In the UAE, the process of buying, selling, and leasing real estate is meticulously regulated through laws and legislation designed to protect the rights of all parties involved and ensure the transparency and integrity of real estate transactions. The UAE law addresses this process in detail by outlining the obligations of the seller, buyer, and tenant, as well as the role of the real estate agent, providing a legal framework to ensure transactions are conducted smoothly and in accordance with legal provisions.
Legal Obligations of the Seller:
Disclosure of Property Condition: The UAE law and in particular Article 246 of the UAE Civil Transactions Law mandates that the seller must disclose all relevant details about the property, including any hidden defects or legal issues that could impact the transaction. Failure to disclose such information may result in the contract being annulled and claims for compensation.
Transfer of Ownership: Upon the completion of the transaction, the seller must ensure the transfer of ownership to the buyer in the property registry. This process is regulated by the Dubai Land Department to guarantee the buyer's legal ownership of the property.
Settlement of Financial Obligations: Under UAE law, the seller is required to settle all outstanding financial obligations related to the property, such as taxes or overdue instalments, before transferring ownership. Failure to do so may expose the seller to legal claims from the buyer.
Legal Obligations of the Buyer:
Timely Payment: According to Article 512 of the UAE Civil Transactions Law, the buyer is obligated to fulfil the payment at the location and time stipulated in the contract.
Property Inspection: The law advises buyers to inspect the property and ensure that it meets the agreed-upon specifications before finalizing the transaction. Neglecting this responsibility may weaken the buyer's position if defects are discovered after the purchase.
Adherence to Contracts: After signing the contract, the buyer is bound by the agreed-upon terms, including payment deadlines and the transfer of ownership. If the buyer fails to comply with these terms, they may face legal penalties.
Role of the Real Estate Broker:
Registration and Licensing: The real estate broker must be licensed by the Dubai Land Department, as required by the Real Estate Brokerage Law No. 85 of 2006. This ensures that the broker has the necessary expertise and knowledge to successfully facilitate the transaction.
Mediation Between Parties: The real estate broker plays a key role in facilitating negotiations between the seller and the buyer, ensuring that all terms and conditions are clearly understood. The broker is legally obliged to act with honesty and integrity, without favouring any party.
Liability and Compensation: If the broker provides false information or omits important details that cause harm to any of the parties, they may be held legally accountable. The harmed party has the right to seek compensation for any losses incurred due to the broker's misconduct.
Responsibility for Property Valuation Costs:
Typically, the seller is responsible for arranging and covering the cost of property valuation before selling the property. This ensures that the property is priced correctly based on its current market value. Valuation helps determine a fair price and ensures that it aligns with market expectations.
In some cases, the buyer may bear the cost of valuation if the appraisal is required by the financial institution providing a mortgage loan. In this scenario, the property appraiser is appointed by the bank or financing entity, and the buyer pays the valuation fees as part of the loan process.
Responsibility for Property Listing Costs:
The real estate agent assumes responsibility for listing the property in real estate markets, whether through online platforms or traditional methods like printed advertisements. This includes showcasing the property on websites, providing professional photography, and preparing a detailed description to attract potential buyers or tenants.
Occasionally, the seller may agree to share the costs of listing the property in real estate markets with the real estate agent, particularly if extensive advertising campaigns are required. A portion of these costs may be added to the agent's commission upon completion of the transaction.
There are no strict laws governing who bears the costs of listing a property in the real estate market in the UAE. Instead, these costs are determined by the contractual agreements between the parties involved. The seller and the real estate agent must negotiate these expenses in the brokerage agreement, including whether the seller or potential buyers will bear part of these costs.
If the property owner wishes to rent out the unit instead of selling it, they must comply with a set of laws and regulations governing the rental process in the UAE. This process is meticulously regulated to protect the rights of both owner and tenant, ensuring that the transaction proceeds legally and smoothly.
Landlord's Obligations When Renting a Unit:
Drafting an Official Lease Agreement: The landlord must prepare a written lease agreement that includes all the terms and conditions agreed upon with the tenant. This process is regulated by Federal Law No. 26 of 2007 concerning the regulation of the relationship between landlords and tenants in the Emirate of Dubai. The law requires the registration of the lease agreement in the "Ejari" system, managed by the Dubai Land Department, to ensure the contract's legality.
