Property Law in UAE is very young and is on its initial phase. It was in the year 2002 when the Ruler of Dubai announced that certain freehold properties in Dubai can be owned by foreigners. The Land Registration Law of the Emirate of Dubai (No.7/2006) known as the “Dubai Property Law” was enacted. It legalized freehold ownership rights to not only UAE and GCC citizens but also granted similar rights to non-GCC expatriates to certain Government entities like the Dubai Properties, Emaar Properties and Nakheel.
Registration of Title
The enacted law introduced Registration of Title at the Department of Lands and Properties. (http://www.dubai.ae/en.portal?departments,LDDEG,1,&_nfpb=true&_pageLabel=topic) Registration of one’s title is an exclusive evidence of his ownership rights. Any sort of limitations, conditions, liabilities, undertakings or encumbrances on the property should be registered in order to be transferred along with the property. Until and unless the third party interest is registered it is applicable only against the original owner as personal liability and is not enforceable to the new owner of the property.
Procedure for Registration
According to the Law, UAE and GCC nationals need to register their freehold interest over the property owned by them at the Department of Lands and Properties which is the sole authority to register title. However, the law restricts the rights of non-GCC expatriates and companies to register the following rights of title with the consent of the Ruler in certain designated areas:
- Freehold ownership of the property for an unlimited period – which means an absolute right to hold and dispose the property.
- Usufruct or leasehold right over real property for a period not exceeding 99 years – which grants the right to use and possess the benefits of the property.
According to the Land Department a lease or usufruct right with a term of less than 10 years cannot be registered. Leases on areas other than the designated areas are not allowed to be registered by foreigners. However, these leases can be enforced as personal contractual obligations between the parties. Companies which are enlisted in the Dubai Financial Market like Emaar are considered as a UAE or a GCC nationals for the purpose of registration of ownership.
Adjudicating Authority for Disputes
Dubai Court is the adjudicating authority for any disputes related to registered real property rights. In cases of unregistered leases disputes are o be heard by the Rents Committee.
Law on Inheritance of Property
An individual is supposed to make a will for his property in Dubai like most other countries. A notification of such inheritance must be registered in the property register maintained by the Land Department. Generally for UAE nationals no death or inheritance taxes are imposed.
Dubai International Financial Centre (DIFC)
The Dubai International Financial Centre or The DIFC is a federal financial free zone established following the prevalent federal law of UAE. Under the DIFC Property Law a recent registration system has been created which allows the DIFC to guarantee both for national and foreign companies and individuals, freehold and leasehold interest for a term of more than 1 year over real properties within the free zone. http://www.difc.ae/
Important Clauses of the Property Law
- Non-national or foreigners are entitled to absolute freehold or leasehold interest in real property only after obtaining the permissions of the three main developers of Dubai, namely, Emaar, Al Nakheel and Dubai Properties.
- Registration can be done in the name of foreigner only after obtaining a no objection certificate from the developer.
- Ownership of mainly three kinds can be granted- Freehold, usufruct and common hold.
- Usufruct lease can have a maximum term of 99 years.
- Common hold ownership allows having a share of freehold interest along with the landlord.
- Registration fee is two percent of the value of the property transferred and out of which the buyer has to pay 1.5 percent.
- All purchases of properties have to b legalized by registration of the title.
- The Law appoints The Department of Land and Properties has the sole implementing authority of the newly enacted property law.
Encouragement for foreign investments
The newly enacted law by recognizing 100 % ownership of foreigners in real properties in Dubai has in a way acted as a boast for foreign investments in real estate sector of Dubai. Thus has brought a new era in The Property Law of UAE.