Rights and registration
What types of holding right over real estate are acknowledged by law in your jurisdiction?
The Civil Code (Federal Law 5/1985) provides for various types of tenure, including:
- freehold – the right to use, enjoy and occupy land or property permanently;
- musataha – the right to build on land for a specified duration not exceeding 50 years. The holder of a musataha right is deemed to own all buildings on the land during the specified term; and
- usufruct – the right to use, enjoy and occupy land or property belonging to another person for a fixed term not exceeding 99 years. Usufruct is similar to the concept of leasehold under English law.
In Dubai, land can also be gifted by the ruler of Dubai to a UAE national at no cost for commercial, industrial or residential purposes. Granted land is not freehold land and is subject to various restrictions.
Are rights to land and buildings on the land legally separable?
In both Dubai and Abu Dhabi a ‘volumetric’ subdivision of land and buildings into designated components is permitted (see Article 8 of the Dubai Direction for General Regulation (2010) and Article 61 of Abu Dhabi Law 3/2015).
Which parties may hold and exercise rights over real estate? Are there restrictions on foreign ownership of property?
There is no express prohibition in the Civil Code against foreign land ownership. However, each emirate can pass its own laws to regulate property ownership.
In Dubai, UAE nationals, Gulf Cooperation Council (GCC) nationals and companies fully owned by either of these can own property anywhere in Dubai (Article 4 of Law 7/2006). A non-UAE/GCC national can own only a freehold, leasehold (up to 99 years) or usufruct (up to 99 years) in designated areas in Dubai, which are listed in Regulation 3/2006 (as amended by Regulation 1/2010), or in the free zones.
Under the Dubai Land Department’s existing policies:
- a foreign company can own only a freehold, leasehold (up to 99 years) or usufruct (up to 99 years) in designated areas in Dubai and the foreign company must be registered onshore in Dubai or offshore in the Jebel Ali Free Zone and certain other free zones; and
- a fund or a trust (or an entity which is held by either of these) cannot own property anywhere in Dubai.
How are rights, encumbrances and other interests over real estate prioritised?
The registration serial number allocated by the relevant registry determines the rank of a mortgage for liquidation purposes. If more than one mortgage registration application is submitted simultaneously for the same real estate, all mortgages will be allocated an identical registration number and the creditors will rank them equally (see Article 1425 of the Civil Code, Article 17 of Dubai Law 14/2008 and Article 45 of Abu Dhabi Law 3/2015).
Must real estate rights, interests and transactions be registered in your jurisdiction? What are the legal effects of registration?
- a developer must register all dispositions of off-plan property in the Interim Register, which is maintained by the Dubai Land Department (Article 3 of Law 13/2008, as amended by Law 9/2009 and clarified by Decree 6/2010);
- a disposition of a completed property must be registered in the Real Property Register, which is also maintained by the Dubai Land Department;
- all leases must be registered with the Real Estate Registration Authority (Article 4 of Law 33/2008); and
- all mortgages must be registered with the Dubai Land Department (Article 7 of Law 14/2008).
Failing to register in accordance with the above will invalidate the relevant sale, lease or mortgage (Article 3(1) of Law 13/2008, Article 4 of Law 33/2008 and Article 7 of Law 14/2008). Therefore, a contract of sale, mortgage or lease is legally binding only if it is registered.
What are the procedural and documentary requirements for entry into the national real estate register(s)? Can registration be completed electronically?
The registry in each emirate has its own rules governing how title is transferred. In Dubai, to register a transfer of title, the buyer and seller must both meet with the Dubai Land Department or a real estate registration trustee. At that meeting, several steps are completed, including the following:
- various original documents will be produced by the buyer and seller, including:
o the title deed;
o a no objection certificate from the developer;
o the mandatory Dubai Land Department template Property Sales Contract between Buyer and Seller form (F), which can and should be augmented (using a schedule, an attachment or incorporation by reference) by the parties entering into a separate sale and purchase contract or memorandum of understanding; and
o the passport, visa or emirates identification of the seller and buyer (if an individual) or the corporate documents of the seller and buyer (if a company);
- the buyer and seller will sign the Dubai Land Department forms for the transfer of title;
- the buyer will pay the purchase price to the seller;
- the necessary payments will be made to the Dubai Land Department and the real estate registration trustee; and
- the Dubai Land Department will issue the buyer with a title deed for the property.
Registration cannot be completed by the parties electronically.
What information is recorded in the national real estate register(s) and to what extent is such information publicly available?
The Property Register records all transactions that create, transfer, amend or extinguish real property rights (being any principal or collateral rights in rem) (Article 9 of Law 7/2006). The description and location of the real property and the rights related thereto are stated in the Property Register.
In Dubai, the Property Register is not open to the general public. However, the following parties can inspect the Property Register and obtain a certified copy of the documents kept on record:
- interested parties (generally the landowner);
- judicial authorities and experts appointed by them; and
- competent authorities (see Article 5 of Law 7/2006).
Is there a state guarantee of title?
There is no state guarantee of title.
The validity of information in the Property Register may be challenged on the grounds of fraud or forgery (Article 7 of Law 7/2006). The Dubai Land Department can correct errors in the Property Register either at the request of a third party or on its own initiative (Article 13 of Law 7/2006).