commonly
insured, not its contents.

32
26-Jan-20

INCREASE in rent must follow the Rent Index set by RERA, which is updated
annually.

If your rent is up to ten per cent less than the average rental value of similar
units, your landlord cannot increase your rent.

If your rent is 11 to 20 per cent less than the average rent of similar
property in the area, the landlord can increase your rent by five per cent.

He can hike your rent by 10 per cent if your current rate is 21 to 30 per cent
lower than the going rate.

A 15 per cent increase can be made if your rent falls short by 31 to 40 per
cent of the average rent.

Lastly, he can increase your rent by 20 per cent if your rent is more than 40
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
per cent lessof these
The Copyright than the
materials average
is vested in DREI. Theserental
materials should value of reproduced
not be copied, similaror transmitted
units.without our prior written consent.

JUDGES who comprise the tribunal at the Rent Disputes Settlement

Center usually give the two opposing parties — landlord and tenant — a
chance to discuss the matter and resolve the case amicably before them
within 15 days.

If the dispute is not resolved, it moves on to trial until the judges reach a
decision.

33
26-Jan-20

KEEP records of all your transactions.

Agreements made verbally are not accepted as evidence in court
in case of disputes.
While this may seem common sense, many residents still fall prey
to people promising them all sorts of things verbally.

LANDLORDS have rights, too. They may evict tenants before their
contract expires if the latter committed specific violations based on Law
No (33) of 2008.

These include failing to pay the rent within 30 days after the notice is
given to him, using it for illegal purposes, damaging the property and
making it unsafe for its users.

Early eviction can also happen if government authorities decide that the
building has to be demolished.

Also in case of a rented retail shop kept closed for no valid reasons for a
30-day continuously or for interrupted 90 days within a year.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

34
26-Jan-20

MULTIPLE OWNERS or landlords often mean erratic rent increases.

Some tenants of single-owner residential buildings talked about the

reason why they live for many years in their flat is because their
landlords don’t increase their rents unjustly.

A building with rented flats owned by many sees more turnover yearly
than that of a building owned by an individual or by a company.

NEWSPAPER announcements in the form of advertisements are

needed if the person you are complaining against fails to show up in
court at the Rent Disputes and Settlement Center.

If the defendant is Arabic speaking, you will be asked to pay for ads in
Arabic newspapers, and if he or she is a non-Arabic speaker, it should
be with an English daily.
Both newspapers should have a wide reach.

35
26-Jan-20

ONLINE SERVICES are available on

www.dubailand.gov.ae
and
www.ejari.ae.

For example, you may register your tenancy contract through an

online Ejari system.

You may follow the eight-step full e-service process to get your final
tenancy contract.

Make sure though that you have soft copies of required documents
on hand.
Payment is done online as well.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

POWER OF ATTORNEY is needed in order to transact with

representatives of landlords based abroad.
We cannot stress this enough as many tenants have been scammed in
Dubai by transacting with bogus landlords only to learn that the
property is actually owned by someone else.
Also, make sure the power of attorney has been signed and stamped
by Dubai courts.

36
26-Jan-20

QUESTION additional conditions added in the addendum of RERA’s

Unified Tenancy Contract.

If there are clauses that seem phony, don’t agree.

Some contracts may contain a clause stating that the contract serves as
a 12-month advance notice of eviction.

This eviction clause goes against Article 25 of Law No (33) of 2008 and is
therefore not valid.

RENT DISPUTES SETTLEMENT CENTER was established in

November 2013 to replace the earlier Rent Committee by Dubai
Municipality.

Their regular working hours are from 7.30am to 2.30pm on

weekdays, located at the ground and the first floor of DLD.

37
26-Jan-20

SCHEDULE your hearings at the center according to your free time.

Be there at least five minutes before the scheduled hearing as they
usually start on time.

If you have work in the morning, you may book your hearings for the
evening sessions from 4.30pm.

For more information, call 800-4488.

TENANTS need to have a valid residence visa before signing a lease contract.

If it is still being processed, they must obtain a letter from their company saying
this.

The tenant also has to accomplish an application for tenancy, provide copies of
his passport and Emirates ID, plus the cheques for the rent payment.
Salary certificates are not a requirement.

38
26-Jan-20

UTILITY SERVICES such electricity, water, phone and internet service

can be connected once RERA’s Tenancy Contract is registered in Ejari.

You will be required to pay a refundable deposit of Dh2,000 for a flat

or Dh4,000 if you’re renting a villa.

VACATE the property in its original condition.

Tenants have no right to alter or renovate the property unless
the owner agrees.
For your own protection, document how the flat looked like
before moving in so you have a reference when you move out.

39
26-Jan-20

WATCHMEN are not allowed to receive payments on ‘behalf of

owners’. They usually keep the keys to a vacant flat that’s up for
lease so that anyone can come and see it.

But never make any payments on the spot even if the person is
issuing a receipt.

EXERCISE your right.

Many tenants simply move out when their landlords ask for an unjust
rent increase.
If your landlord did not give a 90-day advance notice, then he is not
entitled to one.
Also, before moving to another flat, consider the expense of the whole
process and compare it with the demanded increase to see which is
the better option, if rent increase is according to RERA Index

40
26-Jan-20

YOU do not need a lawyer when appearing at the Rent Dispute

Center. Personal appearance is accepted even if it is a courtroom
setting.

Should you wish to have someone represent you, issue a notarized

Power of Attorney in favour of your representatives.

ZONES or areas that fall under the Rent Committee and the Rent
Increase law include the whole emirate, even free zones.
But it does not cover the Dubai International Financial Center
because it has its own courts.

41
Module 6
Code of Ethics

Module 6
Code of Ethics

Objectives

Introducing:
 Code of Ethics.
 The Do’s and Don’ts for real estate brokers.
 Violation and disciplinary action.

1
26-Jan-20

Code of Ethics is a living, dynamic statement that has moved with times,
updating annually to guide Brokers in their daily professional lives.

Code of Ethics regulates your relationship with customers, other agents and
with the public.

Is Ethics the same as law?

No
Ethics are principles by which one treats colleagues, clients, and the
public in a fair, just and trustful manner. Adherence to such standards is
considered one of the requisites for recognition as a profession; that is, to
be called a “profession”, a vocation must (among other requirements)
have an established code of behavior that practitioners are required to
uphold.

2
26-Jan-20

All Registered Brokers / Agent practitioners are Expected to

….
 Strive for “excellence” in practices

 Perform high quality service standards & ‘best practice’

 Follow RERA rules, regulations & procedures within the

framework of the law

What is “ETHICS” ?

 Ethics is a way of thinking

 A belief system,

 A moral code system

my personality my behavior

 It is simply the difference between ‘right’ and ‘wrong’.

3
26-Jan-20

“ETHICS” is influenced by…

 by our attitude,

 by our values,

 by our culture and upbringing,

 by our past experiences, and above all,

 by our ability to always think, speak and act, doing what is right,
truthful & with respect to others.

“ETHICS” in real estate is applied to

 The people we deal with

 The properties we promote and sell

 Our opinions and ourselves

 Our Employer / Our organization

 Our industry, our Government

4
26-Jan-20

“ETHICS” in real estate has (3) primary elements and

relates to

1) VALUE (high / low / current market value)

2) UNDERTAKING / PROMISE / AGREEMENT

3) EXPECTATIONS

PEOPLE PROPERTY PRICE

1. VALUE (high / low / current market value)

PEOPLE PROPERTY
BUYER PROPERTY

SELLER
The main agreements

BROKER
AGENT

THE TRUTH
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

5
26-Jan-20

1. VALUE VALUE (high / low / current market value) ````````````````````

SELLER The Seller thinks one price (Sometimes high or even too
high)

BUYER The Buyer thinks another price (more often less than the
asking price)

BROKER The Agent thinks a different price (the CMA price range and
AGENT
theoretically the highest possible price for a Listing Agent)

2. UNDERTAKING (A promise / An agreement)

BUYER BUYER’S AGENT

SELLER SELLER’S AGENT

BUYER SELLER

6
26-Jan-20

2. UNDERTAKING (A promise / An agreement)

BUYER BUYER’S BANK

SELLER SELLER’S BANK

PROPERTY BUYER SELLER PROPERTY

DEVELOPER DEVELOPER

Other factors “ETHICS” consider….. others

3. EXPECTATIONS (of all parties concerned)

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7
26-Jan-20

REGISTERED BROKERS
ARE TRUE PROFESSIONALS AS

THEY WIL ALWAYS ABIDE BY

THE CODE OF ETHICS ‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Code of Ethics

WE,
Real Estate Brokers licensed to practice in the
Emirate of Dubai, hereby undertake to adhere to
the following principles and rules;

8
26-Jan-20

First – Fair Treatment

We undertake to treat all contracting parties equally and to achieve justice between them
without prejudice or differentiation.

Second – Respectful Treatment

We undertake to respect the contracting and concerned parties and to respect the privacy
of parties and we reject any conduct that would belittle them.

Third – Preservation of Privacy

We undertake to preserve the privacy of the parties and the confidentiality of their
information and undertake not to reveal any information which is confidential or
considered as such to any party whether such information relates to the buyer, the seller or
any parties related to real estate brokerage. We further undertake to keep this information
from reaching any party that would expose it for contractual or personal purposes.

Fourth – Trust and Integrity

We undertake to present the deal to both parties honestly and to inform the parties of all
the facts and circumstances known to us regarding the real estate and to conduct our
business with trust and integrity
‫من المعهد‬ ‫دون الموافقة الخطية‬without harming
‫إستخدامها او إعادة إنتاجها من‬ the
,‫اليجوز نسخها‬ reputation
‫العقاري و‬ of‫الحقوق‬
‫الفكرية محفوظة لمعهد دبي‬ real‫ جميع‬estate brokerage.
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Fifth – Quality Observation

We undertake to provide brokerage services of practical value to parties related to the real
estate brokerage activity and to continuously seek to develop such services in terms of
precision and quality.

Sixth – Observance of Regulations and Laws

We undertake to observe the regulations and laws applied in the country and to honour
our contractual obligations. We further undertake not to allow individuals who are not
brokers to operate through our office or to exploit the name or license of our office. We
realize that forgery, intentional or negligent presentation of false information or data or
any attempt to do so shall subject its perpetrators to questioning and investigation in
addition to taking necessary disciplinary action against them.

Seventh – Integrity
We are diligent in dealing with all parties with integrity and trust and undertake that our
efforts will be based on trustworthy and clear information. We further undertake to deal
transparently with all parties concerned including transparency of systems and procedures
related to our operations.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

9
26-Jan-20

Eighth – Obligation towards the Society

We undertake to be active members of the society and to work to respect the values
and principles of our society. We shall also strive so that our services will support the
growth of real estate development in the Emirate.

Ninth – Observance of the Interests of Contracting Party

We undertake to protect the interests of the contracting parties and to abstain from
doing anything that might harm the interest of one party.

Tenth – Obligation to Preserve Document

We undertake to preserve all documents, instruments and things related to the deal.

Eleventh – Respect of the Regulations and Procedures of the Lands and

Property Department
We undertake to respect the regulations and procedures observed by the Department.
We are further bound by the rules of good behaviour when visiting the Department and
to respect the instructions issued to us by the Department officials. We undertake not
to establish special relations with the Department employees for personal gain.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Duties to Clients
• Protect and promote their clients’ interests while treating all parties honestly.
• Refrain from exaggeration, misrepresentation, or concealment of pertinent facts
related to property or transactions.
• Cooperate with other real estate professionals to advance their clients’ best
interests.
• When buying or selling on their own account or for their families or firms, make
their true position or interest known.
• Do not provide professional services where they have any present or contemplated
interest in property without disclosing that interest to all affected parties.
• Disclose any fee or financial benefit they may receive from recommending related
real estate products or services.
• Receive compensation from only one party, except where they make full disclosure
and receive informed consent from their client.
• Keep entrusted funds of clients and customers in a separate escrow account.
• Make sure that contract details are spelled out in writing and that the parties
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
understand them.
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

10
26-Jan-20

Duties to the Public

• Give equal professional service to all clients and customers irrespective of

race, color, religion, sex, handicap, familial status, or national origin.
• To be knowledgeable and competent in the fields of practice in which you
engage or get assistance from a knowledgeable professional, or disclose any
lack of expertise to their client.
• Paint a true picture in their advertising and in other public representations.
• Do not engage in the unauthorized practice of law.
• Willingly participate in ethics investigations and enforcement actions.

Duties to other Agents

• To make only truthful, objective comments about other real estate

professionals.
• Respect the exclusive representation or exclusive brokerage relationship
agreements that other agents have with their clients.
• Arbitrate financial disagreements with other agents and with their clients.

11
26-Jan-20

“All registered brokers must comply with professional ethics

according to the Code of Ethics prepared by the Committee
in consultation with Brokers with expertise and opinion”.

Foundations of which is ……….

• honesty,
• trust,
• integrity,
• respect
• transparency
• and similar principles derived from the heritage and ethics of
the UAE Society.

12
26-Jan-20

Code of Ethics

In November of 2019, RERA announced the following

“Principles of Business Ethics in Real Estate” under
Circular (4-2019).

13
26-Jan-20

AS A REGISTERED BROKER:
• YOU ARE REQUIRED TO DRESS APPROPRIATELY PARTICULARLY AT THE DUBAI
LAND DEPARTMENT.
• SHOW RESPECT PLEASE LADIES & GENTLEMEN:NO BARE ARMS / LEGS;
PREFERABLY WEAR A JACKET.
It is a requirement under the Code of Ethics.

14
26-Jan-20

The Do’s and Don’ts for Real Estate Brokers

Do’s
• Do get licensed before working with clients on any sort of property showing or deals.
• Do download the “Dubai Brokers” App accessible through “Dubai-REST” app to your
smart device, to validate the owner’s ownership certificate before initiating any
contract.
• Do use the “Dubai-Brokers” app to access contracts A, B and F.
• Do get all agency agreements with clients in writing (Contracts A and B) in order to
formulate Contract F between Buyer and Seller.
• Do include “RERA Permit Numbers” to all listings ( sales and rentals) ads and
marketing material. This applies to all advertising platforms including social media.
• Do always identify yourself as a licensed Broker, exposing your RERA Smart Card
available on the Dubai-REST App and DLD website.
• DO use RERA’s “Unified Tenancy Contract”.
• Do work ONLY with licensed and registered Brokers.
• Do report unregistered Brokers and illegal activities by Brokers to RERA.
• Do renew your Broker ID annually (at least 30 days prior to expiration).
• Do educate yourself on regular basis on any law updates, Code of Ethics, Circulars
issued by RERA (and DLD).
• Do deal only with RERA-approved Developers and Projects.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
• Do ensure thatof all
The Copyright these monies from
materials is vested off-plan
in DREI. These materials shouldproperties go into
not be copied, reproduced the designated
or transmitted Escrow
without our prior written consent.

Account.

15
26-Jan-20

• Do treat all parties fairly and without discrimination.

• Do provide documents to contracting parties requesting them.
• Do act in good faith to all contracting parties, regardless of who you represent.
• Do act as a guardian of your client’s money and do as instructed by client.
• Do take reasonable steps to avoid committing a mistake that could cause client to
suffer a financial loss (conduct due diligence).
• Do have the commission split between you and other brokers in writing.
• Do give full disclosure to all parties about the number of registered Brokers
working with you on the deal.
• Do read all agreements very carefully and advise your client to do the same.
• Do educate your client on their rights and obligations.
• Do furnish your client with details of negotiation and issues related to deal.
• As a registered broker do maintain a “Special Transaction Register”. This must be
maintained by your company daily, and produced if requested by RERA.
• You are Dubai’s ambassadors - Do represent the country and the laws of its land
accordingly.

Don’t
• Do not promise potential clients anything you cannot deliver for the sake of winning
a listing.
• Do not spam/mass email or cold call potential clients.
• Do not advertise properties which are not for sale, or use old or outdated listing
prices.
• Do not accept money/funds into your bank account from your clients.
• Do not accept cash from undisclosed sources on behalf of your clients.
• Do not engage in any activity that may incur loss to any party of the deal.
• Do not represent yourself as a party to the transaction, and as a broker at the same
time (if you do, you are not entitled to Commission).
• Do not accept a Power of Attorney from any party (including your client).
• Do not represent more than one party to the deal without full, written disclosure
and consent from both parties.
• Do not give misleading information to a buyer or a seller on the current market value
of the price of a property.

16
26-Jan-20

• Do not promise your clients future profits!

• Do not work in activities that are not permitted under your company’s trade
license.
• Do not withhold relevant information, deliberately or unintentionally, from a
buyer or a seller out of fear of losing the listing/deal.
• Do not market, advertise, list or promote a property too high or too low in price.
DO a CMA.
• Do not post false or misleading advertising to consumers on the price, features or
benefits of a property, causing loss or financial harm to investors by print or
electronic media.
• Do not breach the privacy of the client by revealing the reason for the sale, or
other private knowledge without permission.
• Do not reveal the details of personal or private information related to the client.
• Do not pressure clients to sign a document without them reading, or
understanding the document and their legal obligations as per the document, or
denying them the opportunity to seek legal advice prior to signing.

• Do not make direct contact with another broker's client whilst written
agreements are in place.
• Do not dictate the terms and conditions of the agreement between the
buyer and the seller; suggest that they seek legal advice.
• Do not delay presenting an “offer to buy” to a seller, or make an
unauthorized decision regarding the sale without prior consent of the
owner of the property.
• Do not tell outright lies!

The law in Dubai is strict, and if it can be proven that any real estate broker
has breached the Code of Ethics, the injured party has a legal cause of action
and can sue such a broker in court, or bring claims before the competent
authorities.

17
26-Jan-20

If a broker violates the Code of Ethics, he violates By Law 85. of 2006 and
as such will face disciplinary action in accordance with the

Newly implemented disciplinary action POINTS System.

What is a disciplinary action?

• It is a punishment resulting from the RERA investigating a complaint against a
licensee.

• Such an action could have serious consequences for the licensee, such as points,
revocation or suspension of the license and a fine.

18
26-Jan-20

Brokers’ Violations

Violations : : ‫المخالفات‬
Unregistered Office. ‫عدم تسجيل الرخصه في سجل الوسطاء‬
Unregistered Brokers. ‫عدم تسجيل الوسطاء‬
Non-adherence to permitted activity. ‫عدم االلتزام بالنشاط‬
Non-inclusion of ORN/BRN and RERA Permit No. in
ads. ‫عدم ذكر رقم تسجيل الوسيط والمكتب في االعالنات‬
Permission not granted. ‫عدم االلتزام بالتصريح‬
License Expired. ‫عدم تجديد الرخصه‬
Permission Expired. ‫عدم تجديد التصريح‬
Office Registration Expired. ‫عدم تجديد سجل الوسطاء‬
Broker Card Expired. ‫عدم تجديد بطاقة الوسيط‬
Involved in activity without license ‫مزاولة نشاط بدون رخصه‬
Marketing unregistered project. ‫تسويق عقارات غير مسجله‬
Submitting incorrect documents and Information ‫تقديم بيانات و مستندات غير صحيحة‬
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
UnethicalThe
business these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our‫العمل‬
Copyright ofpractice. ‫باخالقيات‬
prior written ‫عدم االلتزام‬
consent.

Disciplinary action
POINTS System

This system will categorize and classify brokerage offices and

brokers’ intended violations or wrongdoing according to their
dangerous reflections.

The classification of penalties were divided into 3 levels:

1. Red
2. Yellow
3. Green
(Traffic Lights)

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26-Jan-20

The same Points System is applied either to:

1. Brokerage Offices
2. Brokers

1 RED violation = 20 BLACK points

1 Yellow violation is doubled whenever a violation within the same

category is repeated within a one year period

1 GREEN violation is accumulated to a similar GREEN violation every time

the same or similar violation within the its category has been repeated
within a one year period

POINTS System

1 Red violation = 20 Black violations

1st YELLOW violation = 5 BLACK violations

2nd YELLOW violation = 10 BLACK violations (doubled)
3rd YELLOW violation = 20 BLACK violations (doubled)

1st GREEN violation = 5 BLACK violations

2nd GREEN violation = 10 BLACK violations (accumulated)
3rd GREEN violation = 15 BLACK violations (accumulated)
4th GREEN violation = 20 BLACK violations (accumulated)

20
26-Jan-20

In summary:

 You need 1 RED violation for the penalty to be implemented.

 You need 3 YELLOW violations for the penalty implementation.
 You need 4 GREEN violations for the penalty implementation.

In other words the accumulation of 20 BLACK points.

Violations Categories and classifications:

In case of Brokerage offices:

RED violations are granted in the following cases

 Marketing unregistered projects.

 Submitting incorrect documents or information.
 Dealing with brokers who are not RERA registered.

21
26-Jan-20

Violations Categories and classifications:

In case of Brokerage offices:

YELLOW violations are granted in the following cases

 Not registering brokers

 Not adhering with the permit
 Unregistered office
 Not permitted activity
 Lack of permission
 Unethical business practice

Violations Categories and classifications:

In case of Brokerage offices:

GREEN violations are granted in the following cases

 Expired License.
 Permission Expired.
 Expired Office Registration.
 Expired Broker Card.
 Real Estate Company / Broker not displaying office registration No. (ORN) /
Broker Registration No. (BRN) in any advertisement by any mean.

22
26-Jan-20

Violations Penalties in case of Brokerage offices:

Once accumulating 20 BLACK POINTS:

 Not registering any new broker for the company.

 Not issuing any permission for a new branch for the company within the year.
 Fine of AED 50,000 paid by the company.

Violations Categories and classifications:

In case of Brokers:
RED violations are granted in the following cases

 Marketing unregistered projects

 Providing false information
 Dealing with brokers who are not RERA registered

23
26-Jan-20

Violations Categories and classifications:

In case of Brokers:
YELLOW violations are granted in the following cases

 Following and stopping customer outside the stand

 Not treating customer with respect
 Not respecting customer privacy
 Not permitted activity
 Lack of fair treatment to the parties
 Advertising without mentioning ORN & BRN

Violations Categories and classifications:

In case of Brokers:
GREEN violations are granted in the following cases

 Not displaying Broker RERA Smart Card

24
26-Jan-20

Violations Penalties in case of Brokers:

Once accumulating 20 BLACK POINTS:

Every time you accumulate 20 Black points you will end up paying a fine of
AED 50,000 plus the following:

 First Time:
1. Confiscation of Broker’s Card
2. Suspended from work for 30 days
3. Attending a special course
 Second Time:
1. Confiscation of Broker’s Card
2. Suspended from work for 90 days
3. Attending a special course
 Third Time:
Non-reversed Cancellation of Broker’s Registration

Rules & Instructions for Licensed Brokers

- Brokers must operate within the activity or activities of their license.

- Brokers must display their Smart Broker IDs while on duty.

- Brokers should adhere to permitted activities and those in the license;

Unaccepted performance will be penalized.

25
26-Jan-20

Set your financial goal! Your objective.

An actual number that you need to accumulate in order to achieve the
quality of life you want to enjoy.

Set the number in your mind, and then launch your career with the
intention to achieve your goal by a specific date.

Setting your goals and Objective

BE SMART
S pecific
M easurable
A ction oriented
R ealistic
T ime- Bound ‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

26
26-Jan-20

By having your financial goal in mind, you find clarity and can see past
the hard work that lies ahead of you.

When you have to endure the rejection, competition, disloyal

customers, and challenges that are inevitable along the way; your
knowledge about the wealth you are working to achieve helps you
weather the storms of the business.

27
Module 7
Jointly Owned Property
Ownership In Dubai

Module 7
Jointly Owned Property Ownership
In Dubai

• Most real estate developments in Dubai are jointly owned properties; that is,
a real estate development that is subdivided into units intended for separate
ownership and/or common areas.

• The maintenance of each unit is the responsibility of the unit owner.

• Maintenance of the common areas is a joint responsibility by the owners of

all the units.

• Law no. 6 of 2019 provides for and regulates the procedures and relationship
of stakeholders involved in jointly owned projects

1
26-Jan-20

Law No. 6/2019

• Introduced on 4 September 2019, it replaces the previous Law 27 of 2007
on Ownership of Jointly Owned Property in Dubai.

• Applies to all real estate development projects and jointly owned

properties in Dubai, including those located in free zones and special
development zones.

• Is an important development for Dubai real estate legal framework

• Is expected to have a positive impact on the real estate market and

property values in Dubai

• The Law became effective within 60 days of its publication in the Official
Gazette.

