Dubai Real Estate - Freehold Property Law

In implementation of the provisions of this Law, the following terms and phrases shall have the meanings appearing parallel thereto, unless otherwise provided by the context.
Emirate : Emirate of Dubai
Department : Department of Lands
President : President of the Department
Director : Director General of the Department
Register : Register prepared by the Department for registration of developers.
Guarantee Account : Guarantee account of a property development in which sums paid by buyers of units on the plan or by financiers of developments are deposited.
Concerned Authorities : concerned government or semi-government licensing authorities.
Developer : A natural or corporate person licensed to carry on property development business in the Emirate, including a main or minor developer.
Property Development : Projects involving construction of multi-storeyed buildings or compounds for residential or commercial purposes.
Property : Everything that is permanently fixed in its space and cannot be shifted without destruction or alteration in appearance.
Unit : A partitioned part of a property which a developer sells to third parties.

Provisions of this Law shall be applicable to a who sells units on the plan of the Emirate’s property developments that are not yet completed, whether under or in the process of construction, and who receives payments from buyers or financiers against such units before completion of the developments.

A special register known as (Register of Developers) shall be prepared at the Department to register names of developers licensed to carry on property development business in the Emirate. No developer may carry on such business in the Emirate unless being registered in the Register.

A developer shall not advertise in local or foreign media, or participate in local or foreigner exhibitions, for promotion of sale of units or properties on the plan or in the process of construction in the Emirate, until having obtained a written permit from the Department. The Director shall issue the necessary decisions to regulate the terms and conditions of advertising in media and participation in exhibitions.

Without prejudice to provisions of Article (3) of this Law, a developer wishing to sell units on the plan shall apply to the Department in order to open a guarantee account and shall enclose the following documents:
-Trade license and certificate of registration of membership in Dubai Chamber of Commerce & Industry.
-Title deed of the plot intended for development.
-Letter of approval in relation to the development and issued by the main developer.
-Architectural designs and layouts approved by concerned authorities and the main developer
. -A balance sheet approved by the development’s consultant about sums payable to creditors of the development.
-Building permit issued by concerned authorities .
-Copy of a sale contract between the developer and the buyer.

A guarantee account shall be established according to a written agreement between a developer and the Department through which sums paid by buyers of units on the plan, or paid by financiers, shall be deposited in a special account opened under the name of the property development in an approved bank in the Emirate. The agreement shall determine the conditions of account management, the rights and obligations of contractual parties and other terms and obligations.

The Department shall enter into a contract with an approved,experienced and qualified auditor to manage a guarantee account under its supervision. Spending from deposited sums shall be according to the conditions of contract and the provisions of this Law, and the guarantee account shall be governed by criteria of financial and accounting control that are in force in this regard.

Depositors or their representatives may examine their own accounting records and request copies thereof. The representative of official authorities may also examine the records as well as obtain copies thereof.

In the event that a developer mortgages a development to obtain a loan from financing establishments or companies he shall have to deposit the mortgage sum in the guarantee account. Disposal of a mortgage sum shall be according to provisions of this Law.

A developer may apply to the auditor for spending from a guarantee account after submitting a certificate issued by the consultant of a development describing completed stage and the requirement of a subsequent stage. The auditor shall have to inform the Department in writing about sums paid to the developer.

Without prejudice to Article (11), an auditor shall disburse payments due to a developer within 7 working days from the date of request for payment or the date of completion of required documents.

The Department shall keep 10% of the value of a development in the guarantee account for a period of one year after a developer has obtained a certificate of completion. The held sums shall not be spent until the units are registered in names of buyers and title deeds are issued under their names.

Without prejudice to any penalties provided for in any other law, a penalty of incarceration and payment of a fine not less than 200,000 Dirhams,or either one of them, shall be imposed on anyone who:
-Carries on property development business in the Emirate without a license.
-Submits false documents or misstatements to concerned authorities in order to obtain a license for carrying on property development business.
-Offers to knowingly sell units in bogus property developments.
-Embezzles, uses or squanders payments delivered to him for the purposes of construction of property developments,and misappropriates such payments.
-Any auditor who deliberately prepares a false report about the result of an audit he conducts on a developer’s financial position, or conceals significant facts from his report.
-Any consultant who knowingly approves false documents about a property development.

If proved that a developer is unable to execute a development, the Department shall take necessary legal actions to protect rights of third parties.

A developer shall be cancelled from the Register in any of the following events:
-If he declares his bankruptcy.
-If he cancels his license.
-If carries on prohibited business in the Emirate.
-If he repetitively violates provisions of Article (5) of this Law.

Existing developers at the time when provisions of this Law are applicable shall adjust their status in accordance with the provisions herein.

The Department may collect management fees against services offered in accordance with this Law.

This Law shall be published in the Official Gazette and shall be effective from the date of publication.