What all to consider before signing sale purchase agreement in Dubai

property law

|

August 08, 2019

|

6667 views


| Your comment matters, please click here to rate article!



With a persistent variation in the property prices, the buyers are climbing the bandwagon to earn profits on investment. The developers are equally or slightly more beneficial from such a trend. Once both the parties, buyer and seller agree to buy or sell a specific unit, they enter into a Sale and Purchase Agreement commonly known as SPA in UAE.

SPA is a most frequently used jargon in commercial transactions especially in the real-estate sector. In order to finalize a deal of either a property or any other movable or immovable asset, a well drafted SPA is required. Even though having a SPA is one of the primary and most crucial requirements for the parties, yet parties fail to scrutinize this document to understand their legal status pursuant to the laws of UAE. It is always advised by Real Estate Lawyers to carefully review the contents of the SPA before signing it or parties must seek legal assistance. In line with the preceding, the Corporate Lawyers in Dubai have mentioned a few notable points in this article which must be carefully read and understood by parties before entering into SPA.

Every Emirate has promulgated numerous laws regulating the real-estate transaction within their Emirate. Accordingly, Dubai has issued innumerable laws such as Law Number 7 of 2013 establishing the Dubai Land Department, Law Number 9 of 2009 governing the interim property register, Law Number 8 of 2007 on the Escrow account to be maintained by Developers. All the foregoing laws offer protection to the buyer's post purchasing the property within Dubai. Even though we have ample of legislation safeguarding the interest of the buyers who are purchasing property in Dubai but that will come into effect only post the breach in the contract thus, prevention is always better than cure. As evident from enormous cases, buyers are still in a hurry to sign the SPA without glancing at the clauses mentioned in the agreement. Thus, it is advised to all our readers to thoroughly review the terms of the agreement or at least carefully look into the following issues before signing the SPA:

1. Review the license of Developer

It is essential for the buyer to review the permits of the Developer and to ensure if the developer is registered with the Dubai Land Department. This step is easy and most important as no one wants to sign the deal with a wrong developer. Thus, Department of Land, Dubai has provided a list of developers registered with them, through which one can ascertain if the developer is holding valid licenses and simultaneously registered with the authority.

2. Seek registration record of project

Each and Every real estate project in the Emirate of Dubai is registered with either Land Department or through Oqood as authorized by Real Estate Regulatory Department of Dubai (RERA). Through convenient access to the website of either authority, one can ensure if the project is registered or not as the authority has provided a non-exhaustive list of approved projects in Dubai.

3. Obtain a copy of the title deed

It is pertinent for the buyer to check if the actual owner of the property, as what is mentioned in the title deed is mentioned in the SPA. Thus, reviewing the title deed of the property is paramount. Apart from reviewing the title deed, the buyer must also review the rights awarded to the owner of the property and should verify if there are any restrictions. In addition to title deed, the buyer can also seek a copy of community declaration for understanding the rights in relation to the use of the property.

4. Review the details of essential parties in the SPA

To hasten up the procedure, buyers often neglect to check the parties involved in the contract as sometimes there are numerous parties to the contract that is the owner, developer, manager and more and seller only refer one party in the contract or rather a shell company just for signing agreements. Thus, it must be carefully reviewed, and due diligence on the seller is utmost necessary.

5. Check thoroughly the payment schedule

Considering a general scenario, the payment schedule terms offered by the developer are often too lengthy and extensive. However, they are one of the important document as it is the only obligation of the buyer under the contract. It must be reviewed cautiously to check if it meets the construction stages offered by the Developer.

6. Review the termination clause of the SPA

Termination provisions in a SPA are the most debatable clause as evident from the numerous cases filed before the competent courts in Dubai. In a general termination clause, the Developer retains the initial investment amount paid by the purchaser in the event of termination of the agreement or if the buyer fails to abide by his financial obligations. Accordingly, the buyer must carefully examine the termination clauses allowing him to rescind the contract, upon default of sellers obligations such as delay in handing over the property or failing to register the property with the authority and similar.

