property law

|

October 19, 2016

|

6825 views


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



The conventional wisdom about the UAE is that it was built on oil first and property second. The country's most populous city Dubai is a living shrine to the role property has played in building society from the ground up; hardly a week goes by when a gleaming new skyscraper isn't added to the pack, which combined gives Dubai the tittle of the world's tallest city.

But the economic bounty that property has brought to the country has a fraught history, with the rapid pace of development leading to a burst property bubble during the recession years. Big lessons were learned as a result of this and new bylaws introduced. However, laws were already in place governing the responsibility played by the property brokers who act as intermediaries in negotiating property deals.

Broker's activities are regulated by the Real Estate Brokers Register in Dubai under bylaw No. 85, and under this law is a broker's defined as "any person who undertakes real estate brokerage business in accordance with this bylaw".

If, as is happened commonly during the recession, property developers fold, file for bankruptcy or flee the country, the duties of the broker to the buyer will come under close inspection.

The broker, who has provided information on the property and helped match the buyer with the developer, must have acted according to the code of ethics encapsulated under bylaw No. 85.

That means the broker must have acted in a transparent manner in his role as broker, he must have provided all necessary, accurate details about the property to the buyer and have put the buyer no duress or pressure to purchase the property.

This requirement does not relieve the buyer from their duties of due diligence when considering a purchase and some level of sales tactics on the part of the broker will be deemed permissible. Because the terms of a sales and purchase agreement will by-and-large exist only between the purchaser and developer, the buyer should take all precautions in properly investigating both the property developer and the property broker before embarking on a negotiation.

Questions a potential purchaser would be well advised to ask include checking whether the broker is licensed to operate in Dubai; whether the project is licensed with the Dubai Land Department (DLD) and whether an escrow or trust account exists to hold purchaser's funds in until handover; whether the relationship between the broker and developer is registered with the DLD; and whether the broker is a competent figure and able to answer all questions ask of them.

However, the duties incumbent on the broker include:

1. Ensuring the good standing and viability of the property developer and that the developer is registered with the DLD.

2. That a clear and concise contract exists to govern the relationship between developer and broker. It is recommended this agreement also be registered with the DLD.

3. The broker must ensure all information provided to buyers is accurate and transparent and the broker must in no way mislead any purchaser.

4. The broker is expected to hold on to copies of any relevant documents or other items relating to a purchase and sale transaction.

If all these duties are adhered to, the broker is unlikely to be held liable for any situation where the developer becomes insolvent or the project fails to materialise. This is enshrined in law by Article 267 of The Commercial Code, which states: "The broker is not required to guarantee the solvency of the two parties to the transaction in which he intermediates. He shall bear no liability of the goods related thereto, unless it is established that he committed an act of fraud or fault and he is held for guarantee under the agreement or the law".

As always, if you are considering acting as any party to such a transaction and would like more clarity related to the laws governing such commercial activities please don't hesitate to seek legal counsel.

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