• Developers, management companies and owners committees have been

given a six month transition period from 4 September 2019 to comply.

Major changes that impact owners of units in Dubai:

New management system

Under the Previous Law all owners of units automatically became members of
the owners association of their building when they purchased their unit.

The owners association, through its board, was then entrusted with the
management, operation, maintenance and repair of the common areas of the
building,

They could delegate these responsibilities to an association manager to

perform.

2
26-Jan-20

The New Law replaces this management system with a three tiered
system set out in Article 18 as follows:

First Category – Major Projects where the developer is responsible for

managing, operating and maintaining common areas and facilities.

Second Category- Hotel Projects where the developer has appointed a

company to manage the common areas in accordance with the
regulations set by the Director General of the Land Department.

Third Category: Real estate projects other than the major projects and
hotel projects where a specialised facility management company
manages the common areas.

First Category – Major Projects:

For major projects as considered by the Director General of the DLD, the New Law
provides that:

• the developer shall be responsible for the management, operation, maintenance and
repair of their common parts and the utility services

• The developer may appoint a management company to carry out these responsibilities
on its behalf.

• The management company must be approved by the Real Estate Regulatory Agency
(RERA)

• An owners’ committee must be formed for each Major Project with its members (not
to exceed 9 members) selected by RERA.

3
26-Jan-20

The functions of the owners committee are set out in Article 24 and include:

• verifying that the management company manages the common parts;

• reviewing the annual budgets for the maintenance of the common

property and making recommendations; and

• receiving complaints from owners and submitting them to RERA if the

management company fails to address them within 14 days of being
notified.

• If the developer is found to be incompetent or unable to manage the

common property under this first category in a manner that ensures their
sustainability and serviceability, the Executive Director of RERA may
appoint a specialised management company to manage and operate the
common property (Article 37).

Second Category: Hotel Projects:

For real estate projects that are licensed for use as a hotel establishment, the New Law
provides that:

• The developer shall appoint a hotel project management company approved by

RERA to manage the common parts (Article 18(a)(2)).

• If the hotel project management company wishes, an Owners’ Committee may be

formed for each Hotel Project with its members selected by RERA which shall not
exceed nine members. However, Article 18(a)(2) provides that even if an owners’
committee is formed, it is not entitled to interfere in the management of the hotel
project or the common areas thereof.

• If the hotel project management company is found to be incompetent or unable to

manage the common property under this second category in a manner that ensures
their sustainability and serviceability, the Executive Director of RERA may appoint a
specialised management company to manage and operate the common property
(Article 37).

4
26-Jan-20

Third Category: Real estate projects other than the major projects and hotel
projects:

The common parts in these projects shall be managed by specialised

management companies, which shall be selected and engaged by RERA in
accordance with the controls and regulations set by a decision to be issued by
the Director General in this regard (Article 18(a)(3).

An owners’ committee must be formed for each real estate project with its
members selected by RERA which shall not exceed nine members (Article
18(a)(3)).

The functions of the owners committee are set out in Article 24 and
include:

• verifying that the management company manages the common parts;

• reviewing the annual budgets for the maintenance of the common
property and making recommendations;
• receiving complaints from owners and submitting them to RERA if the
management company fails to address them within 14 days of being
notified; and
• importantly, this owners committee has the power to request RERA to
replace the management company and provide RERA with advice on
the selection and appointment of the new management company
(Article 24(5)).
• If RERA finds that the management company is incompetent, inefficient
or unable to manage the common property under this third category
RERA shall appoint an alternative management company to manage the
common property (Article 38).

5
26-Jan-20

The owners committees for the first and third categories

• should not include more than nine members selected by RERA,

• should be established when 10 per cent of the joint real estate units are
registered.
• The developer cannot be part of an owners committee unless there are
unsold units.
• The committee is tasked with ensuring the proper management of
common areas, and reviewing annual budgets.
• The owner is required to pay the management his share of the cost of
maintenance of the jointly owned real estate property.

Obligations of Master Developer

The Master Developer is required to manage and maintain the common

facilities in the Master Project through a written agreement with a
management company that has been approved by RERA (Article 19).

If the master developer is found to be incompetent or unable to manage

the common property in a manner that ensures their sustainability and
serviceability, the Executive Director of RERA may appoint a specialised
management company to manage and operate the common property
(Article 37).

6
26-Jan-20

Responsibility of Developer to rectify defects

Similar to the Previous Law, the Developer is still under an obligation to:

• Repair or correct any defects in the structural parts of the common

property for a period of ten years from the date of the certificate of
completion for the project; and

• Repair or replace defective fixtures in the individual units within a

period of one year from the date of delivering the unit to the owner. In
case the owner refuses to take possession of the finished unit for any
reason, this period will be calculated from the date of issuance of the
completion certificate.

Fixtures are defined as including mechanical and electrical works, sanitary

fittings, sewerage and others.

Removal of JOPD – New bylaws / building management system

Under the Previous Law, a Jointly Owned Property Declaration was

required to be registered with RERA which governed the use of the
common areas and units, and set out the duties and obligations of the
owners, occupiers, and the developer.

The New Law has now removed the concept of a Jointly Owned
Property Declaration and replaced it with the following: the “bylaws
of the complex”, the “bylaws” and the “building management
system”.

7
26-Jan-20

Bylaws of the complex

The bylaws of the complex are defined in Article 2 as “the terms and
conditions governing the development and operation of the master project
and the common properties and common facilities therein, including the
planning and construction standards of the complex.”

Bylaws
The bylaws are defined in Article 2 as “the rules and provisions governing the
owners’ committee, which shall be established and adopted in accordance
with the provisions of this Law.”

The building management system

Prior to selling any units, the developer must establish a building

management system for major projects and hotel projects which must be
approved by RERA (Article 20).

The building management system is defined as “The document prepared in

accordance with the regulations issued by the Department and recorded in
the Common Property Register, which state the procedures for maintenance
of the common parts, and the percentage of owners’ contribution in the costs
related thereto, including the equipment and services existing in any part of
another building”.

8
26-Jan-20

Legal effect of bylaws, bylaws of the complex and building management

statement
These documents all form part of the title deed and must be complied with
by every occupant, owner, owners committee and the developer of the
project (Article 6).

Filing requirements
The developer must prepare and is required to submit all necessary
documents to DLD to file the bylaws and the bylaws of the complex within
60 days from the date of the certificate of completion for the project. The
Department can extend the deadline for this by 30 days.

However, the building management system shall not be filed by the

developer – instead it will be filed by RERA.

Service charges
Similar to the Previous Law, owners are required to pay to the management
body their shares of the service charge to cover the expenses of the
management and maintenance of the common parts (Article 25(a)).

However, the management body may not collect any service charges unless
they have obtained the prior approval of RERA to the budget allocated for the
service charge (Article 27). RERA will appoint a legal auditing officer
accredited by it for this purpose (Article 27).

Utilisation charges
For prefabricated, under construction buildings or vacant land plots, the
Master Developer may collect a utilisation charge from the owner or sub-
developer of such land, subject to the approval of RERA.

9
26-Jan-20

New common property register

A new “common property register” shall be established by the DLD
which shall contain the following (Article 4):

• Land plots owned by the developers, on which the common

properties shall be constructed;
• units allocated for independent ownership in the common
property sold by the developers, and the names of the owners of
these units;
• members of the owners’ committee;
• building management system;
• plans;
• management body;
• management contracts of the common property or the common
parts;
• area of common parts and private common parts and their
percentage out of the area of units in the common property; and
• areas owned by the developer in the common property.”

New dispute resolution mechanism

The Rental Dispute Settlement Centre in the Emirate of Dubai shall have
exclusive jurisdiction to hear and settle all disputes and differences relating
to the rights and obligations stipulated in the New Law, in accordance with
the rules and procedures of the Rental Dispute Settlement Centre

10
26-Jan-20

According to the law, the facility management company :

• Must receive approval from RERA before charging fees for operating or
maintaining common facilities

• Must submit reports every six months to RERA on the management of the
jointly owned real estate property and common areas.

• Is tasked with obtaining insurance coverage for the jointly owned real
estate project.

• At any time, RERA can request information on the revenues and expenses
related to service charges.

Who is affected by the new Joint Property Law?

The Joint Property Law affects the following stakeholders who should
take advice on what steps will need to be taken to bring their
operations into compliance:

Community Managers
Master Developers and Developers
Hotel Operators
Insurers
Contractors
Investors

11
26-Jan-20

Mollak System Overview and

Implications

Part 3
Mollak System
Overview And Implications

MOLLAK SYSTEM
OVERVIEW AND IMPLICATIONS

12
26-Jan-20

The primary aim of MOLLAK is to provide an on-line registration

and
support system to parties dealing with Jointly Owned Property in
Dubai.

MOLLAK STAKEHOLDERS

MOLLAK is developed to assist real estate stakeholders to comply with all RERA
registration and management requirements :

 Property Developers

 Unit Owners

 Investors

 Owners Associations

 Association Managers

 Banks & Financial Institutions

 Auditors

13
26-Jan-20

WHY MOLLAK?
Mollak is created in line with DLD’s mission statement:

To create an innovative and sustainable real estate environment that will

promote Dubai as the world's happiest city through:

1. Smart services

2. Professional human and financial resources

3. Integrated real estate legislation

FEATURES OF MOLLAK

Mollak aims to assist in the following:

1- Management Registrations Services

2- Service Charge Budget

3- Service Charge Invoice

4- Obtaining NOC Services

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26-Jan-20

BENEFITS OF MOLLAK

 Standardize regulatory processes

 Increase transparency

 Increase investor confidence

 Maintain accurate property records

 Streamline collection process

 Accessibility of project information

OUTCOME OF MOLLAK
IMPLEMENTATION

 Organized property management database

 Structured service charge database

 Detailed monitoring of service charge costs

 Standardized service charge budgets

 Standardized service charge invoices

15
Module 8
Legal Segment

Module 8
Legal Segment

1
04-Nov-19

Purpose of Course

Brokers play a vital role in real estate transactions in Dubai. As such, individuals wishing
to obtain a Real Estate Broker license in Dubai are required to attend this course before
taking a licensing examination. This requirement does the following:

1. Ensures that Brokers in Dubai obtain and continue to possess the proper level of
education and up-to-date information regarding real estate laws, regulations, ethics,
forms, systems and best professional practices.
2. Allows the Emirate of Dubai to maintain its reputation for having excellent legal
standards, protections and a professional environment for those who are considering
conducting real estate transactions in Dubai.
3. Enables you to pass the examination. You must also carefully read and review your
materials.

Broker’s Laws And Obligations

Bylaw No. 85 of 2006

Applies to all Brokers who deal with the sale or purchase of property registered at Dubai Land
Department (DLD). You must:

• Obtain a Trade License from the Dubai Department of Economic Development (DED)

• Attend this course and pass the examination at the end of this course

• Apply for registration in the Broker’s Register at DLD

(Note: You must apply for renewal of registration annually, 30 days prior to the expiration of
your registration)

2
04-Nov-19

• Agency contracts between Brokers and clients must be in writing as a precondition to the
Broker being eligible to be paid his fee.

• All Brokers are required to comply with the Code of Ethics.

• A Broker may not enter into a transaction that violates the law and regulations.

• All transactions made by a Broker must be recorded, and documents furnished to

contracting parties, when requested.

• A Broker must furnish her clients with all details of negotiations and substantial issues
related to the subject of the transaction.

• A Broker must make all offers in good faith, regardless of which party he represents.

• A Broker should not represent herself as a Buyer in the transaction, and if she does so,
she is not entitled to a commission.

• A Broker is the guardian of any monetary amounts given to him, and should do as
instructed by client.

• A Broker must compensate any party that incurs a loss as a result of the Broker’s
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
deception, misrepresentation
The Copyright of these materials is vested in DREI. orThese
negligence.
materials should not be copied, reproduced or transmitted without our prior written consent.

Due Diligence

Taking reasonable steps to avoid committing a mistake that could cause a client to suffer a
financial loss.

Duties owed to client:

• Honesty
• Loyalty
• Fairness
• Good faith
• Reasonable care

3
04-Nov-19

RERA’s Broker Pledge

Basic Principles of Law

Civil Law

Laws are written in a Civil Code. Judges mainly base decisions on the Civil Code.

Common Law

In addition to written laws, judges may be bound by the decisions of other judges in previous
cases with similar facts (precedent).

UAE’s Legal System:

• Mainly based on Civil Law

• Sharia Law used in personal affairs for Muslims (divorce, inheritance, etc)
• English Common Law is used in DIFC (own courts and RE registry)

Sources of Real Estate Law:

• UAE Civil Code

• Decrees ‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
• Regulations
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

4
04-Nov-19

The Dubai Land Department System of Registration Services

DLD is the ultimate authority to register the following transactions (except DIFC):

• Sales and purchases

• Mortgages
• Long term leases
• Lease agreements (Ejari)
• Inheritance rights
• Restrictions on title and liens
• Easements (ie. right to use property of another for a specific purpose)
• Recording of zoning and development rights
• Partial sales (public auctions)
• Gifted lands

Services Other than Registration at DLD:

• Issuance of Title Deeds (Certificates of Title)

• Transfer of title
Transfer fee = 4% of sales price
8% fee, if:
- Off-plan property and Seller using POA (on resale)
- Completed property and Seller has 2 POA’s (POA #1 assigns to POA #2)
• Information on all mortgages recorded against a property, and their priority
• Information on zoning requirements, restrictive covenants, limitations on property use
• Public auctions on foreclosed properties (online)
• Escrow Agents
• Registration Trustees

5
04-Nov-19

Freehold Ownership of Properties

Law No. 7 of 2006

• Gives Foreign Nationals (non-GCC) the right to own property freehold in Designated
Areas.

• Regulates the registration of completed real properties and also sets out the authority,
function and purpose of the DLD with the introduction of a system of registration.

Regulation No.3 of 2006:

• Designates areas where non-GCC nationals

can purchase properties in Dubai.

Free Zones & Offshore Companies

• Free zone is a special economic zone

• Permits 100 % foreign ownership of registered companies
• Zero taxation

Offshore Companies

• Registered in a Free Zone in Dubai; or

• Registered outside Dubai (foreign country or free zone of another emirate)

Issuance of Title to Offshore Companies

• Any offshore company registered in a Dubai FZ (except DIFC) may register title at DLD.

For offshore companies registered outside of Dubai, title may only be registered in the name
of an offshore company that is registered in:

• Jebel Ali Free Zone Authority (JAFZA)

6
04-Nov-19

The Interim Real Estate Register (Oqood)

• Off-plan (under construction) property sales regulated under Law No. 13 of 2008.
• Law No.13 of 2008 was amended by Law No.9 of 2009, Decree No. 6 of 2010 and Law
No. 19 of 2017.

Registration in Interim Register

• Every contract (SPA) for the sale or transfer of an off-plan property must be recorded in
the Interim Register (Oqood).

• It is the Developer’s responsibility to register.

• Contracts for the sale of property in projects not approved by the DLD are void.

• Upon Developer obtaining the Certificate of Completion for the project, the transfer of
Title must be registered in the Real Estate Register at the DLD.

7
04-Nov-19

Requirements for Off-Plan Sales

Law 13 of 2008 states:

“A Developer shall not commence a project or sell its units off plan until and unless the
Developer has taken possession of the plot on which the project is to be constructed.”

Approved fees a Developer may charge

• Developers may not charge transfer fees for the sale or resale of real estate.
• Developers may charge for the issuance of an NOC.
• The maximum charge for an off-plan property NOC is 5,000 AED .
• Developers may charge for additional services, such as a fee for an urgent issuance of
NOC.

Project Registration

• Proof of possession of plot

• Project name

• Open Trust Account for the project; produce a copy of the Escrow Agreement with
Trustee

• Submit a copy of the RERA Developer Registration Certificate

• Approval of development plans (from Dubai Municipality)

• Approval from the DLD of detailed CAD drawings (these drawings are later used for
registration of SPAs in Oqood)

• Submit a copy of proposed SPA

• Any Agency/Broker agreement must be registered with RERA by the Developer

• SubmitTheaCopyright
copyof of proposed marketing/advertising material
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

8
04-Nov-19

Trust (Escrow) Accounts

Law 8 of 2007

• Every Developer must open a RERA Approved Trust Account with an Escrow Agent
for each off-plan project, before off-plan sales may begin.

• A Trust Account must be in the name of the project and its proceeds used
exclusively for the purposes of constructing the real estate project.

• Up to 5% of funds in the Trust Account may be used for marketing purposes

(including Broker commissions).

• Developer is paid in stages, as construction progresses.

• 5% of the monies deposited in the Trust Account must remain in the account for 1
year after registering the units in Buyers’ names, thereafter, it is paid to the
Developer.

• The Developer’s Creditors may not attach the money deposited in the Trust
Account. ‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Developers & Brokers

• Developer is prohibited from hiring Brokers who are not licensed and registered
under Bylaw No. 85 of 2006.

• All Developer-Broker contracts must be registered at DLD to be paid commission.

• Brokers must ensure that the Project has been registered at DLD, a RERA-approved
Trust Account has been opened in the Project’s name and that Developer obtained
approval from DLD to advertise.

• Broker must ensure that any money received by Developer in an off-plan

transaction must be deposited in the RERA Trust Account, including loans for the
project.

• Broker must obtain Developer’s approval of marketing materials.

• Violations of the regulations result in a fine not less than 100,000 AED and/or
imprisonment.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

9
04-Nov-19

Developer’s Right to Terminate for Buyer’s Default

• If a Buyer defaults on any term of an SPA for the sale of an off-plan unit, the
Developer will be entitled to cancellation and compensation if the Developer
satisfies the conditions set out in Law 19 of 2017.

• The Developer notifies the DLD about the default and accordingly the DLD will issue
a default notice to the Buyer allowing 30 days to remedy the default.

• In the event the default persists beyond the 30 day notice period, the Developer
approaches DLD to deregister the unit (to cancel the contract with the Buyer).

• On cancellation Developer is entitled to compensation as per law.

The Developer’s Right to Compensation on Buyer’s Default – Law 19 of 2017

• If the Developer has completed at least 80% of construction, the Developer may: (i)
continue with the performance of the contract, keep all the money received from the
buyer and request the purchaser to pay the outstanding amount; or (ii) request the
Land Department to sell the unit via Public Auction to recover the due payments; or
(iii) deduct no more than 40% of purchase price and cancel the Contract and
return any excess amount to the purchaser within one year of the termination of the
Contract or 60 days of re-selling the unit to another purchaser, whichever is earlier.

• If the percentage of completion of the unit is between (60%) and (80%), the
developer may terminate the Contract, deduct not more than (40%) of the purchase
price and return any excess amount to the purchaser within one year of the date of
termination of the contract or within 60 days of the date of re-selling the unit to
another purchaser, whichever is earlier.

10
04-Nov-19

• If the developer has commenced construction work on the project as per the designs
approved by the competent authorities and the percentage of completion of the unit
is less than 60%, the developer may terminate the contract, retain up to 25% of the
purchase price and return any excess amount to the purchaser within one year of the
date of termination of the contract or within 60 days of the date of re-selling the unit
to another purchaser, whichever is earlier.

• If for reasons beyond the Developer’s control and without negligence on his part, the
Developer has not commenced construction on the project, then the Developer is
entitled to deduct 30% of monies paid by the purchaser, cancel the Contract and must
return any excess amount to the purchaser within 60 days of the date of terminating
the Contract.

The Buyer’s Right to Terminate on Developer’s Default

Buyer may request the Court to cancel his SPA with the Developer under any of the
scenarios listed in Article 20 of Decree No. 6 of 2010.

• If Developer refuses, without a valid excuse, to provide the Buyer with a Final
Sales/Purchase Contract.

• If the Developer fails to tie the payment schedule to the RERA schedule (10% down –
unless Developer has an exception to collect more).

• If the Developer unilaterally and materially modified the unit. (eg. sea view vs. park
view)

• If the Unit is unusable due to major structural defect.

• Any other purpose permitting cancellations of contracts under Civil Law.

Buyer must file a civil lawsuit in Dubai Courts (or Arbitration, depending on terms of SPA)
for the purpose of cancelling the
‫الخطية من المعهد‬ ‫الموافقة‬Contract
‫ إعادة إنتاجها من دون‬and refunding
‫إستخدامها او‬ the
,‫العقاري و اليجوز نسخها‬ monies
‫لمعهد دبي‬ ‫ الفكرية محفوظة‬paid).
‫جميع الحقوق‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

11
04-Nov-19

Variation in Property Size

• If the unit handed over is smaller by less than or equal to 5% than the size in the
Contract, Buyer is not entitled to compensation from Developer, because difference
in size is considered marginal and acceptable based on the engineering industry.
• If the unit handed over is more than 5% smaller than the size in the Contract, then the
Buyer is entitled to compensation for any decrease in the property size.
• If the unit is materially or substantially smaller, then the Buyer may have a valid Civil
Claim against the Developer for cancellation and refund of the contract price
(material breach).
• If the unit handed over is larger than size in the Contract, Developer may not demand
more money for the difference, unless the Contract states otherwise.
Case Study
All measurements now in square metres.
Buyer buys 100 square metre unit for AED 1
million. Upon handover the Developer provides a
unit which is 50 square metres – what can the
Buyer do?
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Cancelled Projects
Law No. 13 of 2008 (as amended by Law No. 19 of 2017)
If a Developer's project is cancelled by order of RERA, then the Developer must refund the
full amount paid by Buyer.
Decree No. 21 of 2013
• All matters regarding liquidation of assets of cancelled real estate projects will be
decided by the Special Judicial Committee (consisting of a panel of Dubai Court judges).
• This law specifically relates to “cancelled” projects only and not “on hold” projects.
• The Committee liquidates real estate projects cancelled by RERA, and settles any debts
with respect to such cancelled projects, after deduction of liquidation expenses.
• The Committee considers and decides any issues, demands and claims that may arise
between Developers and Buyers relating to cancelled real estate projects.
All claims in relation to cancelled real estate projects will only be considered by the
Committee and not by the courts in the Emirate of Dubai (including not by the DIFC Court).
Decisions of the Committee are final and binding and may not be appealed.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

12
04-Nov-19

Landlord-Tenant Laws

Law 4 of 2019 – Concerning the Real Estate Regulatory Agency

• Announced on 15 September 2019

• This Law repeals Law 16 of 2007 Establishing the Real Estate Regulatory Agency

• Article 10: The Dubai Land Department shall replace RERA in the exercise of:
o all functions related to the registration of leases;
o the regulation of the relationship between landlords and tenants; and
o all other functions related to leases

Landlord-Tenant Laws

Law No. 26 of 2007 & Law No. 33 of 2008

Lease Agreements

• Must be in writing
• Must be registered on Ejari to be valid
• Must be in the form of the Unified Ejari Tenancy Contract template available for
downloading at www.ejari.ae
Subleases

• Landlord must give written consent for Sublease to be valid.

• If Landlord consents to a Sublease, a novation (new contract) is effected, and the
Subtenant may continue his tenancy, even if the Primary Tenant is rightfully evicted.
• If Landlord does not consent to Sublease, Subtenant can be evicted.
• If Subtenant is evicted, he reserves the right to file a claim against Primary Tenant in RDC.
• Brokers may not broker Sublease Agreements, only those with Property Management
licence (Leasing & Managing of Other People’s Property) may do so.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

13
04-Nov-19

Landlord Obligations

• No alteration to the premises or its services (for example utilities or facilities). If so,
Landlord will be liable for any damage caused, faults or shortages to the premises.

• On handover the Landlord must provide the premises to the Tenant in good condition,
that enables the Tenant to occupy and enjoy the premises.

• Landlord is responsible for maintaining the premises and must rectify any defects or
damage that affect the Tenant’s intended use of the property.

• Landlord prohibited to disconnect services or to obstruct the Tenant from occupying the
premises for their quiet enjoyment and use. If so, Tenant has the right to file a Police
Report, in addition to filing a case with the Rental Dispute Settlement Centre (RDC).

Tenant Obligations

• Pay the rent on the due dates.

• Pay Security Deposit to guarantee and/or cover the condition of the premises at the end
of Lease.

• No alterations, renovations or performing maintenance work without the Landlord's

permission and, if required, any approval from relevant authorities.

• Return the premises to the Landlord in good condition, with only reasonable wear and
tear. Any dispute over the condition decided upon by the Rental Dispute Settlement
Centre, if no agreement is reached.

