UAE laws are based on a combination of the civil law, Islamic Sharia law as well as common law. The UAE’s Civil Code (Law No. (5) of 1985) as well as the UAE Constitution provide the laws and regulations of property and property transactions at a federal level, these laws are enacted by each emirate of this federation.
Free zones within the UAE also exist, where they follow the common law. Free zones in the UAE are authorized to issue their own laws and regulations that are different from the civil law practiced in different areas. Notable free zone areas include the Abu Dhabi Global Market (ADGM), Dubai International Financial Center as well as Umm Al-Quwain free zone to name a few.
This article provides a brief guide to UAE laws to keep in mind for real estate investors, focusing on three emirates: Abu Dhabi, Dubai and Umm Al Quwain.
1. Abu Dhabi & Dubai
1.1 Property Ownership
Freehold Ownership
Freehold, or absolute ownership, in Abu Dhabi is restricted to specific groups. These include UAE nationals and companies incorporated within the UAE that are wholly owned by them. Public joint stock companies listed on UAE exchanges are also eligible, provided their non-UAE ownership does not exceed 49%. Additionally, specific individuals or companies may be granted permission to own real estate through a special decision by the Crown Prince or the Executive Council. For all other nationalities, real estate ownership is limited to designated “investment areas,” where foreign ownership is permitted.
Similarly, in Dubai, full ownership of real estate is primarily available to GCC nationals, UAE citizens, and companies incorporated in the UAE that are fully owned by them. UAE-listed public joint stock companies also fall under this category. Like in Abu Dhabi, non-GCC nationals are only allowed to own property in specific areas designated for foreign ownership, ensuring that most of the real estate market remains under the control of local or regional entities.
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Usufruct & Musataha Ownership
A usufruct is the right to use and enjoy someone else’s property without owning it, as long as you do not change or damage the property. For example, you can live in a house or rent it out, but you cannot make major changes to it. A musataha is a specific type of usufruct that also allows you to build on the land that belongs to someone else. Therefore, you not only have the right to use the land, but you can also construct buildings on it during the time of the agreement.
In Abu Dhabi, UAE nationals and UAE-incorporated companies can hold usufruct and musataha rights without restrictions, while non-UAE nationals are limited to designated investment areas.
In Dubai, these rights are available to GCC nationals and UAE-incorporated companies, with non-GCC nationals restricted to designated areas. Usufructs are capped at 99 years, and musatahas at 50 years, renewable once in Abu Dhabi.
Leasehold Ownership
In the UAE, leasehold interests are typically regarded as personal agreements between two parties, not as real property rights. However, leases lasting 25 years or more in Abu Dhabi, and 10 years or more in Dubai, are exceptions and can be registered as real property rights.
1.2 Ensuring Legal and Proper Title Transfer
Registration of Transfers
All transfers of land in Abu Dhabi and Dubai must be registered.
In Dubai, this may be done remotely through the Dubai Land Department (DLD) portal, or it may be done in person at one of the trustee offices of the DLD; while in Abu Dhabi it is done at the Abu Dhabi Department of Municipalities and Transport (DMT).
The DIFC and ADGM have their own system of land registration and maintain their own registers. Certain other free zones maintain their own register of real estate interests, but this does not negate the requirement to register land transactions at the onshore land register.
Off-Plan Sales Contracts
In Abu Dhabi and Dubai, contracts for the sale of real estate that is under construction must be registered on an interim register. Interim registration does not create any legal ownership. Upon completion of the property, the interim registration is cancelled, and full registration occurs.
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2. Umm Al Quwain - Laws & Amendments
Real Estate Register – Law No. 2/2023
This key law establishes an Interim Real Estate Register to regulate property registration across the Emirate, promoting transparency and accountability in real estate transactions, essential for the Emirate’s urban development.
Real Estate Landscape – Law No.3/2023
This law regulates real estate development, standardizes project pricing, and establishes escrow accounts, aiming to protect investors, developers, and companies, fostering a more secure and stable real estate market.
Sales Transactions – Law No.4/2023
Umm Al Quwain Law No. 4/2023 amends Law No. 3/2007, providing clear guidelines for compliance with regulations from the Real Estate Foundation. This strengthens the legal framework for property sales, minimizes disputes, and boosts market confidence.
Mortgages – Law No.5/2023
This law governs mortgage registration through the Umm Al Quwain Municipality, in line with UAE Central Bank regulations. It also addresses unregistered mortgages, ensuring a smoother and more secure mortgage process.
Investor Rights – Law No.6/2023
This law tackles delays in real estate development, highlighting the need for timely project completion. It creates a special committee to address issues related to canceled and incomplete projects, ensuring the protection of investors’ interests.
Brokerage Activities – Law No.7/2023
Umm Al Quwain Law No. 7/2023 updates the regulations for real estate brokerage in the Emirate. This legislation establishes comprehensive guidelines to oversee brokerage activities, promoting transparency and accountability.
General Outlook
The UAE’s real estate laws are continually revised to improve clarity and investor protection. Staying informed about these changes is vital for anyone involved in property transactions. Consulting a qualified lawyer is essential to understand your rights, navigate legal complexities, and ensure compliance with the latest regulations, thereby safeguarding your investments in this evolving market.