Disclosure of the Unit's Condition: The landlord is required to provide the unit in good condition, suitable for living or the agreed-upon use. Article 16 of Law No. 26 of 2007 stipulates that the landlord must deliver the unit in a condition fit for the agreed-upon purpose. Any failure to meet this obligation gives the tenant the right to claim compensation or terminate the contract.
Maintenance and Repairs: The landlord is obliged to carry out necessary periodic maintenance of the unit, including repairing any defects that affect the safety of the property or prevent the tenant from fully benefiting from it. Article 17 of the same law specifies that the landlord is responsible for all essential repairs in the unit unless otherwise agreed upon in the contract.
Tenant Obligations When Renting a Unit:
Timely Payment of Rent: According to Article 25 of Law No. 26 of 2007, the tenant is required to pay rent on time as specified in the contract. If the tenant fails to pay the rent on time, the landlord has the right to take legal action, which may include requesting the eviction of the property.
Maintaining the Unit: The tenant must keep the unit in good condition and refrain from making any substantial changes without obtaining written consent from the landlord. Article 21 of Law No. 26 of 2007 states that the tenant is responsible for any damage resulting from misuse or negligence.
Vacating the Unit at the End of the Lease: The tenant is required to vacate the unit at the end of the lease term unless an extension of the contract is agreed upon. Article 30 of Law No. 26 of 2007 regulates the conditions for terminating the lease agreement and outlines the necessary procedures if either party wishes to terminate the contract before its expiration date.
Role of the Real Estate Agent in the Rental Process:
Property Promotion and Negotiation: The real estate agent markets the rental property and seeks potential tenants. The agent also facilitates negotiations between the landlord and tenant to ensure that both parties reach satisfactory terms.
Contract Preparation and Registration: The agent may assist in preparing the rent contract and registering it with the "Ejari" system (An electronic system managed by the Dubai Land Department for registering rental contracts, contributing to the documentation of landlord-tenant relationships and ensuring all contracts comply with the law). This ensures that both parties adhere to legal requirements and that their rights are protected.
Integrity and Transparency: The real estate agent must maintain integrity and transparency in all dealings and avoid any conflicts of interest that could affect the transaction. The agent is responsible for providing accurate advice to both parties and ensuring that all procedures comply with current laws.
Responsibility for Paying Real Estate Agent Fees:
In the process of buying or renting a property, the responsibility for paying real estate agent fees is a key aspect that needs to be clearly defined. In the UAE, the law and contractual agreements between the parties determine how these fees are distributed:
In Case of Sale: The seller is responsible for paying the real estate agent's fees when selling a property. The percentage of this fee is outlined in the brokerage agreement between the seller and the agent. Common practice in the market ranges from 2% to 5% of the property's sale price. The seller bears these costs as part of the sale process.
Although it is most common for the seller to pay the agent's fees, there may be agreements where the buyer contributes to these fees, especially in high-demand property situations or if additional services, such as legal or financial advice, are provided.
In Case of Rental: The tenant is responsible for paying the real estate agent's fees when renting a property. These fees are usually equivalent to one month's rent or a specified percentage of the annual rent and are paid at the time of signing the rental agreement.
In some cases, the landlord may cover the real estate agent's fees when renting out the property. This ensures effective marketing of the property and the quick acquisition of potential tenants.
*Law No. 33 of 2008: Amends certain provisions of Law No. 26 of 2007, aiming to improve the regulation of landlord-tenant relationships with a focus on protecting the rights of both parties and ensuring fair contract execution.
*Federal Law No. 8 of 2007: Governs the landlord-tenant relationship and specifies the obligations and rights of each party.
*Law No. 13 of 2008: Requires the registration of all sales and rental transactions to ensure transparency.
*Law No. 27 of 2007: Regulates joint property ownership and defines the responsibilities of real estate development companies.
*Law No. 7 of 2013: Concerns the Dubai Land Department and governs the registration of sales and purchases, ensuring accredited and documented property valuations for transaction transparency.
*Real Estate Mediation Law No. 85 of 2006: Specifies that real estate brokers must be registered and accredited by the Dubai Land Department, and regulates how brokerage fees are collected and distributed among parties.
*Real Estate Consumer Protection Law No. 19 of 2020: Ensures that all fees and commissions are clearly stated and documented in contracts, and that the involved parties have explicitly agreed to them.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.