• Pay all fees and taxes due for to the utility authorities that benefit the premises, unless
otherwise agreed.

• Not remove any fixtures, unless agreed otherwise by both Landlord and Tenant.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

14
04-Nov-19

Security Deposit

• An amount of money paid in advance;

• Held in reserve;
• In the event that Tenant fails on a contractual obligation (under the Lease).

Covers a default under the Lease which results in:

• Loss of rent
• Damage to the premises
• Lost security keys
• Repairs that are not wear and tear
• Not considered rent

Wear and Tear

• Damage to property that results from ordinary use of an item.

• Does not involve damage caused intentionally or by gross misuse of that item.
• Landlord cannot expect to lease out a property that returns in the exact same condition.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Rental Increase Caps

Decree No. 43 of 2013

• Applies to all properties in Dubai (including Free Zones).

• Rent caps based on Tenant’s previous rent vs. average similar rent, as per RERA Index.
• Rental Increase Calculator is on DLD website at www.dubailand.gov.ae (eServices).
• Notice must be given to Tenant at least 90 days prior to expiration of Lease term.
• Notice may simply state “There will be an increase in rent of ___%.”
• Informal notice accepted by RDC with proof of receipt (email, informal letter, SMS).

If Tenant was paying:

• 10% or less than the average similar rent – Landlord cannot increase the rent.
• 11-20% less than the average similar rent – Landlord may increase rent by up to 5%.
• 21-30% less than the average similar rent – Landlord may increase rent by up to 10%.
• 31-40% less than the average similar rent – Landlord may increase rent by up to 15%.
• Over 40% less than‫المعهد‬the average
‫الخطية من‬ similar
‫إنتاجها من دون الموافقة‬ rent,‫اليجوز –نسخها‬
‫إستخدامها او إعادة‬ Landlord may
‫لمعهد دبي العقاري و‬ ‫محفوظة‬increase
‫ جميع الحقوق الفكرية‬rent by up to 20%.
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

15
04-Nov-19

Eviction
Legal reasons for eviction during Lease term:
• Non-payment of rent (30 day notice);
• Breach of Lease terms (30 day notice);
• Illegal or immoral use of premises;
• Alterations made by Tenant to premises that endangers its safety;
• If the premises are dangerous and likely to collapse (Technical Report from Dubai
Municipality);
• Commercial premises – if Tenant fails to occupy the premises, without legal cause, for 30
days continuously or 90 non-continuous days in one year (unless otherwise agreed).

Landlord must give 12 month Notice of Eviction by Notary Public or Registered Mail:
i. If the Landlord wants to sell the property;
ii. If the Landlord wishes to use the property for his own personal use or direct relatives
(Landlord has burden of proof that he has no other properties for that use);
iii. If the property requires demolition or major renovation that cannot be completed while
occupied by Tenant (Technical Report required).

• If Eviction granted for personal use, property cannot be leased for 2 years (3 for commercial).
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
• If no legal reason
The Copyright of theseto evict
materials – Tenant
is vested in DREI. These has AUTOMATIC
materials should not be copied, right of renewal.
reproduced or transmitted without our prior written consent.

Rental Dispute Settlement Centre (Helpline 800-4488)

Decree No. 26 of 2013

• Responsible for Landlord-Tenant dispute resolution (except in DIFC) under DLD
• Attempts to settle all claims within 75 days (process split between different departments)

Dispute Process

Bring supporting documents to RDC:

- ORIGINAL Lease (or copy of Lease and faxed request to Landlord for original);
- Proof of payment of rent (cheques);
- Ejari Registration & DEWA bill;
- Passport, Emirates ID and Title Deed (of Landlord too, if possible).
• Pay the fee – 3.5% of Lease value (500 AED minimum – 20,000 AED maximum for an eviction case and AED 15,000 for a monetary
claim).
• Fill out application and claim form.
• RDC may refer the matter to the Settlement & Reconciliation Department to try to settle the dispute amicably, although this stage is
not mandatory.
• If the case is not referred to the Settlement & Reconciliation Department, or if the case was referred to the Settlement &
Reconciliation Department and settlement was unsuccessful, then a lawsuit filed is filed through Department of First Instance,
which is usually settled within 2 to 4 weeks.
• If a party wishes to appeal, a case is filed through the Department of Appeal, and the Department of Appeal will issue final verdict
typically within 2 to 4 weeks. In order to appeal, the party must deposit an amount equal to 50% of the judgment amount being
claimed as security. This amount will be used for the execution in case of losing the appeal.
• Offer & Deposit – Tenant provides new Lease (2 originals) and cheque(s). Landlord has 15 days to accept or file claim against
Tenant.

16
04-Nov-19

CASE STUDY

Mortgages

Law No. 14 of 2008

• Mortgagee must be a bank or financial institution duly authorised and registered

with the UAE Central Bank for practicing property financing activities.

• Mortgages must be registered at the DLD, otherwise not valid.

• The Mortgagor (Borrower/Buyer) is responsible for paying registration fees, unless

otherwise agreed.

• The fee to register a Mortgage is .25% of the loan amount, payable to DLD.

17
04-Nov-19

Jointly Owned Properties

Law 6 of 2019 - On the Ownership of Common Property

• Announced on 4 September 2019.

• Repeals Law 27 of 2007 Concerning Ownership of Jointly Owned Property in the Emirate of Dubai (“Previous Law”).
• Six month transition period from 4 September for developers & management companies to comply.

Major changes:
o New three tiered management system – Major Projects, Hotel Projects, All Other Projects.
o Stronger role RERA – remove incompetent management companies.
o Removal of JOPD (Jointly Owned Property Declaration) – New bylaws / building management system.
o Service charges / utilization charges.
o New common property register.
o New dispute resolution mechanism – the Rental Dispute Settlement Centre has exclusive jurisdiction.

New three tiered management system:

• Under the Previous Law:
o all owners of units automatically became members of the Owners Association; and
o the Owners Association, through its board, managed the common areas of the building, and they could
delegate these responsibilities to an Association Manager to perform.
• The New Law replaces this management system with a three tiered system for Major Projects, Hotel Projects, All
Other Projects.
• Most developments in Dubai will fall into category 3: “All Other Projects”.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Management System for Category 3: “All Other Projects”

• The common parts in these projects shall be managed by specialized management

companies which shall be selected and engaged by RERA (Article 18(a)(3).

• An owners’ committee must be formed for each real estate project with its members
selected by RERA which shall not exceed 9 members (Article 18(a)(3)).

• The functions of the owners committee are set out in Article 24 and include:
o verifying that the management company manages the common parts;
o reviewing the annual budgets for the maintenance of the common property and
making recommendations;
o receiving complaints from owners and submitting them to RERA if the management
company fails to address them within 14 days of being notified; and
o importantly, this owners committee has the power to request RERA to replace the
management company and provide RERA with advice on the selection and
appointment of the new management company (Article 24(5)).

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04-Nov-19

Responsibility of Developer to rectify defects ten years (Article 40)

• Similar to the Previous Law, the Developer is still under an obligation to:

o repair or correct any defects in the structural parts of the common property for a
period of ten years from the date of the certificate of completion for the project; and

o repair or replace defective fixtures in the common property for a period of one year
from the date of handing over the unit to the owner. Fixtures are defined as including
mechanical and electrical works, sanitary fittings, sewerage and suchlike.

Removal of JOPD – New bylaws / building management system

• Under the Previous Law, a Jointly Owned Property Declaration was required to be registered with
RERA which governed the use of the common areas and units, and set out the duties and obligations
of the owners, occupiers, and the developer.

• The New Law has removed the concept of a JOPD and replaced it with the following:
– The bylaws of the complex - “the terms and conditions governing the development and
operation of the master project and the common properties and common facilities therein,
including the planning and construction standards of the complex.”
– The bylaws - “the rules and provisions governing the owners’ committee, which shall be
established and adopted in accordance with the provisions of this Law.”
– The building management system - “The document prepared in accordance with the regulations
issued by the Department and recorded in the Common Property Register, which state the
procedures for maintenance of the common parts, and the percentage of owners' contribution in
the costs related thereto, including the equipment and services existing in any part of another
building”.

• Prior to selling any units, the developer must establish a building management system for major
projects and hotel projects which must be approved by RERA (Article 20).
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

19
04-Nov-19

Unpaid Service Charges

If a Unit Owner fails to pay service charges, and fails to remedy this within 30 days following
notice from the management body which has been approved by RERA, then the
management body can enforce their claim for unpaid service charges before an execution
judge in the Rental Dispute Settlement Centre.

The execution judge may, when necessary, sell the Unit through a public auction to collect
the amount of the unpaid service charge.

The management body shall have a lien on each Unit in respect of the unpaid service charge.
The Unit may not be disposed of until after this charge is paid to the management body.

Power Of Attorney

Power of Attorney (POA) is a legal document under which one party (Grantor) gives
authority to another party (Grantee) to act on his or her behalf, in accordance with the
provisions of the POA.

• A locally issued POA must be notarized by the Dubai Notary Public.

• If Grantor is overseas, must be or legalized through the UAE Embassy in that country
and attested by the UAE Ministry of Foreign Affairs.

• Must be in Arabic. If in English, must have translation certified.

• Limited for real estate transactions to a specific property, Dubai Court will not issue
any general POA’s for real estate.

• Limited in time – 2 years, unless revoked or cancelled earlier.

• Expires upon death‫المعهد‬of‫من‬Grantor.

‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

20
04-Nov-19

How to Check a POA to confirm if valid or cancelled

All Dubai Courts registered POAs can be checked online as follows:

1. Visit www.dubaicourts.gov.ae
2. Go to the tab 'public e- service'
3. Inquiries
4. Inquiry about a document
5. Document Type: ‘Authentication Register’
6. Year: Year of registration
7. Serial Number: Enter serial number of document

The outcome will be the POA is either: Valid or Invalid.

Alternative Dispute Resolution

• Relieves the Dubai Courts of many real estate-related cases.

• Rental Dispute Settlement Centre (DLD) - exclusive jurisdiction over rental dispute
cases (except DIFC) and disputes concerning Law 6 of 2019 On the Ownership of
Common Property.
• DIFC has own Courts and committees.
• Cancellation Committee (DLD) exclusively deals with cancelled projects.
Mediation
• A voluntary meeting of the parties before a mediator to discuss issues and options for
settlement.
• If the parties do not agree, then they may go to Court or to Arbitration.

21
04-Nov-19

Arbitration

Arbitration is like going to Court, but in a private setting.

There are a number of arbitration centers:

• DIAC – Dubai International Arbitration Centre (Dubai)
• DIFC- London Court of International Arbitration (Dubai-DIFC)
• International Chamber of Commerce (ICC) (Paris)

Advantages of Arbitration:
• Parties can appoint specialist arbitrators in the area of the dispute.
• Decision may be reached faster than in Court, due to Arbitration Rules.
• Awards can be registered in foreign countries, if signatory to NY Convention

Disadvantages of Arbitration:
• Expensive.
• May require the successful party
‫الموافقة الخطية من المعهد‬ to‫إعادة‬go
‫إنتاجها من دون‬ to Court
‫إستخدامها او‬ ,‫اليجوز نسخها‬to enforce
‫العقاري و‬ the
‫محفوظة لمعهد دبي‬ ‫الفكرية‬award.
‫جميع الحقوق‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

VAT

The imposition of VAT commenced in the UAE from 1 January 2018 at a standard rate of 5%.
The VAT treatment of real estate will depend on whether it is a commercial or residential
property.

Supplies (including sales or leases) of commercial properties will be taxable at the standard
VAT rate of 5%.

There will be no VAT on the supply of residential properties as they fall under either the zero
rated or exempt category. Specifically the VAT law provides that:

• new residential properties that are supplied for the first time within 3 years of their
construction will be a zero rated supply - this means that real estate developers will be
able to recover the VAT they have paid in constructing new residential properties; and

• all other residential property supplies (including sales and leases) will be exempt from
VAT.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

22
04-Nov-19

VAT – Example

Ahmed owns a Building. Building has both residential and commercial units, and these are
rented to various parties. How will be the tax treatment?

Explanation:

• The rent of the residential part of the building shall be treated as zero-rated or exempt,
depending on whether this is a first supply or a subsequent supply.
• The rent of the commercial part of the building shall be treated as subject to VAT at 5%.

Does the owner of real estate have to register for VAT?

• The owners of residential units do not have to register for VAT if they do not have any
other business activities. Where owners have other business activities, they should
consider their obligations accordingly. The owner of any unit that is not residential (ie
commercial units), will have to register if the value of the supplies over the preceding 12
months exceeds Dh375,000 or it is expected that they will exceed Dh375,000 over the
coming 30 days. ‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

ANTI-MONEY LAUNDERING – FEDERAL LAW 20 OF 2018

Article 2: The Crime of Money Laundering

“Any person, having the knowledge that the funds are the proceeds of a felony or a misdemeanor, and
who wilfully commits any of the following acts, shall be considered a perpetrator of the crime of Money
Laundering:
(a) transferring or moving proceeds or conducting any transaction with the aim of concealing or
disguising their illegal source;
(b) concealing or disguising the true nature, source or location of the proceeds as well as the method
involving their disposition, movement, ownership of or rights with respect to said proceeds;
(c) acquiring, possessing or using proceeds upon receipt; or
(d) assisting the perpetrator of the predicate offence to escape punishment. “

Article 22: The Punishment

“Any person who commits or attempts to commit any of the acts in Article 2 shall be sentenced to
imprisonment for a period not exceeding 10 years and to a fine of between AED 500,000 and AED
5,000,000.00.”

23
04-Nov-19

Forms of money laundering in real estate

1. Cash Deposits
Using cash to buy a property is an unsophisticated, but often effective, method of money laundering.
Regulatory reporting thresholds for cash purchases are avoided by making payments from a number of
different bank accounts.

2. Third Party Purchases

Criminals may use a ‘clean’ third party to distance themselves from a property transaction and disguise
ownership, by using them as legal owner of a property and/or using their bank account to deposit and
then withdraw money to buy a property.

3. Loans and mortgages

A criminal may take out a mortgage to buy a property then settle in full a few months later.
The loan is used to buy real estate and repayments are made from illicit funds money to buy a property.

4. Under and overvaluation

This requires the involvement of a vendor or real estate agent who under- or over-estimates the value
of a property, with the difference settled in secret cash payments.

Anti-Money Laundering Guidelines for Real Estate Professionals

1. Conduct Know Your Customer/Customer Due Diligence (CDD)

You must conduct CDD on your client before you enter into a business relationship with the client or
conduct an occasional transaction or activity.

Article 1 of Law 20 of 2018 defines CDD as “The process of identifying or verifying the information of a
Client or Beneficial Owner, whether a natural or legal person or a legal arrangement, and the nature of
its activity and the purpose of the business relationship and the ownership structure and control over it.”
At a bare minimum, this means that companies must provide you with a copy of their current
commercial licence and natural persons must provide you with a copy of their current passport or
Emirates ID verified against the original.

In cases where red flags are present, you should apply increased levels of CDD:
• For a natural person, obtain additional information (ie a driver’s license, passport or other reliable
identification document), to confirm the true identity of the customer.
• For a company, take additional measures to identify who actually controls or owns the entity and
take risk based measures to verify the identity of the owner. This is commonly referred to as
beneficial ownership information.

24
04-Nov-19

2. Report suspicious activity

Report suspicious activity to local law enforcement (ie Dubai Police);

or
Lodge a suspicious transaction report with the Financial Intelligence Department of the
Central Bank of the UAE.

Best wishes for a successful

real estate career!

25
REAL ESTATE LAW

IN DUBAI

2019 Edition

The Copyright of these materials is vested in DREI. These materials should

not be copied, reproduced or transmitted without our prior written consent.

2295512.1
TABLE OF CONTENTS

1 Learning Outcomes.................................................................................................. 6
2 Introduction .............................................................................................................. 6
2.1 Module 7 - Legal Concepts in Real Estate and the Law .............................. 7
2.2 Basic Principles of Law Learning .................................................................... 8
2.3 The Basis of Law in Dubai ............................................................................... 9
2.3.1 Source of Laws............................................................................................ 9
2.3.2 Law Reform................................................................................................. 9
2.4 Why Do We Need The Law? ......................................................................... 10
2.4.1 Codified System ....................................................................................... 10
2.4.1.1 Civil Law .......................................................................................................... 10
2.4.1.2 Common Law .................................................................................................. 11

2.4.1.3 Overview: Our Real Estate Legal System.................................................... 11

3 The Land Department and Law No. 7 Of 2006 .................................................. 14

3.1 Overview .......................................................................................................... 14
3.2 Dubai Land Department History .................................................................. 14
3.3 The DLD System of Registration ................................................................... 15
3.4 The Right to Own Real Property in Dubai: Law No. 7 Of 2006 ................ 18
3.4.1 Regulation No.3 Of 2006 ......................................................................... 19
3.4.2 Free Zones and other Authorities .......................................................... 19
4 Regulating the Interim Real Estate Register: Law No.13 of 2008 .................... 23
4.1 Developer’s Obligations ................................................................................. 23
4.1.1 How Does The Interim Real Estate Register Work? ........................... 23
4.1.2 Approved Fees a Developer May Charge ............................................ 25
4.1.3 Only Authorized Brokers Can Be Engaged.......................................... 25
4.1.4 Illegal Sales ................................................................................................ 25
4.1.5 Variation in Property Size ....................................................................... 26
4.2 Developers Right to Terminate For Buyer Defaults ................................... 26
4.2.1 The Developer’s Right to Compensation on Defaults ........................ 27
4.3 Reporting Violators to Investigating Authority.......................................... 28
4.3.1 Cancelled Projects .................................................................................... 28
(A) Law No.13 of 2008.................................................................................................... 28

(B) Law No. 21 of 2013 concerning the formation of a special judicial committee
for the liquidation of cancelled real estate projects in the Emirate of Dubai ......... 28

Concerning the Real Estate Regulatory Agency: Law 4 of 2019 ............................. 32

2295512.1
4.4 About RERA ..................................................................................................... 32
4.5 Services Provided By RERA .......................................................................... 32
4.6 Real Estate Development Trust Accounts Law No. 8 of 2007................... 35
Introduction to Trust Accounts ................................................................................ 35
4.6.1 The Developers Register ......................................................................... 36
4.6.2 Trust Account Trustee Register ............................................................. 36
4.6.3 Registration of Escrow Agreement and SPAs...................................... 37
4.6.4 How does a Developer register his Project?......................................... 38
4.6.5 Broker Considerations during Off-Plan Sales ...................................... 39
4.6.6 Penalties for Violators ............................................................................. 40
4.6.7 Cancellation of Developers License ...................................................... 41
5 Regulating the Real Estate Brokers Register: Bylaw No.85 of 2006 ................ 43
5.1 The Brokers Registration ................................................................................ 43
5.2 Requirements for Registration in the Brokers Register ............................. 43
5.2.1 Application Requirements ...................................................................... 43
5.2.2 Process after an Application is lodged.................................................. 44
5.3 License Renewal .............................................................................................. 45
5.4 Broker’s Obligations........................................................................................ 45
5.5 Broker’s Remuneration ................................................................................... 47
5.6 Settlement of Disputes .................................................................................... 48
5.7 Disciplinary Penalties and the Expiration of Brokerage Capacity ........... 49
5.7.1 Decision on Cancellation......................................................................... 49
5.7.2 Appeal Rights ........................................................................................... 50
5.7.3 Non-Disciplinary Grounds for Cancellation ........................................ 50
6 Regulating the Relationship between Landlords and Tenants: Law No. 26 of
2007................................................................................................................................... 52
6.1 Law No. 26 of 2007. ......................................................................................... 52
6.1.1 Introduction to Lease Agreement .......................................................... 53
6.1.2 Subleasing Rights, Termination and Renewals, Third Party
Payments ................................................................................................................. 54
6.1.3 Decree No. 43 of 2013: Determining Rental Increases in Dubai ....... 56
6.1.4 Landlord Obligations .............................................................................. 57
6.1.5 Tenant Obligations ................................................................................... 58
6.1.6 Eviction ...................................................................................................... 59
6.1.7 General Provisions under Law No.26 of 2007 ..................................... 61
7 Mortgages In The Emirate Of Dubai: Law No. 14 of 2008 ............................... 63
7.1 Application of the Law ................................................................................... 63
7.2 Mortgage Definitions ...................................................................................... 64
7.3 Mortgage: The Process and Requirements .................................................. 65
7.4 Rights & Obligations of the Mortgagor ........................................................ 66

2295512.1
7.4.1 Rights of the Mortgagor .......................................................................... 66
7.4.2 Obligations of the Mortgagor ................................................................. 66
7.5 Rights & Obligations of the Mortgagee........................................................ 66
7.5.1 Obligations of the Mortgagee ................................................................. 66
7.5.2 Loss or Damage ........................................................................................ 67
7.6 Special Mortgages ........................................................................................... 67
7.6.1 Musataha ................................................................................................... 67
7.6.2 Usufruct or Long Term Lease ................................................................ 67
7.6.3 Termination............................................................................................... 67
7.6.4 Off-Plan Sales............................................................................................ 68
7.7 Enforcement of the Mortgage in the event of Default ............................... 68
8 On the Ownership of Common Property in the Emirate of Dubai: Law 6 Of 2019
71
8.1 Co-Ownership .................................................................................................. 71
8.1.1 General....................................................................................................... 71
8.1.2 On A Sale: A Statutory Priority Right to Purchase ................................. 71
8.1.2.1 Does Not Apply To Domestic Relations ............................................... 71
8.1.2.2 Elements of the Right of First Refusal ................................................... 72
8.1.2.3 Process and Notice Periods .................................................................... 72
8.1.2.4 Breach of the Right of First Refusal: Entitlement to Compensation . 72
8.2 Subdivision ....................................................................................................... 73
8.2.1 Subdivision of a Project ........................................................................... 73
8.2.3 Bylaws, Bylaws of the Complex and Building Management System
75
8.2.4 Disclosure Regime ................................................................................... 76
8.2.5 Completion Certificate ............................................................................ 77
8.2.6 Unpaid Service Charge ........................................................................... 77
9 Power of Attorney and Due Diligence ................................................................ 79
9.1 What is a Power of Attorney? ........................................................................ 79
9.2 For what is a Power Of Attorney used? ....................................................... 79
9.3 Power Of Attorney General Provisions ....................................................... 80
9.3.1 Due Diligence ........................................................................................... 82
9.4 Sale Purchase Transactions ............................................................................ 82
9.4.1 Seller ........................................................................................................... 82
9.4.2 Buyer: an individual resident in the UAE ............................................ 83
9.4.3 Buyer: an individual who is not resident in the UAE ........................ 83
9.4.4 Buyer: a company incorporated in the UAE ........................................ 83
9.5 Lease Transaction ............................................................................................ 85
9.5.1 From A Landlord ..................................................................................... 85
9.5.2 Tenant: a company ................................................................................... 85

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9.5.3 Tenant: an individual .............................................................................. 86
10 Alternative Dispute Resolution ........................................................................... 88
10.1 Mediation ...................................................................................................... 88
10.2 Arbitration .................................................................................................... 88
11 VAT .......................................................................................................................... 89

This module has been authored by Edward Sunna (Chief Legal Officer of Meraas
Holding and the General Legal Advisor to the Engineer's Office), edited by
Shahram Safai (Partner at Afridi & Angell) and updated by Majdel Musa (Legal
Instructor at Dubai Real Estate Institute).

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1 Learning Outcomes

At the conclusion of this module participants will:

1. Understand and appreciate the rationale behind regulation in the real

estate sector.

2. Identify the laws relating to specific real estate practices.

3. Identify facts and circumstances to which real estate laws apply.

4. Adopt practices to comply with real estate laws.

2 Introduction

The Government of Dubai and the Dubai Land Department (through the Real
Estate Regulatory Agency (RERA)) have a genuine commitment to ensuring
transparency and enhancing confidence in the real estate market through a
number of government sanctioned initiatives and practices.

To achieve this objective RERA has initiated and introduced regulation and
control for the benefit of all stakeholders in the local real estate market.

By and large it is recognized that qualified real estate professionals are an

important step in achieving the Government and RERA’s overall objective.

The course you are undertaking is designed to meet the minimum requirements
to qualify for registration as a Real Estate Broker in Dubai.

This course, presented by the Dubai Real Estate Institute (DREI), is mandatory
for a registration in the Brokers Register in accordance with Bylaw No. (85) 2006.

