Tuesday, February 28, 2006

Law on property ownership for foreigners

The new Property Registration Law, which is expected to grant ownership rights to foreign home buyers, will be promulgated soon
The proposed law, which has been submitted to the Dubai government for approval, is currently undergoing the third reading. As per the law, foreigners will have the right to lease or purchase the land, after getting approval from the three master-developers, Emmar, Al Nakheel, and Dubai Real Estate.

After the approval from the ruler, the developers will determine the plots which will be put on sale for foreigners. Foreigners, residing in the UAE or abroad, will be able to purchase the plots as per a contractual agreement with any of the three developers.

A land will be registered in the name of a foreigner only after the developers submit a no-objection letter, stating that all the payments for the transaction have been made in full.

There are three kinds of ownership proposed in the legislation: free hold, usufruct, and common hold. The owner will have complete ownership rights over a free hold property and the building in this case will be in the owner's name.

The second category is usufruct or long-term lease. The law characterises 'usufruct' as the right to use another's property short of destruction or waste of its substance. The right of usufruct, as per the law, should not be for less than five years. This will most probably be a long-term lease whose maximum validity period will range from anywhere between 50 to 99 years.

The registration fee for the transaction will be two per cent of the total value of the property, of which 1.5 per cent has to be paid by the purchaser and the rest by the seller. After the payment of the whole amount, the owner is free to either bequeath the property or sell it.

One important, and probably extremely consequential component of the law is the clause that those who already purchased property will have to legalise their purchase by registering it with the authorities, soon after the law comes into effect. Another important feature of the law is the recognition of the land development lease.

The law also specifies the functions and responsibilities of the Department of Land and Property, which has so far been doing all the work by virtue of practice, sans legal clarity. As per the law, the department will determine the survey areas, approve the land map and the fees for the services provided by the department.
Khaleej Times.

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