Dubai’s real estate has grown significantly, especially in comparison to how it was 10 years ago. One major difference that stands out is the formation of the Real Estate Regulatory Agency (RERA) by Dubai Land’s Department. RERA – after being formed at the peak time of Dubai’s real estate in July 2007 – brought in various rules and regulations that streamlined the transactions and centralised the database of all buyers and sellers in order to ensure the authenticity of the ownership of land, apartment or villas within freehold and non-freehold areas of Dubai.
Buying off-plan developments in Dubai
When buying off-plan developments in Dubai, there are two important steps for any investors to understand. The first is the signing of the agreement that is done between the buyer and the seller and the registration of sale with Dubai Land’s Department in order to secure the purchase legally.
When deciding to purchase any off plan property in Dubai, it is highly advisable to be aware of:
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the profile of the developer,
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the status of the land locality,
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the price of the land of the particular community.
Sales Purchase Agreement in Dubai
Sale Purchase Agreement, often referred to as SPA, is an agreement that is drafted by the developer (seller) and contains all the clauses and conditions of purchases to which both parties agree. Some compulsory clauses to look for within the SPA are:
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Size of the unit within the floor plan.
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Purchasing price of the unit.
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Payment schedule.
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Completion / Handover date stated in the SPA.
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Specifications of the apartments along with the appliances agreed by the developer.
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Penalty if the buyer backs out from the purchase.
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Penalty if the developer backs out or does not deliver on time.
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Late payment surcharges.
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Any recurring or maintenance fees if applicable.
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Number of parkings associated with the unit.
Generally the rest of the clauses are generic, but it is important to ensure that all 10 elements are clear and understood by the buyer before signing each page of the SPA. This agreement would work as the legal document in case of any arbitration that may occur at a later stage.
Once the SPA is mutually agreed and signed, the next step is to register the property with Dubai Land’s Department. If the property is ready to hand-over then the RERA issues a title deed of the property; however when the property is off-plan or under construction an Oqood certificate is issue by RERA under buyer’s name that ensures the property is registered under the buyer’s name. In order to register Oqood the buyer has to pay at least 25% payment to the developer before they can register Oqood with RERA. As per the law, the registration of Oqood is mandatory for every buyer and fees of 4% of the selling price along with some administration charges are charged to the buyer by the Land’s department for registration.
Because, RERA requires the buyer and the seller to be present during the property registration or transfer, if either of the two are not present, the authorized power of attorney would be able to complete the transaction on his/her behalf.