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RERA has introduced the concept of mandatory continuing education for
eligibility for Broker Registration renewal. This means the passing of an
examination given by DREI.

Upon successful completion of the course you will satisfy the educational
requirements for the issuance of a real estate license, subject to all other
conditions, including completion of the prescribed application with RERA.

2.1 Module 7 - Legal Concepts in Real Estate and the Law

This module will familiarize you with the relevant laws and legal principles as
they affect real estate practice in Dubai. It should be borne in mind that laws and
regulations are not unchanging. There are often new laws and regulations
introduced, and it is important that you stay fully up-to-date. This handbook is
correct as of the date of printing.

You will receive a comprehensive introduction to the following:

a. The Legal Framework: Laws and regulations pertaining to real estate

transactions in Dubai;

b. The Legal Institutions: The function and objects of the various

government and judicial bodies set up to administer laws, transactions
and reform in the real estate market;

c. Registration as it applies to projects, Brokers, land transactions (for

example Sales/Purchases (of completed and off-plan units), Leases and
Mortgages) and other legal instruments;

d. Legal concepts & principles which apply to real estate personnel,

financing, marketing and transactions;

e. Best Practice: How to best conduct yourself as a professional to avoid the

pitfalls and risks associated with real estate practice.

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2.2 Basic Principles of Law Learning

The teaching of legal principles differs significantly compared to any other

discipline. It involves the ability to locate the source of the law, identify the facts
or circumstances to which the law applies and to act or comply with the legal
requirement(s).

There is no set formula in applying the law and it is often open to interpretation
and therefore competing views.

Additionally, in order to remain relevant, laws are subject to review and reform.
Legal education is therefore an evolving process as change is necessary to ensure
laws do not become redundant and continue to have application and force in
dynamic market conditions.

Key elements in legal education involve:

 An active process in identifying the relevant law;

 A decision-making process in applying the law to the facts or
circumstances.

We will examine the foundation of law in order to provide an understanding of

the significance law has in our society, and to begin to develop some familiarity
with the legal system.

At first glance, law can seem very distant from our daily lives, but almost
inevitably the law touches upon our lives directly or incidentally.

Below is a list of areas which typically appear to be domestic or economic in

nature:

 Finance
 Marriage
 Crime
 Education
 Medical Insurance
 Intellectual and Information Technology

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An examination of each area would demonstrate a significant level of legal
intervention involving regulation and/or control.

In essence a legal system brings together the different elements of a society

(social, political and economic) with the aim of introducing order and control.

2.3 The Basis of Law in Dubai

Our legal system provides a unique and valuable framework for UAE society. It
is based on the ‘Rule of Law’.

2.3.1 Source of Laws

Laws are devised from the principle often referred to as the ‘Rule of Law’. In the
UAE laws are made up of:

1. Codes;
2. Decrees;
3. Regulations.

The sources of the Rule of Law are derived from:

 Religion;
 Customary practices such as standards of morality, culture, mores and
social expectations;
 International law, treaties and conventions.

2.3.2 Law Reform

The process of law-making is contingent upon the government reacting to social,

economic and administrative changes in society. As society embraces change in
commerce or technology our legal system must lead the way to remain relevant
and to regulate change in all aspects. Old laws may become redundant and
therefore need replaced, or new conditions may arise that are not dealt with by
existing laws.

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The most notable example in recent times has been with the advent of
information technology, which delivered a new kind of asset in the form of
intangible property needing protection (trademarks, copyright, design, patents).
We have also seen the growth in the collection of information. Correspondingly
Data Protection laws have evolved to deal with the rapid effects of technology on
business in particular and society at large.

2.4 Why Do We Need The Law?

Laws provide a framework in our society and govern the behaviour of people -
professional, business and personal - to the extent required to uphold moral,
professional and commercially acceptable means of existing and operating.

As it is universally agreed that a society functions optimally when in harmony, it

is necessary to have a consistent standard that applies across that society. In
other words unified rules referred to as ‘laws’ are imposed to apply to all
members of that society.

2.4.1 Codified System

2.4.1.1 Civil Law

Civil Law is a legal system that originates from the time of the Roman Empire.
Its primary feature is laws that are written, or codified. This is different from a
Common Law system, which is discussed below.

The guiding principle of Civil Law is to provide all citizens with a written
collection of the laws which apply to them and which judges must follow. The
primary source of laws is a ‘Code’, which is a statutory grouping of rules and
standards concerning a particular subject matter and arranged in order to
identify what is a breach of the Code and to provide sanctions against the
outlawed conduct.

The UAE is a Civil Code country, similar to France, Germany and Spain.
Furthermore the codified system in the UAE is Sharia compliant, similar to
Egypt, such that principles of Islamic law are contained throughout the UAE’s
codes. Some of the most notable examples of the UAE’s codes include:

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a. Civil Code;
b. Commercial Companies Code;
c. Code of Civil Procedure.

2.4.1.2 Common Law

Common Law is the other system of law. Apart from written laws which are
passed by Government, many western countries rely on judge-made laws (i.e.
the decisions of judges in legal cases). The decision of a judge in a higher court
will bind a judge in a lower court where the two cases deal with the same set of
facts.

This is a system known as precedent. In a Civil Code country a judge in a lower

court does not have to follow the decision of a judge in a higher court.

2.4.1.3 Overview: Our Real Estate Legal System

The diagram below provides a summary of the structure of Dubai’s real estate
legal system and contains the most fundamental laws, institutions and bodies
involved in real estate.

Understanding each of the elements will provide a solid perspective of how the
system functions, and how as a real estate professional you should behave within
the system and towards the various stakeholders: clients (Sellers, Buyers,
Landlords, Tenants), financial institutions, government bodies and agencies.

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Institutions Registries Laws

RERA Dubai Law No. 7/ 2006 - Land

Registration and
Land Department Ownership

Dubai Land Register and Interim Register

Regulation No. 3 of 2006 –
Court Designated Areas
Property Division
Law No. 85/ 2006 –
Mediation General Provisions Regulation of Real Estate
Judgments and
Brokers
enforcement
Law No. – RERA
4 of 2019
1. Property Due
Rents Diligence, Regulations Law No. 8/ 2007 – Escrow
Dispute Centre & Controls Accounts

2. Use of Power of Law No. 26/ 2007 –

Attorney Tenancy Law

3. Registration Systems Law 6/2019 – Jointly

and Processes as Owned Property Law
General Themes.
4. Alternative Dispute Law No. 13/ 2008 –
Interim pre -title Register &
Resolution Law 9/2009 /Decree No. 6 of 2010

Law No. 14/ 2008 –

Mortgage Law

Law No. 26/2013-Dispute Centre

Law No
26/2007 Tenancy Law
RERA © - A full list of all Laws, Decrees, and
amendments can be printed in English/Arabic Decree No 43/2013
from www.dubailand.gov.ae Regarding Rental Increases

Diagram 1: A summary of the structure of the Dubai Real Estate Legal System

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LEARNING EXERCISE 1

Which of the following is correct? (Select one answer only)

1. Laws are devised from the principle often referred to as the ‘Rule of Law’.
In the UAE laws are made up of:
a) Codes
b) Decrees
c) Regulations
d) All of the above
e) (b) & (d)

2. Which summarizes the structure of the Dubai real estate legal system?
a) Institutions
b) Registries
c) Laws
d) All of the above

3. To develop an understanding of legal principles, Registered Brokers must

develop the ability to:
a) Locate the source of the real estate laws
b) Identify the facts or circumstance to which the law applies
c) To act or comply with the legal requirements
d) (a), (b), & (c) above
e) None of the above

Answer Key:

1) d.
2) d.
3) d.

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3 The Land Department and Law No. 7 Of 2006

3.1 Overview

Law No. 7 of 2006 is often referred to as the Law which substantially changed the
nature of property transactions in the Emirate of Dubai. With it emerged a
completely new market – the freehold real estate market for foreign ownership
and development.

Law No. 7 of 2006 also sets out the authority, function and purpose of the Dubai
Land Department (DLD) with the introduction of a system of real estate
registration.

3.2 Dubai Land Department History

The DLD is one of the oldest institutions of the Dubai Government, established
on January 24, 1960 / 26 Rajab 1379H.

His Highness Sheikh Rashid Bin Saeed Al Maktoum, the late Ruler of Dubai,
signed a decree stating the intention and purpose of the Land Department was:

"…..to oversee affairs related to land and private properties in the Emirate, in order to
register these lands and properties in a systematic and effective manner and to safeguard
the rights of our people."

Historically land transactions were not always committed to writing, and instead
were sometimes based on verbal agreements, with the parties acting in ‘good
faith’ to perform their respective obligations.

These traditional methods of transacting have been superseded as a result of the

growth in the real estate market and the volume of transactions. The need to
record transactions is paramount given the variety of interests in land that can be
created (for example, ownership, leasehold and rights under a Mortgage).

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With Law No. 7 of 2006 DLD was confirmed as the ultimate authority for record-
keeping of ‘real estate transactions’ in Dubai. Real estate transactions in the legal
sense capture:

1. Sales and purchases;

2. Mortgages and long term leases;
3. Inheritance rights associated with property;
4. Restriction on title: positive and negative;
5. Recording of zoning and development rights;
6. Any other conditions relevant to real property.

As the ultimate authority on ‘real estate transactions’, DLD jurisdiction extends

to all areas and titles including:

i. Areas in Dubai in which the freehold interest can be owned only by UAE
or GCC nationals or companies owned by those nationals;
ii. Areas in Dubai in which the freehold interest can be owned by nationals
of any country or companies owned by any such nationals; and
iii. Leasehold property.

Whether a property in Dubai is leasehold, freehold, commercial, residential,

vacated or developed, it must be recorded with the DLD. The only exception to
this rule is for the property located in the Dubai International Financial Centre
(DIFC), which has its own property register, a separate Court system known as
the DIFC Courts and its own property laws.

3.3 The DLD System of Registration

3.3.1 To achieve the intent of Law No. 7 of 2006 – that is, for DLD to be the
ultimate authority in record-keeping of real estate transactions - the law
prescribes a system of registration (‘a Real Property Register’) as a means of
administering the function.

“’Real Property Register’ means a set of documents held in written or electronic format
in the electronic register at the Department, which point out the description and location
of Real Property and the rights attached thereto.”

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The Real Property Register is maintained and controlled by the DLD.

Some of the notable Articles of Law 7 of 2006 include:

 Article 4 This permits non UAE/GCC nationals to own freehold,

usufruct or leasehold interests in property if approved by
the government.

Usufruct is the legal right to use and derive profit or benefit

from property that belongs to another person, as long as the
property is not damaged. It is a real right of limited duration
on the property of another. The holder of usufruct has the
right to use and enjoy the property as well as the right to
receive profits from it for a period not exceeding 99 years but
does not have legal ownership or actual possession at law.
Leasing, on the other hand, involves the right to exclusive
occupation and enjoyment of a property to the exclusion of
all others governed by a lease agreement.

 Article 5 Originals of titles and other documents pursuant to which

property is registered are maintained at the DLD. Interested
parties may have access to the originals and may obtain a
certified copy in accordance with the law. It is important to
note that the Real Property Register is not publicly
searchable.

 Article 9 This provides that all transactions (e.g. freehold, leasehold,

retail, residential, commercial, Mortgage) that create,
transfer, change or cancel rights over property must be
recorded in the Real Property Register and that no
transaction will have effect until it is registered in the Real
Property Register.

 Article 11 If a property owner dies, then the certificate of inheritance

must be registered in the Real Property Register; any
disposal of the property by the deceased’s heirs must be
registered in the Real Property Register to be effective.

 Article 22 DLD has the responsibility of issuing documents relating to

rights over property on the basis of the records of the Land

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Register. The most common example is the ‘Title Deed’ (also
referred to as ‘Certificate of Title’). A Title Deed is
conclusive evidence of legal ownership and records if the
property is subject to any restriction, condition or liability.
Title Deed is issued only for fully constructed property.

 Article 26 Any transaction made contrary to Law 7 of 2006 (or made

with the intention of breaching that Law) is null and void.

Article 26 imposes a significant responsibility on all

concerned in any real estate transaction, including Brokers
acting on behalf of their clients. Any transaction that is
concluded contrary to Law 7 of 2006 is likely to result in a
corresponding breach of the Criminal Code which could
lead to prosecution in addition to professional sanctions.

 Any development involving a merger of plots/units or a subdivision must

be registered and new title deed(s) issued to reflect the approved
development activity.

 On registration of a transfer of title the following fees are payable to the

DLD:

a. A transfer fee of a total of 4% of the selling price is payable,

prescribed as 2% payable by the Seller and 2% payable by the
Buyer. However, when it comes to the sale of warehouses, the
Transfer rate is set at AED 10.00 (Ten Dirham) per square metre to a
maximum of AED 10,000.00.

b. A title issuance fee of AED 520.

c. A service fee for any transfer transaction of AED 4000

d. For off-plan registrations, an Oqood activation fee of AED 1000

 The DLD can correct clerical or financial errors in the Real Property
Register upon a request or on its own.

Regarding off-plan sales, fees and registration are regulated by Law 30 of 2013,
No. 13 of 2008 and Decree 6 of 2010. The Law No. 7 of 2006 contemplates the

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registration of completed properties (as opposed to off-plan properties). Off-plan
properties are the subject of regulation under Law No. 13 of 2008 (see below).
The registration of Mortgages is dealt with under Law 14 of 2008 (see below).

3.3.2 Registration Trustees and other Transfer Locations

The Dubai Land Department allows for transfers to take place at Registration
Trustee locations. An escrow agent essentially acts as an intermediary between
the parties to the transaction and the DLD. Initially, the Land Department
allowed for master developers to set up branch offices, and now it allows for
private intermediaries to be licensed and registered to act as Dubai Land
Department transfer agents. It is expected that the DLD will limit direct transfer
appointments in the future at the Dubai Land Department itself. Instead, parties
will attend upon a Registration Trustee that will carry out the transaction and
issue the title, and therefore lodge in bulk its transactions with the Dubai Land
Department. Furthermore, the fee for attending a Registration Trustee is also set
at AED 4000 (subject to change from time to time).

3.3.3 Title measurements

In 2012, the Dubai Land Department adopted measurements in square metres to

replace the measurement of square feet. During the transition period, you will
find that old titles that are subject to transfer will contain a measurement in
square feet. Following any dealing with the title, such as a transfer, the
measurement will be automatically converted to square metres, when a new
Certificate of Title is issued.

3.4 The Right to Own Real Property in Dubai: Law No. 7 Of 2006

 When issued on 14 March 2006 Law 7 of 2006 introduced the concept of

freehold title whereby the local real estate market became open to foreign
ownership.

 Prior to this Law, real property ownership in Dubai was limited to UAE
nationals and GCC individuals as well as companies wholly owned by
them, and publicly listed UAE/GCC companies.

 Article 4 of Law No. 7 of 2006, paved the way for foreign investment and
ownership of real property in Dubai, allowing non-national individuals

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(foreigner) or companies among those that can own property in what are
known as ‘designated areas’, as per the Regulation No. 3 of 2006.

3.4.1 Regulation No.3 Of 2006

For an area to be ‘designated’ as ‘freehold’ by The Ruler of Dubai, the area

becomes available for foreign ownership. Expatriates, foreign individuals and
certain foreign owned companies have the right to acquire a freehold interest, in
areas designated by the Ruler in Regulation No. 3 of 2006, Regulation No.1 of
2010 and Regulation No. 1 of 2011 (altogether the “Regulations”).

As a Broker, you must develop the practice of making enquiries into any
transaction. In line with Law No. 7 of 2006 and the “Regulations”, a Broker
should conduct due diligence to ascertain the nature of the Seller’s title and if the
transaction is permitted.

3.4.2 Free Zones and other Authorities

The phrases “freehold” and “free zones” are often used to describe a property.
The two phrases have distinct meanings. A reference to freehold property is a
reference to a kind of interest in real estate; the holder of the freehold interest is
the “owner” of the property.

In contrast, a “free zone” is an area within Dubai that bestows certain economic
rights and benefits to entities operating in the free zone. It is possible for an entity
to own the freehold interest in a property located in a free zone.

Entities incorporated and/or operating in a free zones benefit from economic

incentives such as 100% foreign ownership, nil income and/or company taxes and
the right to repatriate profits and capital without being subject to restrictions or
duties from the free zone authority.

Each free zone generally has its own respective laws and regulations relating to
business incorporation, registration, licensing and corporate governance.

Although free zones are treated as being offshore despite physically being located
in Dubai, if an entity based in a free zone wishes to operate or provide its services
within Dubai, it will nevertheless be subject to the licensing and entity
requirements of the Dubai Economic Department (usually involving the
establishment of an agency, branch or limited liability company).

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Examples of free zones in Dubai include the following:

a. Jebel Ali Free Zone Authority (JAFZA);

b. Dubai Technology and Media Free Zone (TECOM);

c. Dubai International Financial Centre (DIFC); and

d. Dubai Health Care City (DHCC).

The relationship therefore between real estate and free zones is limited to the
marketing of the zoning for business use of the property. Some free zone
authorities have laws specific to real estate concerning for example registration of
title or leases such as the DIFC, whereas others may defer to the general real estate
laws applicable in Dubai or may operate an information register.

3.4.3 Issue of Title to Offshore Companies

Offshore companies may be owned 100% by foreign nationals, whereas

companies registered in Dubai must be owned at least 51% by UAE or GCC
nationals.

At the time of printing of this handbook, any offshore company that is registered
in a Dubai free zone may register title in the name of the offshore company at the
Dubai Land Department. For those offshore companies registered either (i) in a
foreign country, or (ii) in a free zone of an emirate other than Dubai, title may
only be registered in the name of an offshore company that is registered in
JAFZA.

The guidelines conclude that any application for registration by an offshore

company must be accompanied by (i) a registration certificate from the respective
free zone authority, (ii) a shareholder certificate (i.e. detailing the company’s share
capital and the shareholders), (iii) the company’s memorandum and articles of
association (i.e. detailing the objects and powers of the company) and (iv) an
undertaking to inform the Land Department of any change in share ownership.

The guidelines apply generally, but in any given case there may be circumstances
that require additional documentation to be exhibited.

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Over time, the guidelines and Land Department policy may evolve. Accordingly,
for any purchase involving an offshore company it is recommended that you
communicate with the Land Department at an early stage to establish any specific
requirements.

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LEARNING EXERCISE 2

Which of the following is correct? (Select one answer only)

1. The only recognized authority to register real estate transactions

extending to all areas and titles in the Emirate of Dubai with the exception
of the DIFC is:
a) Roads & Traffic Authority
b) Jebel Ali Freezone Authority
c) Dubai Land Department
d) Dubai Real Estate Institute
e) Dubai Property Courts

2. The Real Property Register is a primary register held at Dubai Land

Department, and Law No. (7) of 2006 permits DLD to authorize branch
registries, sometimes set up on site, at which of the following?
a) Mall of the Emirates
b) Registration Trustee Office
c) Safa Park
d) Dubai Real Estate Institute
e) Epco Service Stations

Answer Key:

1) c.
2) b.

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4 Regulating the Interim Real Estate Register: Law No.13 of 2008

Application of Law No. 7 of 2006 regulates the registration of completed real

property in respect of all transactions. The registration of sales of and the
marketing of off-plan property is regulated by Law No. 13 of 2008.

Law 13 of 2008 applies to:

i. All disposals of real estate units off-plan

ii. Other dispositions of real estate units off-plan that transfer or restrict title
e.g. Mortgages, covenants and easement.

4.1 Developer’s Obligations

Law 13 of 2008 states:

“A Developer shall not commence a project or sell its units off plan until and unless the
Developer has taken possession of the plot on which the project is to be constructed”.

This is a further obligation on Developers (in addition to the obligation to

The notion behind this obligation is to reduce the potential for construction
delays due to restricted access to the development plot.

References to ‘Articles’ in this chapter are references to articles contained in Law

13 of 2008. Law 13 of 2008 has been amended by Decree 6 of 2010.

4.1.1 How Does The Interim Real Estate Register Work?

Every sale of an off-plan unit must be registered in the Interim Real Estate
Register. Similarly, Mortgages over off-plan units must be registered in the
Interim Real Estate Register.

As discussed in section 3.3 above, the DLD fee for registration in the Real
Property Register is 4% of the selling price. The DLD may demand all or part of
that fee to be paid in return for registration in the Interim Real Property Register.
Whatever fee is paid in respect of the Interim Real Estate Register will be

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discounted from the 4% fee that would have been paid for registration in the
Real Property Register. This allocation of fees should be discussed with the DLD
at the earliest possible occasion to establish their requirements.

Below is a diagram that explains the system or procedure of the Interim Real
Estate Register following registration with RERA.

INTERIM REAL ESTATE REGISTER

Project
Registered with Project details
are transferred
RERA
Developer to the Land
Details to register include: Department for
upload on the
a. Plans of the units Interim Real
Developers register b. Apartment Numbers
Estate
with DLD for use c. Internal and external
of the Interim Real Estate size Register
Register. d. Common area plans

A financial institution
can register its interest
Bank (Mortgage) in an off-plan property.

Interim Real
Buyer A Buyer needs to register his/her interest Estate Register
in the off-plan unit.
MAIL

The Interim Register is updated with

the names of the Buyers and any financial
institutions with an interest in the off-plan
property as transactions take place.
On completion of the Project the
Interim Real Estate Register record is
transferred to the Real Estate Register
at the DLD, and the Interim Real Estate
Register is closed for the Project.

Diagram: The Interim Real Estate Register following registration with RERA

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4.1.2 Approved Fees a Developer May Charge

A Developer is prohibited from charging any percentage fee for a sale, re-sale or
any other disposal of property whether complete or off-plan. A fee based on a
percentage of the sale price is expressly prohibited. An administration fee may
nevertheless be charged by the Developer. This restriction is found in Article 7 of
Law 13 of 2008. This is confirmed by Article 8 of Decree 6 of 2010, and clarified
by DLD circular dated Aug 6, 2012 clearly allowing developers to change
administration fees not exceeding AED 5000 for off-plan and under construction
pro-parties provided that are registered in the Interim Real Estate Registry, and
only AED 500 to issue an NOC ("No Objection Certificate") for completed
properties provided a Title Deed exists. Each developer however is likely to have
a different fee which will ultimately fall within the range of AED 500 to AED
5000, as the law does not prevent developers from charges additional fees to
issue NOCs on an urgent basis as one example, provided always that the cap is
observed.

4.1.3 Only Authorized Brokers Can Be Engaged

Under Article 9:

“ A developer who wishes to market his project through a real estate broker must first
conclude a contract with a Broker who is accredited under the terms and provisions of
Regulation No. 85 of 2006 concerning the Register of Real Estate Brokers in the Emirate
of Dubai then the developer must have the contract registered at the Department”.

The purpose of Article 9 is to prevent the use of unauthorized parties from taking
part in the real estate market and to ensure that only licensed professionals are
involved in the market.

4.1.4 Illegal Sales

Article 10 states:

“The developers or the Broker cannot conclude informal contracts for the sale of Real
Estate and Real Estate Units off plan in projects that have not been approved by the
Competent Authorities, and contracts made without such approval will be void”.

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Article 10 intends to prevent the sale of units in projects that have not been
registered. Any such sale agreements are void. Article 11 of Decree 6 of 2010
echoes this and adds that any disposal in a project not registered at DLD is void.

As a Broker, it is critical to ensure a project is registered.

4.1.5 Variation in Property Size

It is not usual for variations to occur between the unit plan included as part of
the sale contract and the actual unit that is constructed. Under Article 12 of Law
13 of 2008 (and Article 13 of Decree 6 of 2010) the Developer’s practice of
adjusting the price of the unit, upon completion and based on actual
measurement, is now restricted.

If the unit’s as-built area is greater than the area as detailed in the sale contract,
the Developer is prohibited from seeking to increase the price payable by the
Buyer (unless otherwise agreed). If, however, the as-built net area of the unit is
smaller by more than 5% than that detailed in the sale agreement, the Developer
is required to compensate the Buyer for the shortfall in proportion to the
reduction.

4.2 Developers Right to Terminate For Buyer Defaults

If a Buyer defaults on any term of a sale purchase contract for the sale of an off-
plan unit, the Developer will be entitled to take action in accordance with Article
11 of the Law No. 13 of 2008, as amended by Article 15 of Decree 6 of 2010 and
Law 19 of 2017.