7. Check the details of the Escrow account

Dubai Law Number 8 of 2007 on maintaining the escrow account, obliges each contractor or developer in Dubai to maintain an escrow account for the project and all the investment made by the sellers should be submitted in the escrow account. The property developers, failing to abide by this provision can face hefty penalties. Thus, it is essential for the buyers to seek details from the developer or RERA of an escrow account to ensure the security of investment amount.

8. Study the dispute resolution clause

Buyers must carefully study the governing law to ensure if the law regulating the contract is of UAE. In addition, he must check the method for resolving disputes which can be either through UAE courts or independent arbitration centers. In case the contract opts for arbitration, buyers must seek legal advice from Arbitration Lawyers in Dubai.

9. Check a power of attorney for authorized signatory

Sometimes, the developers authorize third parties to sign the contract on their behalf which is commonly known as authorized signatories. Ergo, the buyers must carefully review power of attorney granting signatory rights to the authorized signatory.

10. Check the completion date of the project and consequences for failure

Every sale purchase agreement has a completion date on which the seller will hand over the unit to the buyer. However, we have witnessed numerous cases, wherein the sellers fail to oblige with the hand over date. On the other hand, buyers being unaware of the completion date lose their right of terminating the property and seeking compensation. Therefore, buyers must determine the completion date of the project and should understand the legal consequences for the seller, if they breach the provision of the contract.


Related Links


Copyright © of this article is retained by the author and/or other copyright owners. We explicitly grant you permission to download a copy, without any alteration, of this article for personal non-commercial research or study, without prior permission or any charge. This article can be utilized on your website or for marketing, however, we grant you permission to host this article on your website and no other rights. This content should not be altered in any way or sold commercially in any format without prior permission of the copyright holder. During reference of this article, full biographic details entailing the name of the author, his designation, the institute and the publishing date of the article shall be provided.


Comments

No comments found.

Leave a Comment

Your email address will not be published. Required fields are marked *

Want to know more?
Then talk to us.


Client Testimonials

I owe the success of my case to Dr. Hassan's diligent approach. He remained focused, put me at ease and always went the extra mile. Dr. Hassan tirelessly put my case in the best possible light and I cannot thank him enough. I would highly recommend Dr. Hassan - I am grateful to him from the bottom of my heart.

Raphael Lauria
Manager, FME General Trading

Dr. Hassan Elhais is among the best legal consultants I have ever worked with. He has an amazing ability to reduce complex issues into a simple concept that non-legal people can understand. He consistently develops innovative litigation strategies that help us to achieve our ultimate legal goals.

Zhuo Liu
Client

...the extraordinary effort that has been exerted by the staff, and we specially thank Dr. Hassan Mohsen Alhais. Wishing your continues success & excellence...

H.H. Sheikh Saeed Bin
Mohammed Hashir Al Maktoum

I believe everyone should recognize what a difference Dr. Hassan Elhais work has made to people's lives; and especially to our family's life, because we will remain forever grateful to each and every one of his team.

Luis Pozueco
Client

Dr. Hassan Elhais never fears cases that involve exposure and he always gives me his honest assessment of our chances of success, which is invaluable to me.

Bassam Yamout
Director, JM Metal Trading LCC

He aided us not only in providing legal advice but also in all legal issues that required a long term strategic approach to achieve most favorable and optimum outcomes he provided us with high level of professional service.

Philippe Delbecq
Client

Dr. Hassan Elhais is a responsible, reputable counsel who operates to high levels of service.

British Client

Dr Hassan Elhais is responsive, thorough and creative with his advice, and is a valued advisor and legal consultant.

Asma Mattar
Manager, Italian Style

Regardless of the complexity of the matter I know Dr. Hassan Elhais will consider not only legal strategy but also business practicalities in providing advice and litigation options.

Dr. Massimo Hakim
Chairman, Italian Style

I recommend Dr. Hassan Elhais to anyone who says 'I'm in legal trouble'. I was extremely satisfied with the high standard of his work. He has always been there when I have needed him and I refer all my clients, family and friends to him/his firm.

Manish Gupta
Marketing Manager, Express Digital System

Dr. Hassan Elhais was very professional and he listened to my needs. He was very prompt, efficient and always kept me informed. Dr. Hassan Elhais's service was excellent and I would definitely recommend him to friends and colleagues.

James Horsley
British Client

Select your Language:

     

Main Menu