Dubai’s Real Estate is getting matured day by day and comparing it with the industry how it was 10 years ago, one major different that stands out is the formation of Real Estate Regulatory Agency (RERA) by Dubai Land’s Department. RERA after being formed at the peak time of Dubai real estate in July 2007 brought in various rules and regulations that streamlined the transactions and a centralized the database of all buyers and sellers in order to ensure authenticity of the ownership of land, apartment or villas within freehold and non-freehold areas of Dubai.
When buying an off plan developments in Dubai, the two steps that are of prime importance for any investors to understand are the signing of agreement that is done between the buyer and the seller and the registration of sale with Dubai Land’s Department to order to secure the purchase legally.
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 the parties the developer and the buyer agree. Some compulsory clauses to look for within the SPA are
- Size of the unit within the floor plan
- Purchasing price of the unit
- Payment schedule
- Completion / Handover date stated in the SPA
- Specifications of the apartments along with the appliances agreed by the developer
- Penalty if the buyer backs out from the purchase
- Penalty if the developer backs out or does not deliver on time
- Late payment surcharges
- Any recurring or maintenance fees if applicable
- Number of parking associated with the unit
Generally the rest of the clauses are generic, but it is important to ensure all these 10 elements are clear fully read by the buyer before signing on each page of the SPA as this agreement would work as the legal document in case of any arbitration that may occur at any 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 RERA issues a title deed of the property; however when the property is off plan or during construction an Oqood certificate is issue by RERA under buyer’s name that ensures the property is registered under buyer’s name. In order to register Oqood the buyer has to pay at least 25% payment to the developer before he / she 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 this registration.
Because, RERA requires the buyer and the seller to be present during the property registration or transfer, in case either of the two is not present, the authorized power of attorney would be able to complete the transaction on his / her behalf.