First, the Developer must give the Buyer written notice, requesting the Buyer to
comply with his obligations. If the Buyer fails to comply the Developer should
notify the DLD about the default. The DLD should then issue a default notice to
the Buyer allowing the Buyer 30 days to remedy the default.

In the event the default persists beyond the 30 day notice period, DLD may de-
register the unit, and the Developer has the right to cancel the contract with the
Buyer (approved by RERA).

On cancellation the Developer is entitled to be compensated as prescribed by the

Law.

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4.2.1 The Developer’s Right to Compensation on Defaults

What is a Developer entitled to receive following the cancellation of a contract

for the sale of off-plan property due to the Buyer’s default?

A Developer’s entitlement to compensation is contained in Article 11(2) of Law

No. 13 of 2008. Article 11 has been since amended specifically by the
introduction of Law No 9 of 2009 ("Law 9") and Article 15 of Decree 6 of 2010
(“Decree 6”) and Law 19 of 2017.

• If the Developer has completed at least 80% of construction, the Developer

may: (i) continue with the performance of the contract, keep all the money
received from the buyer and request the purchaser to pay the
outstanding amount; or (ii) request the Land Department to sell the unit
via Public Auction to recover the due payments; or (iii) deduct no more
than 40% of purchase price and cancel the Contract and return any excess
amount to the purchaser within one year of the termination of the
Contract or 60 days of re-selling the unit to another purchaser, whichever
is earlier.

• If the percentage of completion of the unit is between (60%) and (80%), the
developer may terminate the Contract, deduct not more than (40%) of the
purchase price and return any excess amount to the purchaser within
one year of the date of termination of the contract or within 60 days of
the date of re-selling the unit to another purchaser, whichever is earlier.

• If the developer has commenced construction work on the project as per

the designs approved by the competent authorities and the percentage
of completion of the unit is less than 60%, the developer may terminate
the contract, retain up to 25% of the purchase price and return any
excess amount to the purchaser within one year of the date of
termination of the contract or within 60 days of the date of re-selling the
unit to another purchaser, whichever is earlier.

• If for reasons beyond the Developer’s control and without negligence on

his part, the Developer has not commenced construction on the project,
then the Developer is entitled to deduct 30% of monies paid by the
purchaser, cancel the Contract and must return any excess amount
to the purchaser within 60 days of the date of terminating the Contract.

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In addition to the above, the Developer may also sue the Buyer for any
further losses suffered by the Developer as a result of the Buyer’s breach
of contract.

4.3 Reporting Violators to Investigating Authority

If the Director General of DLD finds that a Developer or Broker has committed
an act of omission that constitutes an offence under Law 8 of 2007 or any other
legislation in force, he may prepare a report and refer the matter to the
competent investigating authorities.

4.3.1 Cancelled Projects

(A) Law No.13 of 2008

If a Developer's project is cancelled by order of RERA, then the Developer
shall refund to the Buyer the full amount paid by him.

(B) Law No. 21 of 2013 concerning the formation of a special judicial

committee for the liquidation of cancelled real estate projects in the
Emirate of Dubai

His Highness, Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice

President, Prime Minister and Ruler of Dubai, has issued Decree No. 21 of
2013 concerning the formation of a special judicial committee (the
“Committee”) for the liquidation of cancelled real estate projects in the
Emirate of Dubai and the settlement of the relevant rights.

The main aim of the Committee is to consolidate the process for investors
to seek compensation against developers for cancelled real estate projects.
Any prospect of recovery for investors relies upon there being sufficient

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assets to liquidate. The Decree specifically relates to “cancelled” projects
rather those that have been declared as “on hold” by RERA.

It aims to further facilitate quicker proceedings, particularly since court

and arbitration proceedings have not only been lengthy but also
expensive. The Committee shall consist of one or more panels, provided
that the number of members of each panel is at least three judges from the
Dubai Courts, including the Chairman.

The Committee has the power to:

 consider and decide any issues, demands and claims that may arise
between developers and purchasers relating to cancelled real estate
projects;
 liquidate real estate projects cancelled under a final resolution
issued by RERA in accordance with RERA’s powers under Law 13 of 2008;
 settle any debts with respect to such cancelled projects, after
deduction of liquidation expenses; and
 consider all executive proceedings, complaints and grievances
relating to cancelled real estate projects.

All claims in relation to cancelled real estate projects will now only be
considered by the Committee and not by the courts in the Emirate of
Dubai (including in the Dubai International Financial Centre Courts). In
addition, the courts are required to refer any current cases before them to
the Committee. Cases or demands brought before the Committee shall be
exempt from Court fees. Decisions of the Committee are final and binding
and may not be appealed.

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LEARNING EXERCISE 3

Which of the following is correct? (Select one answer only)

1. When a Buyer who has previously purchased from a Developer is

unhappy with that Developer’s work, then asks a Broker to assist, the
Broker should:
a) Complain to DREI
b) Not become involved by way of support, opinion or otherwise
c) Refer the Buyer to RERA
d) Call the police
e) All of the above

2. What kind of fee can a property Developer charge a Buyer or Seller on a

resale?
a) Price of the Unit being sold off-plan having RERA’s approval
b) A commission fee
c) A transfer fee
d) Extra for the balcony area on top of the unit price

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e) Up to AED 5000 for off-plan or under construction properties &
AED 500 to issue an NOC for finished property
f) A payment default fee to the Buyer

Answer Key:

1) c.
2) e.

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Concerning the Real Estate Regulatory Agency: Law 4 of 2019

4.4 About RERA

The setting up of the Dubai Real Estate Regulatory Agency (RERA) was decreed
by His Highness Sheikh Mohammed Bin Rashid Al-Maktoum, Vice President
and Prime Minister of UAE and Ruler of Dubai, on July 31, 2007 as a service
agency under the DLD to regulate the real estate sector. RERA is a government
entity, with its own financial and administrative independence.

RERA's main objective is to establish the foundations for a globally attractive real
estate sector that satisfies and guarantees all stakeholders' rights and
expectations to bring about and maintain investor confidence.

RERA has four main operating areas:

a. Policy and Strategy Development

b. Regulation & Registration
c. Research & Studies
d. Programmes & Projects

4.5 Services Provided By RERA

RERA's responsibilities lie within a framework of specific themes which include:

1. Supervision of Developers' Trust Accounts and Account Trustee

providers

As part of the Trust Account system, RERA has set criteria for financial
institutions to be able to offer to Developers mandatory Trust Accounts
(commonly referred to as Escrow Accounts or Guarantee Accounts Law
No. 8 of 2007). Financial institutions must meet the criteria and approved
by RERA in order to offer accounts of this kind.

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Trust Account administration is also regulated in many ways to protect
Buyers and ensure that any money released is for the use of the project
and tied in with construction progress. This is discussed further in below.

2. Licensing and organizing Real Estate Agents, Developers and Projects

Tasks include:

 The regulation of real estate agents includes registering and qualifying

Brokers individually as well as Brokerage entities; identifying the need
for service providers in the sector; and monitoring of the activities of
real estate market.

 Registering Developers and Projects regardless of whether activities

are carried out within Dubai or within a Free Zone in Dubai.

 The regulation of real estate software and licensing.

 The regulation of real estate valuation professionals, surveyors and

management bodies under the ownership of common property law
(Law 6 of 2019).

3. Effect of Law 4 of 2019 on RERA’s previous role of Regulating and

authenticating rental agreements

Pursuant to Law 4 of 2019, from 15 September 2019 the DLD has replaced
RERA in managing the online registration system “Ejari”; the regulation
of the relationship between landlords and tenants; and all other functions
related to leases. All Dubai leases must be registered on “Ejari” if they are
for a term of less than 10 years or registered with the DLD if they are for a
term of between 10 to 99 years. The DLD sources rental information to
produce the Rental Index. The Index lists average rental levels based on
property types, size and locality (Decree No. 1 of 2009 & Decree No. 2 of
2011).

4. Regulating and supervising Owners Committees and Management

Bodies

Under Law 6 of 2019, which replaced the Jointly Owned Property Law
Law 27 of 2007, a new three tiered management system has been

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introduced in Dubai for Major Projects, Hotel Projects, All Other Projects.
Most developments in Dubai will fall into category 3: “All Other Projects”.
The common parts in these projects shall be managed by specialized
management companies which shall be selected and engaged by RERA
(Article 18(a)(3). An owners’ committee must be formed for each real
estate project with its members selected by RERA which shall not exceed 9
members (Article 18(a)(3)). Importantly, this owners committee has the
power to request RERA to replace the management company and provide
RERA with advice on the selection and appointment of the new
management company (Article 24(5)). If RERA finds that the management
company is incompetent, inefficient or unable to manage the common
property under this third category RERA shall appoint an alternative
management company to manage the common property (Article 38). .

5. Regulation of real estate related media advertising

RERA is tasked with ensuring sensible and realistic marketing campaigns

are released; it aims to prevent conduct that is misleading or which
provides unrealistic promises not capable of being kept. All as placed via
any means of advertising should include ORN (Office Registration
Number) & BRN (Broker Registration Number).

6. Regulating and licensing real estate related exhibitions

Similarly, RERA licenses and regulates real estate exhibitions in order to

secure and maintain public confidence, thus ensuring credibility of such
events and promoting transparency and cooperation with the participants
and the media.

7. The publishing of research and studies

Studies and research play an integral role in the ongoing understanding of

a dynamic real estate market and help with law reform in order to
maintain a relevant and effective system of regulation.

8. Enhancing national participation in the real estate sector and increasing

real estate awareness

RERA launches campaigns to increase awareness of the real estate sector

and customer protection laws.

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4.6 Real Estate Development Trust Accounts Law No. 8 of 2007

Introduction to Trust Accounts

Law No. 8 of 2007 concerning Real Estate Development introduced the

system of Trust Accounts and with it the need for a formal regulatory body -
RERA - to administer the system.

A Trust Account opened with an approved provider, (known as the ‘Account

Trustee’), is necessary before a Developer can launch a project and sell off-
plan.

The following are the main features of a Trust Account:

o The provision of this Law applies to Developers selling off-plan units in

Dubai and who receive payments from Buyers or financiers. All such
payments must be deposited into the Trust Account.

o The Trust Account must be opened in the name of the project (the project
may contain one or more building) and shall be used only for the
purposes of the registered project.

o Amounts deposited in the Trust Account may not be used as security for
a creditor of the Developer.

o A Developer carrying on several projects must open an independent

Trust Account for each project.

o The release of funds is only permitted in accordance with the certified

progress of the project and with other limits in place for the release of
funds. For example a Developer may be reimbursed from the relevant
Trust Account for a project’s soft costs and marketing (including Brokers’
commissions) to a maximum of 5% of funds received.

o Developers looking to sell property off-plan must first obtain a permit

from DLD to authorize marketing activity in connection with the sale. This
process is intended to reduce the threat of fraudulent projects and
unqualified Developers. Next is the opening of a Trust Account with an
Account Trustee, into which must be deposited:

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(a) all monies received from Buyers or their financiers;
(b) all monies advanced by a bank or financial institution financing the
project on behalf of the Developer.

o After obtaining a written permit from RERA, a Developer may advertise

in local or foreign media or participate in local or foreign exhibitions to
promote off-plan units in the Emirate for the registered Project.

Brokers must not market off-plan properties unless due diligence is

conducted and copies of the following are obtained:

 Developer registration Certificate;

 Project approval & registration with RERA;
 Developer’s project Trust Account Number;
 No Objection Certificate issued by RERA to promote and sell off-plan
units of the concerned Project.

4.6.1 The Developers Register

o A special register called “The Developers Register” is retained with

RERA. Names and details of Developers licensed to carry out real estate
development activities in the Emirate are recorded in this register.

No Developer may carry out a project unless he is recorded in this

4.6.2 Trust Account Trustee Register

o RERA also holds a register that includes the names of financial institutions
who may act as trustees of Trust Accounts. These trustees should be
proficient in managing Trust Accounts. The agreement (the ‘Escrow
Agreement’) between Developer and the Account Trustee sets out the
duties of the Account Trustee and the terms under which the Trust

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Account is managed. A copy of the Escrow Agreement is kept in the
Developer Register.

o The Account Trustee must also to meet certain RERA requirements to

maintain its registration as a Trust Account provider permitted to offer
Trust Account services to Developers.

4.6.3 Registration of Escrow Agreement and SPAs

o Escrow Agreement: As explained above, this is the written agreement that

governs the relationship between the Developer and the Account Trustee.
The Escrow Agreement details the obligation to deposit into the project’s
Trust Account all amounts paid to the Developer by Buyers of off-plan
units or amounts received by the Developer from the Buyers’ financiers.
The Escrow Agreement sets out the terms for managing the Trust Account
and the rights and obligations of the contracting parties. A copy of the
Escrow Agreement must be lodged with the DLD and must be kept in the
Developers Register.

o SPA: a Sale and Purchase Agreement (an ‘SPA’) may for example be
entered into between a) the Master Developer and the Developer, b) the
Developer and the Buyer and c) a Unit owner and a Buyer on the
secondary market. For the sale of off-plan units, an SPA between the
Developer and the Buyer must contain the details of the Trust Account
and the Buyer must be obliged to make payments towards the Unit
purchase price into that Trust Account.

Note: When acting for a client that is buying, a Broker should always check
the SPA and ensure that (1) any separate requests/instructions from the
Developer on how payments towards the Unit purchase price are to be
made are consistent with what is contained in the SPA and (2) the Trust
Account name detailed in the SPA is consistent with the project name.

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4.6.4 How does a Developer register his Project?
The requirements for registration of a project are predominantly captured
in Law 8 of 2007; the additional requirement on the Developer (prior to
selling off-plan) to demonstrate possession of the plot and to have
obtained all necessary consents and approvals contained in Law 13 of
2008.

Below is a summary of the steps that must be taken by the Developer to

Requirements under Law 8 of 2007:

1. Obtain approval of development plans (either from Dubai

Municipality or other Competent Authority);

2. Obtain approval from the DLD of detailed CAD drawings (these

drawings are later used for registration of SPAs in the Interim Real
Estate Register);

3. Submit a copy of the RERA Developer registration Certificate;

4. Project name;

5. Open the Trust Account for the project; produce a copy of the
Escrow Agreement with Account Trustee;

6. Submit a copy of proposed Sale Purchase Agreement (SPA);

7. Any Agency/Broker contract agreement must be registered with

RERA by the Developer as per Law No. (13) of 2008, Article 9;

8. Submit a copy of proposed marketing/advertising material.

Requirements for project registration under Law 13 of 2008:

9. Evidence of possession of the Site and obtaining all necessary

approvals from the Competent Authorities

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Requirements as per DLD and RERA Policy:

DLD and RERA have administrative powers to make policy decisions and
to impose additional conditions for project registration. For each project it
should be established what, if any, additional requirements are imposed
by DLD and RERA. These now include the following conditions:

10. Title Deed and completion of 20% construction before selling, or

payment of a bank guarantee for 20% of the construction value to
RERA.

4.6.5 Broker Considerations during Off-Plan Sales

Throughout any off-plan launch, Brokers should remain vigilant and

perform some basic checks and ensure appropriate agreements are in
place to avoid disputes or professional conduct issues:

1. The Broker should check the validity of the Project.

2. The Broker should ensure that his agency/commission agreement has been
signed by the Seller to ensure that the Broker is entitled to be paid for his
time and efforts.

3. Advertising?

a. What information can be used in and what information must be

omitted from any advertisement?

Adverts may be placed that do not infringe the law or intellectual

property rights. As such, it is best practice for a Broker to have the
Seller approve any marketing the Broker intends to undertake.

b. Things to check with the Developer/Seller before placing property

on a Broker’s list:

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i. Get approval of all marketing material;
ii. Get details of finishes, fixtures and fittings;
iii. Establish whether there is any variation in the anticipated
completion date;
iv. Establish which units have been sold and which remain
available;
v. Ensure that the Developer, and the project meet all the
regulatory and compliance requirements.

4. It should be established what documentation (e.g. passport) the Seller (i.e.

the Developer) requires from each Buyer.

5. Where an off-plan unit is being bought and payments by cheque or post-

dated cheque are to be made by the Buyer on signing the SPA, the Broker
must ensure the cheques are payable into the Trust Account for the
project.

6. Brokers and Real Estate Brokerages are prohibited from taking payment
from the Buyer to the Seller into the Broker’s/the Brokerage’s bank
account. All such payments must go into the Trust Account.

4.6.6 Penalties for Violators

Without prejudice to any penalties provided for under the general law, a penalty
of incarceration and payment of a fine not less than 100,000 Dirham, or either one
of them, may be imposed on:

1. Anyone who carries on a property development business in the Emirate

without a license.

2. Anyone who submits false documents or makes misstatements to

concerned authorities in order to obtain a license for carrying on a
property development business.

3. Anyone who knowingly offers to sell units in a bogus property

development.

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4. Anyone who misappropriates the funds of Buyers.

5. Any auditor who deliberately prepares a false report about the results of
an audit on a Developer’s financial position, or intentionally conceals
significant facts from the report.

6. Any consultant who knowingly approves false documents about a

property development.

7. Any Developer who deals with a Broker not registered in the Broker’s
Register pursuant to Bylaw No. 85 of 2006.

4.6.7 Cancellation of Developers License

A Developer’s license shall be cancelled and the Developer shall be struck from
the Register in any of the following events:

1. If the Developer is declared bankrupt.

2. If the Developer does not commence construction within six months of the
date the Developer was granted approval to sell off-plan. This does not
apply if the Developer has an acceptable excuse. (Cases of this nature are
normally reported to RERA for investigation to determine if the
Developer’s excuse for the delay is acceptable or not.)

3. If the Developer’s license is cancelled by the licensing authorities (for

example the Dubai Economic Department).

4. If the Developer violates any of sub-articles of Article 16 of law No. 8 of,

2007 (these are stated in the preceding paragraph 4.6.6).

If a determination is made by the Director of DLD that the Developer is in

violation of any of the laws and/or Bylaws regulating real estate development,
this would also be grounds for cancellation of the Developer’s license.

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LEARNING EXERCISE 4

Which of the following is incorrect? (Select one answer only)

1. For properties sold ‘off-plan’ the Buyer’s funds which are deposited in
the RERA approved Trust Account, can be used for:
a) Construction of the project
b) Security for a creditor of the Developer
c) 5% can be used for marketing of the project
d) Purchase of building materials for the project

2. A Broker should ensure the following when selling properties ‘off-plan’:

a) Check the validity of the project
b) Ensure the RERA approved project Trust Account is in the
name of the project
c) Check that the Developer / Broker agency agreement is
registered with RERA
d) Have the Seller (or Developer) approve any of any marketing
e) None of the above

3. Which documents must a Broker obtain from a Developer before selling

‘off-plan’?
a) Developer Registration Certificate
b) Developer has project Trust Account number
c) No Objection Certificate from RERA to promote and sell ‘off-
plan’ units of the concerned property
d) Project approval & registration with RERA
e) None of the above

Answer Key:

1) b.
2) e.
3) e.

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5 Regulating the Real Estate Brokers Register: Bylaw No.85 of
2006

Bylaw 85 of 2006 regulates the real estate profession. It sets out the criteria and
requirements to maintain a valid license to practice as a real estate Broker.

5.1 The Brokers Registration

A person may not carry on Brokerage activity in the Emirate of Dubai unless he
is licensed by the competent authorities and registered in the Brokers Register.

Brokers are classified into two classes. The majority however falls under Class B:

o Class (A): The people of expertise who are registered in the list unlicensed
by the competent authorities and are exempted from the registration
requirements (They are certified by the Chairman).

o Class (B): the general class applicable to anyone who carries on real estate
activity under a license issued by the competent authorities.

5.2 Requirements for Registration in the Brokers Register

Whoever wishes to practice as a Broker in the Emirate of Dubai must submit an

application in the prescribed form, and if accepted, the applicant is recorded in
the Register as a licensed Broker in the appropriate class.

5.2.1 Application Requirements

Administratively the requirements to lodge an application are the following:

1. A valid trade license issued by the competent authorities (for Broker

entities e.g. LLC);

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2. A membership certificate in Dubai Chamber of Commerce & Industry (for
Broker entities);

3. A copy of the trade license (for Broker entities)

4. A copy of the applicants’ passport (for an individual Broker);

5. A copy of the Ownership certificate of the Brokerage entity on the lease

contract of its business premises;

6. A Certificate of Good Conduct for the Broker entity’s owner and/or

general manager(s) of the Broker entity. It should be noted that none of
the Broker entity’s Directors or the shareholders authorized to run the
Broker’s entity can be ex-bankrupts or have criminal convictions for
crimes involving dishonesty;

7. Obtaining certificates in courses specializing in real estate from

educational institutions accredited by DLD/DREI;

8. Passing the Brokerage profession test prepared by DLD/DREI.

5.2.2 Process after an Application is lodged

1. The Department examines the application. Within seven days from

submitting the application, the Department requests the applicant to
complete the documents or information it deems necessary.

2. The Department takes its internal procedures to verify that the application
is compliant with the requirements of the Bylaw and decisions issued in
accordance therewith.

3. The Department presents the application to the Committee (the

Permanent Real Estate Brokerage Committee) within seven days from the
date of submitting the application or completing the documents and
information required by the DLD, as the case may be.

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4. The Committee has the right to approve or reject the application and the
applicant is duly informed. Reasons are given should an application be
rejected.

5. If the Committee rejects an application, , the concerned party may re-

submit the application after satisfying all the required conditions, within
14 days of being informed of the initial rejection.

6. The Department issues the Broker a card bearing the applicant’s name,
address and registration number. The Broker must cite his name and
registration number in all correspondence and reports issued by him.

5.3 License Renewal

o The license is renewable annually and each Broker wishing to renew his
license must apply for renewal at the DLD.

o A renewal application must be submitted to DLD in the prescribed form

at least 30 days prior to the expiry date of the existing license.

o The DLD will renew the Broker’s registration in the Register after
verifying the Broker’s compliance with the renewal conditions. (and
passing or renewal test as required by DLD/DREI)

5.4 Broker’s Obligations

The professional conduct of all registered Brokers must comply with the
Code of Ethical Conduct prepared by the Committee. The content of the Code
is discussed in detail in the Code of Ethics module, and only limited comment
is made about this Code in this module.

o The Broker must maintain a special register of all the transactions (STR) he
is involved with during the course of his business, submitting an identical
copy of the same to any of the contracting parties who request it. Where
transactions involve sale of property off-plan or identified by map, the
Broker must also keep the map/plan as part of his records until the
transaction is completed.

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o The Broker must submit all the information related to his Brokerage
activity as required by the DLD.

o A Broker must inform his client of all details of negotiations and stages of
mediation he is conducting together with any information that is
considered necessary to enable the client to make a decision whether to
enter into an agreement with a third party or not.

o The Broker must also provide the other contracting party with all the said
material and inform the contracting party of all substantial issues that are
related to the subject of the agreement and which are necessary in order to
avoid any doubt in the agreement.

o The Broker must not mediate to enter a transaction in violation of the laws
and regulations applicable in the Emirate of Dubai and the UAE in
general.

o The Broker shall, at all times, communicate only genuine offers, and will
be held responsible for any deception or mistake carried out during the
course of his business. The Broker must, even if only authorized by one
party to the transaction, give all parties a faithful offer and inform them of
all the circumstances he knows.

o The Broker must not become a party to an agreement that he has

negotiated unless authorized to do so by the other contracting party. In
such cases, the Broker is not entitled to a fee for acting as the Broker.

o The Broker shall be the guardian of any amounts, cheques or other items
given to the Broker by any of the contracting parties to hold and/or to
deliver to another of the contracting parties. The Broker must give or
deliver the said items according to what is agreed upon – accordingly it is
important that the Broker’s responsibilities are clearly documented. The
Broker is also bound by Law No. 85 of 2007.

o The Broker will be held responsible for any losses or damages suffered by
a party resulting from the Broker’s acts or omissions in breach of the
Bylaw or the Code of Ethical Conduct.

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o The Broker’s right to claim remuneration or to be reimbursed for expenses
shall be forfeited if the Broker works in favour of the other contracting
party thus violating the Broker’s obligations toward the client he is
representing or if the Broker accepts from the other party an offer of a
benefit (if accepting that offer is prohibited by the rules of good faith and
the Code of Ethical Conduct).

5.5 Broker’s Remuneration

Obligations under Bylaw 85 of 2006

o The Broker is not entitled to a brokerage fee unless the Broker is

responsible for the sale/lease/etc. contract (the ‘Property Contract’) being
signed between the parties. The Property Contract shall be considered as
entered when the parties agree on all the substantial issues therein and is
documented in writing.

o If the Property Contract is contingent on a pre-condition, the Broker is not

entitled to the fee unless this condition is met.

o If the brokerage contract is revoked by the parties at some later stage, the
Broker may retain the broker fee he received, unless deception or grave
mistake is proved on the Broker’s part.

o If the Broker’s instructions or negotiations did not lead to the signing of a

Property Contract between the two parties, the Broker shall not be entitled
to claim any compensations, expenses or costs incurred unless there was a
prior agreement that the Broker would be entitled to such payment(s).

o If more than one Broker is instructed to work on a deal, the Brokers are
jointly responsible for the work delegated to them, unless they are
instructed to work severally. The Brokers should ensure that the broker
contract(s) clearly set out the circumstances that entitle them to payment
and how payment is to be allocated amongst them, depending on which
Broker concludes the deal.

o The Broker is entitled to his fee only from the party who instructs the
Broker to mediate in the transaction. If the instruction is issued by more
than one party, each party shall be severally responsible to the Broker for
paying the fee due, unless they agree otherwise.

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5.6 Settlement of Disputes

o The DLD has a Council composed of four persons, in addition to the legal
consultant of the DLD, appointed by the Director of DLD, to hear disputes
related to Brokerage.

o The Council will not consider disputes of real estate brokerage unless the
brokerage contract contains a provision for dispute resolution by the DLD,
or the parties consent subsequently to the referral of their dispute to the
Council for arbitration. The agreement on arbitration must be in writing
and the subject of the dispute must be specified in the arbitration
agreement.

o The Council performs its duties according to simplified procedures that

seek to resolve the dispute between the parties by following the general
principles of the law. The Council’s decisions are in accordance with the
rule of law, unless the Council is authorized by the parties to conciliate. In
such cases the Council need not comply with the rule of law, other than
rules related to public order.

o The Council includes a secretariat, appointed by a decision from the

Director of DLD, in charge of:

a. receiving applications;
b. opening files;
c. writing proceedings and correspondence;
d. serving notices on the parties;
e. maintaining files;
f. completing administrative tasks and assisting the Council in
general.

o An application that a dispute should be resolved before the Council

should be submitted to the Committee in the prescribed form; sufficient
copies of supporting documents (according to the number of the disputing
parties) are to be enclosed with the application.

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o The Chairman of the Committee then orders the application to be
registered after the prescribed fee is paid. The secretariat then advises the
respondent (i.e. the adversary of the person who made the claim) of the
application, who in turn responds in writing to the application statement.
This response together with any supporting documents must be lodged
with the secretariat within a week from The respondent’s receipt of the
original notice from the secretariat. The Council makes its decision
regarding the dispute within a maximum period of 30 days from the date
of referral. This period may not be extended unless there are reasons
justifying an extension.

5.7 Disciplinary Penalties and the Expiration of Brokerage

Capacity

Without prejudice to any penalty set by the applicable laws, the Committee has
the right to impose any of the following measures on a Broker who violates the
Bylaw:

1. Warning.
2. Notice
3. Suspension from work for a period not exceeding 6 months.
4. Listing the Broker’s name on the black-list.

5.7.1 Decision on Cancellation

The Broker’s registration may be cancelled if the Broker breaches the Code of
Ethical Conduct, accumulates three violations in the black list or commits a
substantial violation of the applicable laws and regulations in the Emirate of
Dubai.

Cancellation is based on a decision issued by the Director of DLD based on a

recommendation from the Committee, stating the reasons for cancellation.

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5.7.2 Appeal Rights

The Broker may file a grievance against the decision of cancellation with the
Chairman within 15 days of being informed of it. The decision of the Chairman is
final.

5.7.3 Non-Disciplinary Grounds for Cancellation

A Broker’s registration may be cancelled for the following reasons:

1. The Broker leaves the brokerage business permanently, and informs the
DLD;

2. The Broker leaves the Brokerage business for a period exceeding 12

consecutive months without reasonable grounds acceptable to the
Committee;

3. Failure to satisfy a) license conditions as detailed in the Bylaw; or b) any

regulations or instructions issued by the DLD;

4. The Broker’s registration was based on false information submitted to the

DLD;

5. DLD issues a decision cancelling the registration as per the provisions of

Article 40 of the Bylaw No. 85 of 2006 (see Section 5.7.1).

The Brokerage division in the DLD must notify the competent authorities of
any decision to discontinue the Broker’s activity or cancel the Broker’s
registration.

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LEARNING EXERCISE 5

Which of the following is correct? (Select one answer only)

1. Broker registration must be renewed?

a) Every 5 years
b) Every 3 months
c) 30 days prior to expiry
d) 30 days after expiry

2. A Broker has a right to claim a fee from:

a) RERA
b) The Seller who authorizes the Broker and a sale result occurs
c) A Buyer who authorizes the Broker and a sale result occurs
d) (b) & (c)

3. A Broker is violating his agreement with the party he represents, if the Broker:
a) Accepts a fee or reward from an opposing party
b) Fails to inform either the Buyer or the Seller of all the facts
c) Misleads, misrepresents, omits relevant information
d) (a), & (b)
e) (a), (b) & (c)

4. If two Owners of a property appoint a Broker to list, market and introduce a

Buyer for their property and only one of the Owners signs the Seller’s
Agreement, what should the Broker do?
a) Continue to perform their obligations as per the agreement and hope the
other Owner finally agrees to sell
b) Seek medical advice
c) Decline to work on the property until both Owners have agreed to the
appointment in writing
d) Accept the appointment and provide written apology to the other Owner

Answer Key:

1) c.
2) d.
3) e.
4) c.

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6 Regulating the Relationship between Landlords and Tenants:
Law No. 26 of 2007

6.1 Law No. 26 of 2007.

o Law 26 of 2007 is applicable to all leased properties in the Emirate

however it excludes:

a. Free accommodation;
b. Employer-provided accommodation.

Law 33 of 2008 (the ‘Amending Act’) was issued on 1 December 2008 and
amended various provisions within Law 26 of 2007. For example Law 26 of 2007,
originally excluded hotel accommodation. However, with the introduction of the
Amending Act, with effect from 1 December 2008, hotel accommodation (such as
serviced apartments) on residential term leases are now captured by Law 26 of
2007.

Given that employer-provided accommodation is not captured by Law 26 of

2007, it is worth noting that on conclusion of an employee’s service under Article
131(2) of the UAE Labour Law, the employee is given a 30 day grace period in
which to vacate the residential premises provided by the employer. If the
employee does not vacate the employer within that period, the Labour ministry
may seek appropriate orders from the Dubai Rental Dispute Settlement Centre
(RDC) without the need for a formal hearing or application of Law 26 of 2007.

On 18 December 2013, Decree No. 43 of 2013 determining rental increases came

into enforce. The Decree clarified that the regulation of rental increases is
applicable to all rental properties in Dubai (including in free zones e.g. DIFC)
and applies to both public and private sector Landlords.

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6.1.1 Introduction to Lease Agreement

What are the requirements to have a valid and enforceable lease agreement?

1. In March 2017, the Dubai Land Department introduced mandatory

Unified Ejari Tenancy Contracts which are template leases that must be
used in all leasing transactions and can be supplemented by additional
terms and conditions. The Unified Ejari Tenancy Contracts are available
to download from
http://www.ejari.ae/PublicPages/DownloadTempaltes.aspx

2. The Lease agreement must be in writing;

3. The Lease must state the names of each of the Landlord and the Tenant:

This should be identical to what is contained in the passport copies of the parties.
If a company - it will be the company name. If there is more than one Landlord or
Tenant, the joint Tenants or Landlords must be named. Note: Under the
Amending Act (Law 33), the Landlord does not necessary have to be the owner, it
could be for example the managing agent of the owner that acts as the Landlord. If
the Landlord is not the owner, the name of the owner must be detailed in the lease.

4. The Lease must be signed by the Tenant and the Landlord:

If there is more than one Landlord or Tenant, the joint Tenants or Landlords must
all sign. If even just one signature is missing, the lease is invalid. One party may
sign on behalf of the other provided they have the authority to do so, (for example
a legalized power of attorney).

5. The Lease must describe the leased property in detail:

Such as apartment or villa; how many bedrooms and parking spaces, etc.

6. The lease must state the permitted use of the leased property:

Permitted use: residential, office, retail etc.

7. The Lease should detail the location of the leased property to allow it to be
easily identified;

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Location particulars. For example unit/apartment or villa number, street name,
building name, location area.

8. The Lease must state the period of the lease:

Term of the lease for example 6 months, 1 year, 2 years etc.

9. The Lease must state the rent payable by the Tenant:

The amount of rent that is payable in words and in numbers. If the rent value is
absent from the agreement, it is for the Rental Dispute Settlement Centre to
decide if the landlord and tenant do not agree.

10. The Lease must state how and when the Tenant must make the rent
payment.

Whether by cheque or by direct debit into a nominated account, and should be

paid on the date agreed on, if the date is not specified on unable to determine, it
shall be paid annually on 4 equal installments.

11. The Lease must be registered in accordance with the Law:

All leases with a term of less than 10 years must be registered on Ejari, the online
leasing registration system managed by the Dubai Land Department
(Administrative Resolution No. 134 of 2013 and Law 4 of 2019). In addition from
1 July 2017, a tenant cannot get its DEWA supply activated unless its lease is
registered on Ejari.

All leases with a term of 10 – 99 years must be registered on the Real Property
Register maintained by the Dubai Land Department (Administrative Resolution
No. 134 of 2013).

6.1.2 Subleasing Rights, Termination and Renewals, Third Party

Payments

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Subleasing

The law states that Tenants may not sublet or assign the leased premises to a
third party without the written consent of the Landlord. However, note that
according to RERA regulations, only those companies that have the license
for Leasing & Management of Other People’s Property may engage in
subleasing activities.

Sublease agreements between the Tenant and Subtenant (consented to by the

Landlord) expire with the expiry of the head lease between Landlord and
Tenant, unless the landlord expressly agrees to the extension of the Sublease
contract period.

Since the introduction of Ejari registration, no registration of a Sublease is

allowed unless the Landlord is the Government and grants the same to
Tenant.

Termination and Renewals

Except as after-mentioned and other than as detailed in the lease, a lease

cannot be unilaterally terminated by either party although both parties may
mutually agree to terminate the lease. The right of the Landlord to terminate
the lease depends if the lease term has (or has not) expired. See section 6.1.6
below. Under the Amending Act, unless the lease provides otherwise, a
Tenant may vacate leased property at the end of the lease term without
giving notice to the Landlord.

If either party wishes to renew a lease or otherwise seek to amend any terms
or conditions the party must give at least 90 days prior written notice to the
other party. If notice is provided, and the variation is not agreed between the
parties, the matter may be referred to the Rental Dispute Settlement Centre
for determination.

Where the rent is to be determined, the RDC is to consider the rent rise
percentage criteria set by RERA; the general economic climate in the Emirate;
the condition of the leased property, the standard rent prevailing in the
property market in the relevant area; the provisions of any legislation
applicable in Dubai regarding property rents and any other factors
determined by RERA.

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Third Party Cheques

In some cases you will find that a Tenant may be an employee of a company,
which has an obligation to pay the tenant a housing entitlement. The Tenant
may seek to arrange for the payment of rent (by either current or post-dated
cheques) to be made by the employer of the Tenant to the Landlord, even
though the employer is not a party to the Lease.

The Lease should expressly deal with these circumstances: if it does not, the
parties are at risk and should be alerted by the Broker. It may be preferred for
the employer to be detailed as the Tenant in the Lease, and that way the
employer is directly contracting with the Landlord and is directly obliged to
pay the rent.

6.1.3 Decree No. 43 of 2013: Determining Rental Increases in Dubai

Decree 43 of 2013 details the circumstances in which rent can be increased. The
Decree came into force on 18 December 2013.

For Tenants who lease a property, upon renewal if the rent paid in the previous
term was not higher than the “average similar rent” and not lower than 90% of
the average similar rent, the rent cannot be increased for the new term. This is
according to Article 1 of the Decree.

However, rent increases are permitted for properties that had a rent rate below
90% of the average similar rent. The permitted rent increases are as follows:

a. If the rent was 11% to 20% less than the average similar rent, the
maximum rent increase is 5% of the rent.

b. If the rent was 21% to 30% less than the average similar rent, the
maximum rent increase is 10% of the rent.

c. If the rent was 31% to 40% less than the average similar rent, the
maximum rent increase is 15% of the rent.

d. If the rent was less than the average similar rent by more than 40%, the
maximum rent increase is 20% of the rent.

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The average similar rent is determined according to “the Rent Index of the
Emirate of Dubai” approved by RERA. RERA is to review and update the
Rent Index of the Emirate of Dubai periodically. A tenant must receive ninety
(90) days’ notice of an increase.

The said Rent Index groups property types, locations and sizes and is based
on the rentals currently available to RERA. In previous years, equivalent
Decrees were issued regulating rent increased. RERA indicated that for these
years the Decrees would not apply to (a) leases that automatically renewed
on that year without being signed and (b) leases signed before that year. It is
recommended to enquire about current policy regarding Decree 43 of 2013.
Rental Increase Calculator can be accessed via www.dubailand.gov.ae.

6.1.4 Landlord Obligations

At the start of a lease it would be relatively standard for the lease to oblige the
Landlord to handover the vacant premises to the Tenant in good condition
that enables the Tenant to occupy and enjoy the premises. There are
exceptions however. For example when Landlord and Tenant agree that the
Landlord will handover partially complete premises for the Tenant to fit-out
and complete according to the Tenant’s specifications and requirements. This
practice is common with commercial premises, e.g. office space. The lease
should make clear which party is responsible for the costs of fit-out and
which party (if any) must remove the works on expiry of the lease.

The Lease should make clear which party is responsible for the repairs and
maintenance of the premises. The Landlord is responsible for maintaining the
premises and shall rectify any defects or faults that affect the Tenant’s right of
occupation and enjoyment of the premises unless agreed otherwise.

No alteration to the premises or its services (for example utilities or facilities

generally) by the Landlord is permitted. Should the Landlord (or anyone
instructed by the Landlord) breach that obligation the Landlord will be liable
for any damage, fault or shortage to the premises (other than as caused by the
Tenant’s conduct).

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Unless stated otherwise in the Lease, the Landlord must provide the Tenant
with all approvals by competent authorities, if the Tenant wishes to execute
works to the premises. The Tenant is permitted to undertake works to the
premises provided it is not prohibited by the terms of the Lease and does not
impact on the structure of the premises. The Tenant would ordinarily be
liable to reinstate the premises on vacating, but this should be expressly
stated in the Lease.

It is expressly prohibited for the Landlord to disconnect services to the

premises or to obstruct the Tenant from occupying the premises for its quiet
enjoyment and use. If the Landlord breaches this obligation, the Tenant has
the right to involve the police from the nearest police station and to file a case
before the Rental Dispute Settlement Centre provided the lease agreement is
registered in Ejari system. When filing a case, the Tenant needs to provide
supporting reports (including any police report) to seek compensation and
other appropriate orders.

6.1.5 Tenant Obligations

The Tenant’s obligations are outlined below:

The Tenant must pay the rent on the due dates and maintain the premises in
reasonable condition (or such other condition as detailed in the Lease).

Subject to any provisions in the Lease, the Tenant may not make any
alterations, renovations or perform maintenance work without Landlord's
permission and if required any approval from relevant authorities. This does
not however detract from a Tenant’s obligation to perform maintenance or
other works which the Tenant is contractually liable to perform.

Other than as detailed in the Lease, the Landlord may collect a security
deposit from the Tenants to guarantee the condition of the premises at the
end of the period of lease. The Landlord must undertake to refund the
security deposit, or any remaining part thereof, upon expiry of the period of
lease. To reduce the chance of dispute between the parties, the lease should
make clear in which circumstances the Landlord can utilize the guarantee and
in which circumstances the guarantee is to be returned to the Tenant.

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Subject to any provisions in the Lease, the Tenant is obliged, upon expiry of
the period of lease, to return the premises to the Landlord in the same
condition as which it was handed over to him, except for reasonable wear and
tear. Any dispute over the condition of the leased premises shall be decided
upon by the RDC.

Unless the lease otherwise provides, the Tenant shall pay (a) all fees and taxes
due for to the utility authorities that benefit the premises.

The Tenant shall not, upon vacating the premises, remove any fixtures unless
agreed otherwise by both Landlord and Tenant.

6.1.6 Eviction

The Landlord may demand eviction of the Tenant during the term of the lease in
the following cases:

1. If the Tenant fails to pay the rent or any part thereof, within thirty 30 days
of notification from the Landlord demanding payment;

2. If the Tenant subleases the premises in whole or in part, without the

Landlord’s written consent. If the Tenant is evicted, the subtenant will also
be evicted, without prejudice to the subtenant’s right to compensation
from the Tenant;

3. If the Tenant uses or allows others to use the premises illegally or

immorally or otherwise not in accordance with the permitted use;

4. If the Tenant (a) makes alterations to the premises that endanger the safety
of the premises in a way that the premises cannot be restored to their
original condition or (b) damages the premises intentionally or as a result
of gross negligence;

5. In the case of commercial premises, if the Tenant fails to occupy the

premises, , for 30 days continuously or 90 non-continuous days in one
year unless agreed between the parties;

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6. If the premises are dangerous and likely to collapse, subject to the
Landlord proving this condition by submitting a technical report from an
attested technical expert by the Dubai Municipality;

7. If the Tenant fails to observe any obligation within 30 days from date of
written notice from the Landlord to remedy any breach;

8. If the competent authorities need to demolish the premises as part of any

urban re-development.

If the Landlord wishes to exercise this right to terminate, the Landlord must give
the Tenant written notice through the Notary Public or registered mail. The
notice must state which of the above categories applies. Should the Tenant not
accept the grounds contained in the notice and the Tenant refuses to vacate, the
Landlord may file his claim with the Rental Dispute Settlement Centre to
determine the validity of the notice and for the Tenant to submit its case in reply.
The RDC will consider the case and then make appropriate orders, provided the
lease agreement is registered in Ejari System.

A Landlord may demand eviction upon expiry of the period of lease in the
following cases:

1. If the premises require renovation or comprehensive maintenance which

cannot be executed while the Tenant remains in occupation. This ground
needs to be supported by a technical report issued or attested by Dubai
Municipality;

2. If the Landlord wishes to demolish the premises for reconstruction or

otherwise construction to extend the premises, and these works would
prevent the Tenant from occupying the premises;

3. If the owner of the property wants to sell the property;

4. If the Landlord wishes to recover the premises for its personal use or use
by its next of kin of the first degree. The onus is on the Landlord to prove
that there is no alternative property for such use. If the Landlord demands
the recovery of the premises for its personal use, or use by its next of kin
of the first degree, then the Landlord shall not rent the premises to third
parties except after the elapsing of the following periods:

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a. 2 years in respect of residential property from the date of recovery
of the premises;
b. 3 years in respect of commercial property from the date of recovery
of the premises.

The Tenant has the right to claim compensation through the Rental
Dispute Settlement Centre for a breach of this provision, if the premises is
leased out earlier.

In all above mentioned grounds, the Landlord must notify the Tenant in writing
through the notary public or via registered mail stating the grounds of the
eviction and providing at least twelve months (365 days) notice prior to expiry of
the lease.

6.1.7 General Provisions under Law No.26 of 2007

If Landlord or Tenant dies, the tenancy relationship devolves to their

respective heirs, unless the Tenant’s heirs decide to terminate that
relationship. In that event, termination shall become effective (a) 30 days after
the Tenant’s heirs notify the Landlord of such decision or (b) on expiry of the
lease, whichever occurs first.

The filing of a case seeking eviction of the Tenant does not relieve the Tenant
from the obligation to pay rent for the whole period of the case up to the issue
of judgment and execution thereof. (If the Tenant is not evicted, the Tenant
remains responsible for the rent up to the expiry of the period of the Lease.)

If the RDC orders termination of the lease and the premises were occupied by
a subtenant (in accordance with a sublease signed by the subtenant and the
Tenant and approved by the Landlord) then the subtenant retains the right to
remain in occupation of the premises on the same conditions as existed prior
to termination of the lease.

6.1.8 Decree No. 26 of 2013 - Special Judicial Committee for the Settlement of
disputes between Landlords and Tenant

Effective from 18 November 2013, the Rent Committee in the Dubai Municipality
was replaced by the Special Judicial Committee for the settlement of disputes
between Landlord and Tenant, which is a division of the Dubai Land
Department. It is referred to as the Rental Dispute Settlement Centre.

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RDC is not responsible for free zones that have their own dispute resolution
committees or courts. For example, the DIFC is excluded from the jurisdiction of
the RDC. A DIFC dispute forum (DIFC Court or DIFC seated arbitration) must
still apply the Dubai Law on determining rental increases (Decree No. 43 of
2013).

Disputes for amounts under AED 100,000 cannot be appealed. The Rental
Dispute Settlement Centre has an appeals jurisdiction, meaning a party can
appeal a decision provided it is for a claim over AED 100,000. The RDC has its
own enforcement section as well. This will help to speed up the process to
enforce a decision.

LEARNING EXERCISE 6

Which of the following is correct? (Select one answer only)

1. A Tenant occupies a property a Broker has listed for sale. Does the Broker have
an obligation to inform all prospective Buyers that they cannot occupy the
property because it is subject to a valid tenancy?
a) Yes – the Buyer can only be given vacant possession of the property after
a 12 month ‘Notice to Vacate’ is served, or the parties to the lease
mutually agree to the termination of the lease
b) No
c) Maybe, if the Buyer does not consult with the Tenant
d) Only if the Seller agrees that yes, the Tenant will vacate and more rent
can be obtained
e) (b), (c), & (d) above

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2. It is mandatory for a lease to be registered with:
a) Roads and Traffic Authority
b) Dubai Real Estate Institute
c) DLD’s Ejari system
d) Dubai Economic Department

3. If a Tenant wants to rent a property and does not have a valid UAE residency
visa, what should the Broker do?
a) Overlook the fact that they have no residency visa and proceed to sign up
the Tenant
b) Ignore the rule and hope nobody finds out
c) Refer the Tenant to the Rental Dispute Settlement Centre
d) Advise the Tenant of the Dubai/UAE rules and decline to assist this
Tenant and refer him to short-term rental brokers
e) Accept a non-refundable tenancy fee of 5% of the annual rent and advise
the Tenant later the Landlord rejected them

4. If a Tenant is not paying rent, prior to evicting Tenant, Landlord:

a) Must give 90 day notice
b) Can evict Tenant immediately
c) Must give 30 day notice

Answer Key:
1) a.
2) c.
3) d.
4) c.

7 Mortgages In The Emirate Of Dubai: Law No. 14 of 2008

7.1 Application of the Law

The Law applies to the mortgaging of Property and Property Units as security for
debt. For the purpose of Law No 14 of 2008, “Property” means land and personal
structures erected on it that may not be moved without suffering damage or
alteration and “Property Unit” means the subdivided part of Property (including
off-plan subdivisions).

The debt may be secured by a charge over:

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 the whole of the Property, or
 an undivided interest in the Property, or
 a right in-rem or a personal right over Property marked as sold off-
plan.

Property granted by the UAE government for commercial and residential

purposes i.e. “granted land” is excluded from Law No. 14 of 2008.

7.2 Mortgage Definitions

Mortgage (i.e. a secured loan) is defined in Law 14 of 2008 as follows:

A contract whereby a creditor acquires security over Property or a Property Unit for the
repayment of his debt, ahead of ordinary creditors and lower ranking creditors, from the
value of the Property wherever located and by whomsoever held.

Mortgagee (i.e. a lender) is defined to be:

A creditor who lends money to a mortgagor against the security of Property that exits
IPSO facto (by the fact itself) or IPSO Jure (by operation of low).

Mortgagor (is a borrower) is defined as:

The owner of the Property or the holder of the right in-rem or personal right under the
contract of sale signed with the owner of the Property which is marked as sold off-plan
and is registered in the Real Estate Register or the Interim Real Estate Register.

The Mortgagee must be a bank, company or financial institution that is duly

licensed and registered with the UAE Central Bank to provide finance for
Property in the UAE.

A Mortgage includes all appurtenances to the Property or Property Unit

including buildings, plants, and any improvements made after the Mortgage
contract is signed.

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The Need for Registration

A Mortgage is not valid unless it is registered with the DLD and any agreement
to the contrary is void. A Mortgage secures only the amount specified in the
Mortgage contract unless otherwise provided by law or agreement. A Mortgage
terminates upon repayment of the secured debt.

7.3 Mortgage: The Process and Requirements

Mortgage applications are to be filed with the DLD and must be signed by the
Mortgagor and Mortgagee (or the guarantor in rem, if any,) and must include the
following particulars:

 All information related to the Property

 Value of the Property
 Value of the debt
 Mortgage term
 Personal details of the Mortgagor, Mortgagee and guarantor in rem
including domicile and place of residence

The Mortgage contract is a standard form of the DLD and must be registered in
either the DLD’s Real Estate Register or Interim Real Estate Register.

The rank of a Mortgagee is determined by the serial number under which it is

registered with the DLD. If several applications are submitted at the same time to
register different Mortgages against the same debtor and over the same Property
or Property Unit, the Mortgages are registered under the same serial number and
the creditors rank equally.

On completion of registration the DLD must give the contracting parties a

Mortgage Deed bearing the signature of the competent officer and the DLD seal.
The Mortgage Deed can be in electronic form and is admissible as evidence on
the same basis as a written Mortgage Deed.

The Mortgagor must be the owner of the Mortgaged Property or Property Unit
and in a position to dispose of the same in order to be able to Mortgage it in the
first place.

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7.4 Rights & Obligations of the Mortgagor

7.4.1 Rights of the Mortgagor

After the Mortgage is granted the Mortgagor has the right to use, enjoy and
benefit financially from the Mortgaged Property unless there is a default and the
Mortgagee exercises its right to have the Mortgaged Property sold at public
auction by a private company, under DLD regulations.

(It should be noted that whereas in many western jurisdictions, it the borrower
defaults under a Mortgage, the lender can take possession of the Mortgaged
property and re-sell it, under Dubai law, the lender’s right is to have the
Mortgaged property sold at public auction.)

7.4.2 Obligations of the Mortgagor

The Mortgagor may not sell, gift or otherwise dispose of the Mortgaged Property
or create any right in-rem or personal right over the Mortgaged Property without
the approval of the Mortgagee. The Mortgagee may in the Mortgage Contract
stipulate joint liability of the Mortgagor and its assigns for those obligations. The
Mortgagor will guarantee the Mortgaged Property and must keep it in good
condition until the debt is repaid. The Mortgagee may take whatever legal action
is necessary to protect its interest in the guarantee and the Mortgage and may
recover the costs thereby incurred from the Mortgagor.

7.5 Rights & Obligations of the Mortgagee

7.5.1 Obligations of the Mortgagee

If a clause in the Mortgage contract gives the Mortgagee title to the Mortgaged
Property on default by the Mortgagor within the specified period or provides for
the sale of the Mortgaged Property without the Mortgagee having taken the

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specified statutory steps, the Mortgage shall be considered valid however such a
clause would be considered void.

The debt owed by Mortgagor to Mortgagee may only be covered out of the
Mortgaged Property and the guarantor in kind may not seek recourse against the
Mortgagor’s other assets before enforcement against the Mortgaged Property.

7.5.2 Loss or Damage

Where loss or damage occurs to the Mortgaged Property, the Mortgage shall
attach to substitute assets and the Mortgagee may cover his claim from those
assets in the order of priority.

7.6 Special Mortgages

7.6.1 Musataha

A Musataha holder may Mortgage buildings or plants over the term of the
Musataha without having the right to Mortgage the land that is to be developed
unless otherwise agreed.

7.6.2 Usufruct or Long Term Lease

The holder of usufruct or long term lease for a term between 10 and 99 years may
Mortgage the interest in the Property or Property Unit for the term of the
usufruct or long term lease.

7.6.3 Termination

A Mortgage over rights of musataha, usufruct or long term lease shall terminate
and be deleted from the Real Estate Register/Interim Real Estate Register upon

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repayment of the debt secured by the Mortgage or upon expiry of the term of the
musataha, usufruct or long term lease.

7.6.4 Off-Plan Sales

A Buyer of Property Units or Property that are marked as off-plan may

Mortgage the Property Units or Property as security for the debt provided that
the Property Units or Property are registered in the Interim Real Estate Register
maintained by DLD.

7.7 Enforcement of the Mortgage in the event of Default

Upon default in payment of the debt when due, the Mortgagee must provide the
Mortgagee or person in possession of the Mortgaged Property 30 days’ prior
written notice through the Notary Public before commencing execution
proceedings (i.e. before seeking to enforce the Mortgage).

If the Mortgagor fails to pay the Mortgage arrears within the said 30 day period
the execution judge shall, upon request of the Mortgagee, order an attachment
against the Mortgaged Property so that it can be sold by public auction in
accordance with the applicable procedures.
The execution judge may, upon request of the Mortgagee, postpone the sale by
public auction for up to 60 days if he finds that:

 the Mortgagor will be able to repay the arrears if given this period;

 the sale of the Mortgaged Property will cause the Mortgagor

substantial damage.

The claims of all Mortgagees shall be paid out of the public auction sale price
of the Mortgaged Property in order of priority.

If the public auction sale proceeds of the Mortgaged Property are not
sufficient to cover the claim of a creditor, the creditor can claim the difference
from the Mortgagor.

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LEARNING EXERCISE 7

Which of the following is correct? (Select one answer only)

1. A Mortgage is:
a) A loan for the purchase of a business
b) Security over a property for a debt
c) An ownership interest
d) All of the above

2. A Mortgage not registered with the Dubai Land Department (DLD) is:
a) Fine so long as the parties agree
b) Not valid unless it is registered
c) Only valid if listed after 2002
d) Valid if signed by a Notary
e) None of the above

3. Which applies to a Mortgager (Borrower) in terms of restrictions and/or

obligations until the loan is discharged:
a) Mortgagor shall not sell, gift, or otherwise dispose of the property
b) Mortgagor keep property in good condition until the debt is
repaid
c) All of the above

Answer Key:

1) b.
2) b.
3) c.

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8 On the Ownership of Common Property in the Emirate of Dubai:
Law 6 Of 2019

The law of jointly owned property deals with two separate concepts. The first
relates to co-ownership and the second pertains to the concept of subdivision of a
building or a plot, the by-product of which is the creation of common areas.

8.1 Co-Ownership

8.1.1 General

A Unit co-owned by two or more persons may not be divided among the co-
owners into separate units unless the bylaws of the complex permit this and DLD
approval and the necessary licenses from the competent authority are obtained. In
other words, the property cannot be split on percentage terms any further (see
Article 13 of Law 6 of 2019.

8.1.2 On A Sale: A Statutory Priority Right to Purchase

If one co-owner seeks to sell its share in the Unit to a third party, the remaining
co-owners each have a priority to purchase (also commonly known as a right of
first refusal to purchase) the first co-owner’s share in the Unit. If more than one
co-owner possesses this right of first refusal, then they shall be entitled to
purchase proportionally to their existing interests (see Article 14 of Law 6 of
2019).

8.1.2.1 Does Not Apply To Domestic Relations

The right of first refusal does not apply to any sale between parents and sons or
between spouses or relatives up to the fourth degree or in-laws up to the second
degree (see Article 14 of Law 6 of 2019).

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8.1.2.2 Elements of the Right of First Refusal

The right of first refusal cannot be divided and cannot be used in part. In the case
of multiple co-owners, if one or some of them waives their right of first refusal
then this right transfers proportionally to the remaining co-owners (see Article
15(a) of Law 6 of 2019).

8.1.2.3 Process and Notice Periods

The right of first refusal lapses if the selling co-owner notifies the other co-
owners through a Notary Public, of the name and address of the third party
Buyer and the conditions of sale, and the co-owner(s) fail to agree to the
conditions for sale within a period of 30 days after receiving the notice (“30 Day
Period”) (see Article 15(b) of Law 6 of 2019).

In the event a co-owner agrees to exercise the right of first refusal and to buy the
selling co-owner’s share he must notify the selling co-owner through the Notary
Public of the intention within the 30 Day Period described above, and then he
must complete the sale procedures at the DLD within 10 working days after the
expiration of the said 30 Day Period (see Article 15(c) of Law 6 of 2019).

8.1.2.4 Breach of the Right of First Refusal: Entitlement to

Compensation

If the selling co-owner sells to a third party on more advantageous terms than
provided for in the notice from the Notary Public forwarded to the remaining
co-owners,(as detailed in section 8.1.2.3 above) the remaining co-owner(s) will be
entitled to compensation for the damage caused to them as assessed by the
Rental Disputes Settlement Centre (see Article 15(d) of Law 6 of 2019).

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8.2 Subdivision

8.2.1 Subdivision of a Project

Law 6 of 2019 On the Ownership of Common Property provides a framework for

the development and subdivision of land and buildings into units (“Units”) and
common property (“Common Property”) designated for common use by Unit
owners and occupiers.
Law 6 of 2019 was announced on 4 September 2019 and repeals Law 27 of 2007
Concerning Ownership of Jointly Owned Property in the Emirate of Dubai
(“Previous Law”). There is a six month transition period from 4 September for
developers and management companies to comply. The major changes that Law
6 of 2019 has introduced are as follows:
o a new three tiered management system – Major Projects, Hotel Projects,
All Other Projects;
o a stronger role for RERA (ie to remove incompetent management
companies);
o the removal of the JOPD and replaced it with a new system of bylaws and
a building management system;
o a new common property register; and
o a new dispute resolution mechanism ie the Rental Dispute Settlement
Centre has exclusive jurisdiction.

New three tiered management system

Under the Previous Law:

• all owners of units automatically became members of the Owners

Association; and

• the Owners Association, through its board, managed the common areas of
the building, and they could delegate these responsibilities to an
Association Manager to perform.

Law 6 of 2019 replaces this management system with a three tiered system for
Major Projects, Hotel Projects, All Other Projects. In Dubai, most developments
in Dubai will fall into category 3: “All Other Projects”. The common parts in
these projects shall be managed by specialized management companies which

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shall be selected and engaged by RERA (Article 18(a)(3). An owners’ committee
must be formed for each real estate project with its members selected by RERA
which shall not exceed 9 members (Article 18(a)(3)). The functions of the owners
committee are set out in Article 24 and include:

• verifying that the management company manages the common parts;

• reviewing the annual budgets for the maintenance of the common

property and making recommendations;

• receiving complaints from owners and submitting them to RERA if the

management company fails to address them within 14 days of being
notified; and

• importantly, this owners committee has the power to request RERA to

replace the management company and provide RERA with advice on the
selection and appointment of the new management company (Article
24(5)).

8.2.2 Ownership of Common Areas

Law 6 of 2019 provides that each owner shall own an undivided share of the
common parts which shall be determined on the basis of their unit area out of the
total area of the common property.

However, the common parts are not permitted to be transformed into private
property, divided or wholly or partially disposed of independently from the units
to which they relate, unless the prior written consent of the DLD and the
competent authorities is obtained. The Director General of the DLD shall, by a
decision issued by him, establish controls relating to the utilization of the financial
return generated from such transformation.

It is also prohibited to dispose of the common parts in any way, exploit, change,
re-plan or cancel them in a way that limits utilization thereof by the owners,
except after obtaining the prior written consent of the DLD and the competent
authorities.

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8.2.3 Bylaws, Bylaws of the Complex and Building Management System

Under the Previous Law, a Jointly Owned Property Declaration was required to
be registered with RERA which governed the use of the common areas and units,
and set out the duties and obligations of the owners, occupiers, and the
developer.

Law 6 of 2019 has removed the concept of a Jointly Owned Property Declaration
and replaced it with the following:

 The bylaws of the complex – This document is defined as follows: “the

terms and conditions governing the development and operation of the master
project and the common properties and common facilities therein, including the
planning and construction standards of the complex.”

 The bylaws - This document is defined as follows: “the rules and provisions
governing the owners’ committee, which shall be established and adopted in
accordance with the provisions of this Law.”

 The building management system - This document is defined as follows:

“The document prepared in accordance with the regulations issued by the
Department and recorded in the Common Property Register, which state the
procedures for maintenance of the common parts, and the percentage of owners'
contribution in the costs related thereto, including the equipment and services
existing in any part of another building”.

Prior to selling any units, the developer must establish a building management
system for major projects and hotel projects which must be approved by RERA
(Article 20).

The legal effect of the bylaws, the bylaws of the complex and the building
management statement is that these documents all form part of the title deed and
must be complied with by every occupant, owner, owners committee and the
developer of the project (Article 6).

The developer must prepare and file the bylaws and the bylaws of the complex
within 60 days from the date of the certificate of completion for the project.

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However, the building management system shall not be filed by the developer –
instead it shall be filed by RERA.

8.2.4 Disclosure Regime

The Directions also establish a disclosure regime. The regime is intended to

ensure that purchasers are better informed as to what they are purchasing and as
regards potential future payments beyond the purchase price.

Broadly speaking, under this regime, where a sale contract is signed

on/following 13 January 2011:

(a) In respect of a sale by the Developer, the Developer must give to the
purchaser a document called a Disclosure Statement. The Disclosure
Statement will contain information about the Unit being purchased,
including an estimate of the service charges payable in respect of the unit
during the first two financial years of the Owners Association.

(b) In respect of a sale by a Unit owner on the secondary market, the Unit
owner must give the purchaser a complete copy of any Disclosure
Statement that he received when he bought the unit.

In the event of failure to comply with this obligation, the sale contract is void and
of no effect.

The Developer is deemed to have warranted the information in the Disclosure

Statement.

If, within two years of the transfer of the unit by the Developer (it would seem
this means the date of registration of title in the name of the first purchaser at the
Land Department), the information in the Disclosure Statement is found to be
inaccurate or incomplete in a material way, the Developer will be liable for
damages to the consumer that purchased the unit. This liability applies whether
the consumer bought (a) from the Developer or (b) on the secondary market from
a prior consumer.

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8.2.5 Completion Certificate

At the same time as handing over the unit to the first purchaser, the Developer
must advise the first purchaser in writing of the date of the project’s completion
certificate.

This date is important in relation to the warranties that bind the Developer under
Law 6 of 2019:

(a) The Developer remains liable for 10 years from the date of the completion
certificate of the project to repair and cure any defects in the structural
elements of the common property.

(b) The Developer remains liable for 1 year from the date of the completion
certificate of the project to repair or replace any defective installations in
the common property.

8.2.6 Unpaid Service Charge

Similar to the Previous Law, owners are required to pay to the management
body their share of the service charge to cover the expenses of the management
and maintenance of the common parts pursuant to Law 6 of 2019 (Article 25(a)).

The calculation mechanism will be determined by the Director General of the

DLD.

The management body must deposit the service charges into a special account
with one of the banks approved by RERA.

The funds in the service charge bank account may only be used for the purposes
listed in Article 30(e), including:
• Cleaning services;
• Security services;
• Maintenance and repair;
• Premiums on insurance;
• Fees of the management company approved by RERA; and
• Administrative expenses of the developer for the management of Major
Projects approved by RERA.

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If a Unit Owner fails to pay service charges, and fails to remedy this within 30
days following notice from the management body which has been approved by
RERA, then the management body can enforce their claim for unpaid service
charges before an execution judge in the Rental Dispute Settlement Centre.

The execution judge may, when necessary, sell the Unit through a public auction
to collect the amount of the unpaid service charge.

The management body shall have a lien on each Unit in respect of the unpaid
service charge. The Unit may not be disposed of until after this charge is paid to
the management body.

LEARNING EXERCISE 8

True or False?

1. Unpaid service charges create a lien that attaches to the Unit Owner.

2. After date of completion certificate, the Developer remains liable for

installation defects for 10 years and structural defects for 1 year.

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Answer Key:

2) False
3) False

9 Power of Attorney and Due Diligence

9.1 What is a Power of Attorney?

A Power of Attorney (‘POA’) is a legal document under which one party

(known as the Grantor) gives authority to another party (known as the Grantee)
to act on his or her behalf in accordance with the provisions of the POA.

9.2 For what is a Power Of Attorney used?

There are many reasons for appointing someone POA. For example, the Grantor
may be based in the USA, and unable to travel to Dubai to complete a transaction
– the Grantor would appoint the Grantee under a POA to represent the Grantor
in the transaction.

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Some potential uses of a POA include:

 Withdrawing funds from an account;

 Collecting rental income;
 Appointing a broker;
 Entering a Mortgage or discharging a Mortgage;
 Entering a lease transaction as either landlord or as a Tenant;
 Entering a sale or purchase contract;
 Paying bills;
 Investing money.

9.3 Power Of Attorney General Provisions

Unless stated otherwise, a POA comes into on signing. However, it does not have
to be used immediately.

The POA can be granted for very specific purposes (e.g. only to allow the
collection of a rent cheque) or it could have broader purposes (e.g. to allow the
signing of all documents necessary to sell or lease a given property)

The POA can be stated to expire on a given date or it can be without an express
expiry date.

A POA will lapse with the death of the Grantor or on the Grantor losing mental
capacity if it is not an enduring POA.

The POA must be either (a) notarized by the Dubai Notary Public or (b) legalized
up to the UAE Ministry of Foreign Affairs. If the Grantor is in Dubai then option
(a) may be followed. However if the Grantor is abroad it will be necessary for the
Grantor to sign before a notary public in the foreign country, then for the POA to
be legalized at the UAE Embassy in that country, and finally for the POA to be
legalized at the UAE Ministry of Foreign Affairs.

If the document is bilingual (Arabic and English) and there exists an

inconsistency in the two language versions, the Arabic language interpretation
prevails, as per the general law applied by the Courts. The Court has introduced
a new process whereby the POAs need to be stamped by a licensed legal
translator before submitted to the Dubai Courts for notarization.

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The Dubai Courts have also placed restrictions on the use of POAs when in it
comes to real estate matters. The Court will only accept specific POAs (specific to
a property and its purpose) and does not allow general POAs for real estate
matters. It has also acted to limit the life of a POA to two (2) years.

Any Broker that is acting on a transaction that involves the use of a POA should
try to verify the authenticity of the document and make contact with:

 The Grantor to confirm that he did grant the POA and has not revoked it,
and the Notary that has notarized the document.
 Check the Dubai Courts website by authenticating the registration
number of the document online.
 Steps to check a Dubai registered POA are:

1. visit www.dubaicourts.gov.ae

2. go to the tab 'public e- service'

3. Inquiries

4. Inquiry about a document

5. Document type: (enter from the drop down menu): select

‘Authentication Register’

6. Year: enter year of registration

7. Serial Number: enter serial number of document

8. The outcome will be that the POA is either valid or invalid

This helps to safe guard against any fraudulent activity.

It is critical for the Broker to carefully read the document in order to ensure the
Grantee is authorized by the POA to enter into the proposed transaction.

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If a POA is over one year old it may be rejected by the authorities or developer in
Dubai. This should be considered at the earliest opportunity so that, if necessary,
a replacement can be obtained.

9.3.1 Due Diligence

Under Bylaw 85 of 2006, a Broker is responsible for any loss or damage suffered
by any of the contracting parties as a result of the Broker’s deception, fraud or
non-observation of the Bylaw or the Code of Ethics. The Bylaw (for example)
states that a Broker may not mediate in a transaction that breaches Dubai’s laws.
Similarly, under the Code of Ethics if a Broker is guilty of forgery or intentional
or negligent presentation of false information he faces disciplinary action.
Accordingly, it is important that a Broker establishes that
landlord/tenant/Buyer/Seller/etc. have the authority to act in their respective
roles.

By following best practices of recording and obtaining the relevant supporting

documents for any particular transaction it assists your Brokerage business to
comply with national anti-money laundering laws and regulations, in addition to
your own personal obligations to maintain records of the transactions you
conclude. You are also reducing the risk of fraud or misappropriation.

9.4 Sale Purchase Transactions

There follows a non-exhaustive list of documentation of which you should have

sight at the earliest possible stage of a proposed transaction. In every specific
case consideration should be given as to whether additional documentation
should also be exhibited. Always remember to collect copies of the parties’
Emirates ID and passport/residency visa.

9.4.1 Seller

Document Original Copy

Certificate of Title Must be viewed Retain a copy
If Mortgaged, a Bank Must be viewed Retain a copy
statement and copy of
the Mortgage
Oqood registration Must be viewed Retain a copy

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receipt, if Certificate of
Title is unavailable
DEWA Account Must be viewed Retain a copy

9.4.2 Buyer: an individual resident in the UAE

Document Original Copy

Passport copy and if expat copy Must be viewed Retain a copy
of valid visa.
Recent, utility bill showing Must be viewed Retain a copy
address (DEWA, Du, Etisalat)
Current Lease (if the Buyer Must be viewed Retain a copy
rents his current place of
residence) or (if the Buyer is an
owner occupier) Certificate of
Title

9.4.3 Buyer: an individual who is not resident in the UAE

Document Original Copy

Passport copy Must be viewed Retain a copy
Recent utility bill showing Must be viewed Retain a copy
address

9.4.4 Buyer: a company incorporated in the UAE

Document Original Copy

Memorandum of Association Must be viewed Retain a copy
(MoA)
Trade License Must be viewed Retain a copy
Board/Manager’s resolution Must be viewed Retain a copy
calling for the purchase or sale
of the property if not expressly
permitted in the MOA

9.4.5 Buyer/Seller: a company incorporated offshore

Document Original Copy

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Certificate of Incorporation/Trade Must be viewed. Original must be Retain a copy
Licence brought by Seller. Should be
authenticated and attested up to
UAE Ministry of Foreign Affairs. If
not in Arabic, it must be officially
translated prior to authorization and
attestation.
Articles of Association (AOA) Must be viewed. Original must be Retain a copy
brought by Seller.
Certificate of Incumbency Must be viewed. Original must be Retain a copy
brought by Seller. Needs to be no more
than 5 days old for transfer.
Share Certificate Must be viewed. Original must be Retain a copy
brought by Seller.
Certificate of Good Standing Must be viewed. Original must be Retain a copy
brought by Seller.
Board/Director’s Resolution calling Must be viewed. Should be Retain a copy
for the purchase of property, if this authenticated and attested up to
is not expressly provided for in the UAE Ministry of Foreign Affairs. If
MOA. not in Arabic, it must be officially
translated prior to authorization and
attestation.
Board/Director’s Resolution Must be viewed. Should be Retain a copy
specifying the authorised signatory authenticated and attested up to
for purchase UAE Ministry of Foreign Affairs. If
not in Arabic, it must be officially
translated prior to authorization and
attestation.
Passport, Emirates ID of authorised Must be viewed. Original brought Retain a copy
signatory by Signatory.
Specimen signature of Original brought by Signatory N/A
the authorised signatory

Company Stamp Brought by Signatory N/A

NOC from JAFZA Must be viewed. Original brought Retain a copy
by Seller.

Note: If company is owned by

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another offshore company, all
offshore company docs must be
properly attested through UAE
Embassy/MOFA

9.5 Lease Transaction

There follows a non-exhaustive list of documentation of which you should have

sight at the earliest possible stage of a proposed transaction. In every specific
case consideration should be given as to whether additional documentation
should also be exhibited.

9.5.1 From A Landlord

Document Original Copy

Certificate of Title Must be viewed Retain a copy
If Mortgaged, a Bank Must be viewed Retain a copy
statement and copy of
the Mortgage
Oqood receipt, if proper Must be viewed Retain a copy
and complete but
Certificate of Title not
issued

9.5.2 Tenant: a company

Document Original Copy

Trade License Must be viewed Retain a copy
General Manager’s Must be viewed Retain a copy
passport copy
POA or MoA (AoA) Must be viewed Retain a copy
authorising the company
manager to enter into the
lease

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9.5.3 Tenant: an individual

Document Original Copy

Passport Copy Must be viewed Retain a copy
Valid Residency Visa Must be viewed Retain a copy
Please note the comments in section 6.1.2 about the employer of the would-be
Tenant in fact being detailed as the Tenant in the Lease.

LEARNING EXERCISE 9

Which of the following is correct? (Select one answer only)

1. As per Dubai Courts regulations, a real estate Power of Attorney:

a) Cannot be used in real estate transactions
b) Can be up to 5 years old
c) Can be no more than 2 years old
d) Is good for different periods of time, depending on the situation

2. A real estate POA must be:

a) General

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b) Specific to the property which is the subject of the transaction
c) A POA cannot be used in real estate transactions
d) None of the above

Answer Key:

1) c.
2) b.

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10 Alternative Dispute Resolution

Dispute resolution is an important part of any jurisdiction or system for real

estate administration. The formal dispute resolution mechanisms typically
involve courts such as the Dubai Courts or special judicial bodies such as the
Rental Dispute Settlement Centre. However alternative dispute resolution (e.g.
mediation or arbitration) is equally important and, is generally the most popular
way to resolve disputes.

10.1 Mediation

Mediation as a means of dispute resolution involves the meeting of the parties in

conflict before a mediator to discuss the issues and explore the options of
settlement. Depending on the forum, the parties may have separate legal
representation or the parties may appear without any legal representation. In
some instances representation may be precluded, for example, if one party
cannot afford legal representation.

One advantage of a mediation conference is that it is inexpensive and quick. One

disadvantage is that it is normally voluntary and requires the consent of both
parties, and the opinion or view of the mediator is not binding on either party.

10.2 Arbitration

Arbitration is a more formal type of dispute resolution than mediation.

Arbitration awards can be enforced by the Dubai Courts as part of the
enforcement process after an award is registered in the Dubai Courts to be a
judgment. Foreign awards can be registered locally in Dubai and local arbitration
awards from Dubai can be registered in a foreign jurisdiction, provided the other
jurisdiction has acceded to the New York Convention on Arbitration.

There are a number of arbitration centers (each with their own procedures and
rules) that specialize in this kind of dispute resolution including:

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i. DIAC – Dubai International Arbitration Centre
ii. DIFC- London Court of International Arbitration
iii. International Chamber of Commerce

The most prominent arbitration centre in the region is the Dubai International
Arbitration Centre. It is by far the most commonly used arbitration Centre for
real estate disputes in the Emirate of Dubai. First set up in 1994, the DIAC is
located in the Dubai Chamber of Commerce Building. For more information on
the DIAC or the arbitration process, visit www.diac.ae.

11 VAT

The imposition of VAT will commence in the UAE from 1 January 2018 at a standard
rate of 5%.
Federal Decree Law No.8 of 2017 (VAT Law) provides the framework for
implementation of VAT in the UAE.
The VAT treatment of real estate will depend on whether it is a commercial or residential
property.

Supplies (including sales or leases) of commercial properties will be taxable at the

standard VAT rate of 5%.

There will be no VAT on the supply of residential properties as they fall under either the
zero rated or exempt category. The key distinguishing feature between the two supplies is
that a supplier of a zero rated good or service will be able to claim a refund on any VAT
paid on their purchases (input tax) whilst a supplier of an exempt good or service will be
unable to recover any VAT paid on their purchases. Specifically the VAT law provides
that:

 new residential properties that are supplied for the first time within 3 years of
their construction will be a zero rated supply - this means that real estate
developers will be able to recover the VAT they have paid in constructing new
residential properties; and

 all other residential property supplies (including sales and leases) will be exempt
from VAT.

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Many operative provisions are not incorporated in the VAT Law and the VAT Law does
not provide guidance as to the application of VAT within any of the free zones in the
UAE. It is expected that provisions covering these issues will be disseminated in the
future through Executive Regulations and Cabinet Decisions.

******

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Module 9
Essential Skills for Brokers

Module 9
Essential Skills for Brokers

Objectives

Introducing:
• Broker’s essential skills.
• Marketing: today’s market/buyer’s vs. seller’s markets.
• Marketing: prospecting, open House, hunting, farming.
• Mathematical Concepts: average, percentage, proration.
• Case Study 1: proration.
• Role Play 1: seller.
• Comparative Market Analysis (CMA).
• Listing interview= Contract A.
• Role play 2: buyer= Contract B.
• Contract F.
• Sale transaction case study.

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Objectives of Today
• To provide a venue for the practical application of some concepts
covered in the Brokers' course.
• To expose brokers to some methods of client creation.
• To highlight the importance of following a disciplined and an ethical work
routine.
• To provide a basic step-by-step real estate transaction through case
studies and checklists.

You will be better equipped to:

• prospect for clients and generate leads.
• understand a CMA.
• perform necessary RE calculations.
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

What skills/knowledge must a broker cultivate?

• Soft skills:
 People’s skills
 Networking, Marketing and Sales
 Psychology

• Mathematical/Architectural
• Technological
• Planning/Organising and time-management
• Multitasking

2
26-Jan-20

Marketing

Dubai Market

Dubai Today,
• Enjoys a free market economy.
• Prices are dictated by Supply and Demand.
• There are new projects- where?
• There is demand – Is there?
• What kind of market are we in, buyer’s or seller’s?

3
26-Jan-20

Dubai Market
Buyer’s market (also called soft market)

A market where sellers are more than buyers. This excess of supply over
demand results in low prices of goods.

Generally, the market is slow and properties take longer to sell.

Dubai Market

Seller’s market

A market where buyers are more than sellers. This excess of demand
over supply results in high prices of goods.

Generally, properties sell faster.

4
26-Jan-20

“You want to be in the middle”

Demand Supply
=Buyers = Sellers

How to Reach them???

Marketing

Three things to remember:

• Your success is dictated by effective marketing.

• There’s always room for improvement, even if you are a seasoned broker.
• Marketing is not a one-time chore, it is an ongoing activity.

5
26-Jan-20

Sphere of
Influence

Company Own
leads Network Marketing
Leads

Old Clients

6
26-Jan-20

How to Generate Leads

• Calls: NO cold calling.

• On-line presence: Webpage, social media.
• Ads, flyers, printed matter.
• Teaming –up with a star.
• Open Houses.

What is an OPEN HOUSE?

• It is where an agent invites the public to visit a listing he/she has. The
open house is usually hosted for a few hours during the weekend and
food and beverages are served.

• Visitors will register their names and contact details, their comments
on the property and what is it they are looking for.

7
26-Jan-20

Conditions for a successful OPEN HOUSE?

• Listing exclusivity (exclusive Contract A).

• Seller’s approval.
• Community permission.
• Presentable property.
• Broker present.
• Seller absent.

Benefits of an OPEN HOUSE

• Saves time as you can show the property to many people at once.
• Creates urgency in the minds of interested buyers to finalize when they see
other visitors.
• A great way to market yourself and your property and generate warm
leads.
• Helps establishing you as the expert in that area.

8
26-Jan-20

What is your main objective of hosting an open house?

• To increase your contacts data base mainly of buyers!

Other objectives:
• Sell the listed property.
• Market yourself.
• Establish your presence in the area.

9
26-Jan-20

HUNTERS (transactional)

• Hunters typically look for their sales increases from transactions with new
customers.

• They are interested in prospective clients who have an immediate need to

buy or sell.

• They do not necessarily attach themselves to a particular location or niche

market.

Some facts about hunting:

a) It is a numbers game. Lots of contacts/ fast results
b) Hunters want solutions and results, more than they need a relationship
c) Hunters seek instant gratification
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Farmers (Institutional)

• Farmers concentrate their time, effort and budget on a specific location

or niche client and strive to become the expert.

• They employ a customer-centric method of selling, very focused on the

needs and wants of their prospects and customers.

• They act as trusted business advisors working to bring strategic value to

each transaction.

• They believe in the existence of a strong, customer-focused, strategic

relationship that effectively locks out competitors, thus lowering the cost
of doing repeat or additional business with that customer.

10
26-Jan-20

Farmers (continued)

• Customer loyalty arises naturally out of the strategic-level partnership created

when the sales representative takes a genuine interest in helping the customer
meet strategic goals.

Some facts about farming are:

a) Requires patience/waiting.

b) Education and information is consistently sent out to gain trust.

c) The goal is to stay positioned, educate the clients, to gain their trust so that
when the time is right, the client will close with you as the rep: you have
harvested your crop.

Farming entails:
 Building: Choose a neighborhood: Start small and grow.
 Knowledge: Know your product.
 Recognition: Become the recognized local expert.
 Involvement: Become a member of the community.
 Focus : Concentrate your effort and resources.

11
26-Jan-20

Benefits of Farming:
 Builds a solid networking base.
 Provides higher professional security/stability.
 Allows better prediction of income.
 Logistically feasible: Saves time, money and effort.
 Allows easier multi-tasking.
 Allows smarter allocation of resources.

You can decide what kind of professional you want to be.

However, a combination of both with an emphasis on farming is a winning
scenario.

Marketing
Remember
 Marketing is a continuous daily activity.
 Educate yourself.
 Stop cold calling; have clients call you instead.
 Identify your target market: Investors, end- users, residential,
commercial, buyers…etc.
 Look for the most profitable niche and tailor your plan accordingly.
 Identify your geographical farm; don’t spread yourself thin.
 Market yourself: Don’t be an undercover agent.

12
26-Jan-20

Mathematical Concepts

• Average/Mean
• Percentage
• Proration
• Yield
• Return on Investment (ROI)

13
26-Jan-20

Average (also called Mean)

• A calculated "central" value of a set of numbers.

To calculate: add up all the numbers, then divide by the number of

occurrences.
Example: what is the average of 2, 7 and 9?
Add the numbers: 2 + 7 + 9 = 18
Divide by the number of occurrences (i.e. we added 3 numbers): 18 ÷ 3 = 6

Percentage

• A percentage is a number or ratio expressed as a fraction of 100.

When we say "Percent" we are really saying "per 100"

What is 2% of 1,800,000?
What percentage is 16 from 40?

14
26-Jan-20

Proration

• To Prorate is to calculate proportionately.

• We prorate when we need to allocate or distribute amounts

proportionally in relation to time, contribution, share or
other factors.

Ex: Prorating service charges, distributing dividends to

shareholders.

Yield

• A yield is a measurement of expected or earned income on an investment.

It is generally calculated annually as a percentage, based on the property’s
(or investment’s) cost or market value.

• Yield = income X 100

investment

15
26-Jan-20

Return On Investment (ROI)

• A performance measure used to evaluate the efficiency of an investment

or to compare the efficiency of a number of different investments.

ROI = profit + income × 100

investment

Gross Income (GI)= All income generated from an investment before expenses/costs

Net Operating Income (NOI) = Income Minus Expenses

Expenses/Costs could include:

Vacancy allowance
Property Management fees
Insurance
Repairs costs
Service charge
Maintenance fees
Consumable costs
Etc…

16
26-Jan-20

GROSS YIELD

Gross yield is a percentage calculated as the annual income generated by an asset,

divided by its price before deducting expenses.

For example:
Annual rent: 50,000
Purchase price: 1,000,000
Gross yield = 50,000 x 100 = 5%
1,000,000

Knowing the gross yield gives you a very general idea of whether a particular property
is a good investment – and gives a quick and easy way to compare different
properties to each other.
But it's not that helpful, because it doesn't take costs into account. That's where you
need…

NET YIELD

Net yield is a percentage calculated as the net annual income (income minus costs)
generated by an asset, divided by its price.

So:
Annual rent: 50,000
Annual expenses: 10,000
Net annual Income= 40,000
Purchase price: 1,000,000
Net yield = 50,000- 10,000 x 100 =4%
1,000,000

Net yield is more accurate than gross yield, because it's based on the actual amount of
money you'll end up with after costs

17
26-Jan-20

Gross ROI is annual income from the property plus the realized gain/loss
(before expenses ) divided by the value of the investment.

Net ROI is NET annual income from the property plus the realized gain/loss
(after deducting expenses ) divided by the value of the investment.

Example:
Annual rent: 50,000
Annual costs: 10,000
Net income: 40,000

Purchase price: 1,000,000

Sales price: 1,100,000

Therefore,
Gross Return On Investment = (100,000 + 50,000) / 1,000,000 = 15%
Net Return On Investment = (100,000 + 40,000) / 1,000,000 = 14%
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Case Study 1

Proration

18
26-Jan-20

Case study 1- Part 1:

Calculation of Service Charges to be reimbursed to the Seller by the Buyer.

Annual service charge for a shop in Marina Diamond is AED 14,047.

Service Charge period : 1st March 2018 to 28th February 2019

The Seller, Mr. John Doe, paid for the annual service charge in advance for the
whole year on 1st of March 2018.

The Seller, Mr. John Doe, sold his shop to the Buyer, Mrs. Jumeirah Jane, on 4th
September 2018.
How much did the Seller, Mr. John Doe, utilize from the fully paid annual
service charge?
How much should the Buyer, Mrs. Jumeirah Jane, reimburse the Seller, Mr. John
Doe for the service ‫ المعهد‬charges
‫دون الموافقة الخطية من‬that he‫إستخدامها او‬
‫إعادة إنتاجها من‬ paid,‫نسخها‬
in‫اليجوز‬
advance?
‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Case Study 1 Continues:

Part 2
Calculation of rental amount that needs to be reimbursed to the Buyer by the
Seller.

In addition to the above, assume there is a tenant in the shop. The tenant was
given proper notice to vacate the shop and the tenant agreed to vacate on
10/7/2019.

Annual Rent: AED 200,000/year in two payments:

AED 100,000 cheque dated 11/07/2018 “Cashed by Seller”
AED 100,000 cheque dated 11/01/2019 “ Not Cashed”

The Security Deposit is AED 10,000

Tenancy period: 11/7/2018 to 10/7/2019

How much should Mr. Doe reimburse Mrs. Jane from the rent collected and
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
cashed?
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

19
26-Jan-20

Case Study 1 continues again ☺:

Part 3
Calculation of total adjustments due on Transfer date

In addition to the above, assume the selling price is AED 2,690,880.

Commission to be paid by the Buyer: 2% of the Selling Price.

Seller to pay the NOC charges of AED 500 to the developer.

Transfer fees were agreed to be paid in full by the Buyer.

Buyer agreed to pay 10% deposit to reserve the property through the transfer
date. At the transfer date, it was agreed that the buyer gets back her deposit
cheque and the Seller gets a manager’s cheque for the full amount.

Calculate the deposit amount, transfer fees; commission and the total amount
of the cheque that the Seller is supposed to receive from the Buyer at transfer
date. ‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Role Play 1=Seller

Ms. Huda A. is referred to you by a friend. She wants to sell her villa.

What do you need to know at the initial stage?

What do you do next?

20
26-Jan-20

What you need to know about the property for sale

• Completed or off-plan.
• Type, location and exact address.
• Size, number of bedrooms, bathrooms.
• Parking spots, facilities
And ………………many other things!

What is the main objective of this initial contact?

1. List the property?

2. Sell the property?
3. Meet the owner?
4. Find out information about the property?

It is to: Set an appointment to visit the property

Then you
• Research: Area, schools, transport, shopping, entertainment…
• Prepare a Comparative Market Analysis (CMA)

21
26-Jan-20

Comparative Market analysis CMA

• A tool to help reach a fair market price.

• The primary purpose of the CMA is to educate you, the agent, about the
prices at which comparable homes are being listed and sold.

• Completing a comparative market analysis, an agent can obtain certainty

and conviction about the value of the property you're getting ready to list.
With this knowledge, you'll be able to proceed with confidence as you share
your view of the marketplace and persuade the seller to accept your home
pricing recommendation.

A Comparative Market Analysis involves a review of all homes similar to the one
you are selling (subject property), and in the neighborhood of the subject
property, that have recently:
1. sold,
2. listed, or
3. expired

Sold properties provide the most valuable demonstration of market value. They
are properties for which sales goals have been accomplished, transactions have
closed, and ownership has transferred. Especially in markets undergoing active
appreciation or depreciation, review only homes that have sold and closed in
the last six months. In some markets it would be wise to narrow that to three
months or less. Sales before that period probably won't be an accurate
indication of current values.

22
26-Jan-20

Listed Properties: A CMA for listed properties allows you to list (price) the
subject property competitively. When selecting similar properties avoid
exceptionally low or high priced comparables.

Expired listings: These are homes owned by sellers who, in effect, lost the sales
game. In a CMA, they provide a very good bookend against the prices of sold
properties.

By presenting both categories, you can show your seller the pricing path to
success, as indicated by sold properties, and the path to failure, as indicated by
expired listings.

CMA

When selecting comparable units:

1. Select properties that share as many features as possible with the subject
property

2. Limit your CMA to 6 comparable units

3. Then zoom-in on the differences

23
26-Jan-20

Area No of No of
Unit Type (m2) Bed Bath Garage Lock Pool Gym View Sale price

Subject unit villa 205 4 5 2 yes yes pool

Unit 1 apt 120 2 2 1 1 yes yes 1.75m

Unit 2 villa 190 4 4 2 yes yes pool 3.35m
Unit 3 villa 194 3 4 2 yes yes pool 3.2m
Unit 4 villa 185 4 5 3 yes yes park 3.5m
Unit 5 apt 200 5 5 3 2 yes yes water 3.95m
Unit 6 villa 210 4 5 2 yes yes 3.4m
Unit 7 villa 192 4 4 2 no yes 3.15m
Unit 8 apt 185 3 4 1 1 yes yes water 3.45m
Unit 9 villa 220 4 5 2 yes yes 3.2m
unit 10 villa 300 6 7 4 private yes lake 4.9m
Unit 11 villa 140 2 3 2 yes yes 1.63m

C MA Exercise

• Assumed added values:

– Bedroom: AED100,000
– Bathroom: AED 60,000
– Garage: AED 40,000
– Locker: AED 20,000
– Pool: AED 90,000
– Gym: AED 35,000
– Views: Pool or park(80K), Water and lake(100K)

24
26-Jan-20

After Selection

Step1: Attach added values to variances (extra bedroom, bathroom, garage,

view, corner unit, updated kitchen…).
Step 2:Make adjustments to selling prices by adding or subtracting the added
value.
Step 3:Come up with an average price.
Step 4:Determine a range for the suggested Selling Price of the subject unit.

CMA Exercise cont.

• What market price would you suggest Ms Huda lists her
property for?

25
26-Jan-20

Listing Interview: What to take with you

• Presentation Kit.
• Business card.
• CMA.
• Camera.
• I-pad or laptop.
• Form A.
• A give-away.

Creating a Positive First Impression

• Promptness.
• Dress code.
• Power of a Smile.
• Hand Shake.
• Show sincere interest.

26
26-Jan-20

What to bring back

• Approved contract A through RERA’s Dubai Brokers App.

• Passport copies of all owners.
• Title deed or Oqood (for off-plan).
• POA if applicable.
• Mortgage details if applicable.
• Tenancy contract if the property is leased.
• In case of a Jointly Owned Property, a copy of The Owners Association
Declaration Statement.

Then register the contract in the STR

Contract A

27
26-Jan-20

The Quality Listing

• Always visit the property.

• Take photos of the interior and exterior (professional if possible).
• Description: Avoid generic terms. Be specific about the property itself
highlighting special features.
• Include a floor plan and/or room sizes.

Writing a Quality Description

• Avoid copying and duplication.

• Avoid spelling mistakes.
• Avoid industry jargon and special characters.
• Refer to landmarks.
• Think like a buyer.
• Ex: Walking distance, waterfront with exceptional views, child friendly
neighborhood, low maintenance cost.

28
26-Jan-20

Role Play 2: Buyer

Mr. Ivan, a Russian businessman calls you. He has recently moved to Dubai and
wants to purchase a property.

What do you need to know?

New Buyer

• Qualify: Find out his DNA, Desire Need Authority

• Put buyer into action:
– Approving contract B.
– Book viewing.
• Get Buyer to put an offer.

Calls + viewing + Offer= Sale

29
26-Jan-20

Qualifying a New Buyer

• Passport copy for age (21) and nationality.

• Purpose: investment or personal use.
• Currently rents or owns.
• Time scale.
• Family members, children.
• Location, proximity, work location.
• Type, size, no of rooms, maid’s qtr, facilities.
• Budget and cash or finance
………and many other things

Re-qualifying old Clients

Things that may have changed:

• Pre-approval came through.
• Has seen a different property or style.
• Has just offered= hottest buyer.
• Has just sold= “Panic buy” mode.
• Has just bought (with someone else).
• Rent expiring soon.
• Unforeseen circumstances.

30
26-Jan-20

Q’s to ask old buyer

• Are you still looking in your area of choice?

• Have you seen anything you like recently?

• Have you made any offers on any units?

Recognizing a Hot Buyer

• Buyer calls in for a specific unit type-knows what he wants.

• Discuss furniture layout during a viewing.
• Ask what price the seller might accept.
• Ask about the seller’s motivation to sell.
• Asks about fees and extra costs.
• Gives positive words: nice view, love the kitchen…etc.
• Chases you and returns your call.
• Asks what the next step is??

31
26-Jan-20

What to offer a buyer

• Start with your inventory and those of your office.

• Use search engines.
• Limit the search per request and budget.
• Avoid too much choice.

Contract B

32
26-Jan-20

Viewings

• Have a copy of the listing.

• Ensure the property is presentable.
• Know all details about it.
• Respect the culture of the seller.
• Show all parts including parking, locker, gym…
• Return everything the way it was.

Contract F

33
26-Jan-20

Case Study 1 Solution

Case 1- Part 1 Solution

Calculation of Service Charges to be reimbursed to the Seller by

the Buyer.

Service charge per day: AED14,047/365=AED 38.48/day

1st March 2018 to 3rd September 2018=187 days

AED 38.48/day*187 days= AED 7,195.76 utilized through the selling

date.

Balance charges until 28/2/2019 for 178 days= AED 14,047-AED

7,195.76= AED 6,851.24 which is the amount that Mrs. Jane needs
to reimburse Mr. Doe.

34
26-Jan-20

Case Study 1- Part 2

Calculation of rental amount that needs to be reimbursed to the Buyer by the
Seller.

Solution:

Rent per day: AED 200,000/365= AED 547.95

Rent from 11/7/2018 to 10/8/2018( 31 days)= AED 16,986.45

Rent from 11/08/2018 to 03/09/2018 (24 days)=AED 13,150.80

Sub total: 55 days * 547.95/day=30,137.25

Balance from 1st cheque is AED 100,000-30,137.25=AED 69,862.75

Amount to be reimbursed to Mrs. Jane by Mr. Doe = AED 69,862.75+AED 10,000

deposit= AED 79, 862.75
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

Case Study 1 Part 3

Calculation of total adjustments due on Transfer date

Deposit: AED 2,690,880* 0.10= AED 269,088

To be paid by Mrs. Jane in favor of Mr. Doe to be held by the brokerage company until the
date of transfer. On date of the transfer the deposit cheque will be returned to Mrs. Jane.

Calculation of Transfer Fees: AED 2,690,880* 0.04= 107,635.20 plus AED 540 admin fees To
be paid by Mrs. Jane in manager’s cheque to DLD.

Calculation of Commission: AED 2,690,880 * 0.02= AED 53,817.60

To be paid by Mrs. Jane in manager’s cheque to the brokerage company on transfer date.

Total to be received by Mr. Doe on Transfer date

AED 2,690,880 (Selling Price) + 6,851.24 ( service charges)-79,862.75 ( rent owed to Mrs.
Jane)=AED2,617,868.50.
Total to be paid by Mr. Doe to developer: AED 500
Total to be paid by Mrs. Jane to DLD: AED 108,175.20
Total to be paid by Mrs. Jane to brokerage company: AED 53,817.60
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

35
26-Jan-20

CMA Exercise Solution

Unit 1 apt 120 2 2 1 1 yes yes 1700000

Unit 2 villa 190 4 4 2 yes yes pool 3350000 3410000
Unit 3 villa 194 3 4 2 yes yes pool 3200000 3360000
Unit 4 villa 185 4 5 3 yes yes park 3500000 3460000
Unit 5 apt 200 5 5 3 2 yes yes water 3950000
Unit 6 villa 210 4 5 2 yes yes 3400000 3480000
Unit 7 villa 192 4 4 2 no yes 3150000 3380000
Unit 8 apt 185 3 4 1 1 yes yes water 3450000
Unit 9 villa 220 4 5 2 yes yes 3200000 3280000
unit 10 villa 300 6 7 4 private yes lake 4900000
Unit 11 villa 140 2 3 2 yes yes 1630000
Total 20370000
•Assumed added values: Average 3395000
–Bedroom: 100000 Pool: AED 90000 Suggested listing 3.3-3.5m
–Bathroom: AED 60000 Gym: AED 35000
–Garage: AED 40000 Pool/park view 80000
–Locker: AED 20000 water/lake view 100000

Key variance
‫ إستخدامها او إعادة إنتاجها من دون الموافقة الخطية من المعهد‬,‫جميع الحقوق الفكرية محفوظة لمعهد دبي العقاري و اليجوز نسخها‬
The Copyright of these materials is vested in DREI. These materials should not be copied, reproduced or transmitted without our prior written consent.

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