It’s no longer news that Dubai has become one of the fastest-growing and developing cities in the world within recent years with a huge increase of large-scale real estate development projects in the residential, commercial and industrial sectors. Moreover, investment in the emirate’s real estate has become even more attractive after the new laws regarding the purchase of real estate by foreign citizens with the possibility of full ownership of assets at local population level came into force. Originally, the Dubai Land Department (DLD) was the only organization that oversaw all transactions regarding the sale and purchase of a property. But it was decided to create an appropriate system to regulate the whole process of the sale, purchase and lease of property assets because of the rapid growth in Dubai’s real estate market and the need for a more defined legal system to protect all parties involved in the deal. In 2007, the government of Dubai, together with the DLD supported the creation and implementation of the Real Estate Regulatory Authority – in other words – RERA.

Briefly on what RERA is

RERA acts as one of the regulatory divisions of the DLD and establishes precise rules and regulations for the Dubai real estate market, and directly monitors the compliance of each party within them. These rules include laws on the purchase of property and its lease as well as the legalization and registration of various forms of contracts regarding real estate in the emirate. The purchase and sale of real estate may seem at first glance a rather complicated process, however if you know the rules of the procedure and what necessary documents you need in advance, the process can actually be the complete opposite. Since a huge number of real estate transactions are carried out in Dubai every day, RERA has developed several final documents, which allows all participants in the process to be protected at the legislative level and can count on transparency and fairness in all real estate transactions. Furthermore, we will tell you about some of the documents you will need to be aware of when buying real estate in Dubai, which are especially helpful for amature investors.

Form A: Agency agreement or Listing form

When selling real estate in Dubai, Form A is one of the most important documents, which contains all the agreements between the seller and the listing agent, ready to sell an asset. These document includes:

<ul><li>All the details regarding the real estate.</li><li>Financial aspects (service fee, mortgage status, payment plan).</li><li>Giving the right to advertise the property legally and exclusively upon the previously agreed portals.</li><li>Terms of the sale itself.</li><li>Conditions of termination of the contract and the amount (%) of compensation as well as agency commission.</li></ul>

The broker has to obtain the seller’s information before beginning the process of the sale announcement. If the property is jointly owned by two or more people, they also must provide their data and sign a Form A. The sale of real estate is considered illegal without signing this agreement. After the agreement of all details and signing of the contract, Form A must be approved by the Trakheesi DLD system, which is responsible for assigning a unique authorization number for the property listing. Footnote: According to RERA law, a property owner (the salesman) may conclude no more than three Form A simultaneously and engage a maximum of three brokers (one contract for each broker engaged).

Form B: Agency agreement of the buyer

In the case of purchasing real estate (residential, commercial or industrial), the buyer will need to sign a Form B. It is valid only when the buyer has already identified a broker or real estate agency that will search for the right property. When Form B is concluded, both sides will need to provide all the necessary data. The type of land or property sought, location, budget and other requirements of the buyer are specified. The terms of termination of the contract and the amount (%) of compensation, as well as the agency commission, are also specified here. According to RERA law, the buyer has the right to terminate this agreement unilaterally for a specific reason. In such a case, the buyer needs to fill out a Form U with a description of the reason for terminating further cooperation. Important! When choosing an agent or a real estate agency, it is strongly recommended to contact only certified RERA professionals who will help you find the right asset that will meet your requirements and budget. You can view a list of such agents through the use of the app ‘Dubai brokers’ or go online and visit the website of the DLD and RERA.

Form I or Agency agreement

Form I is an agreement between two agents who act on behalf of the seller and the buyer. The main goal of this form is to protect the lists and rights of the agent and the agents’ clients, to ensure a professional relationship between the two agents as well as to clearly spell out the distribution of commission and to eliminate any possible manipulation in the future. Form I is mainly applicable when several agents are involved in one joint transaction concerning the sale or lease of real estate. Moreover, the representative of the buyer will not be able to attend auctions, to view the property, or to interact with representatives of the other party’s interests without a Form I.

Form F or Contract of sale

Form F, also known as the Memorandum of Understanding (MOU), is one of the main documents needed for property deals in Dubai and is concluded after the buyer has decided on the property. It is essentially a contract of sale which details the following points:

<ul><li>The negotiated and agreed-upon value of the real estate with the seller.</li><li>Conditions of purchase, payment terms, mortgage terms and commission to the agent.</li><li>All details about the object of purchase itself.</li></ul>

Form F is legally valid only if it is signed by both parties of the transaction and the signatures are dated and witnessed by representatives of both parties.

Form U - The notice of cancellation of the contract

As previously stated, the buyer or seller can unilaterally terminate the agreement with the broker by signing a copy of Form U. In such a case, it is the only legally accepted way of termination of the contract. This can be done only by notifying the real estate agent in written form, stating the reason for termination, and given at least seven working days in advance of the stated termination date. Footnote: Based on the RERA law, if the cooperation with the broker is terminated, the hirer is obliged to reimburse any fees , which was stipulated in Form A or B. But in most cases, factors such as the amount of work done and the length of the contract itself are taken into consideration.

Contract for the lease of property

Renting a property in Dubai is possible only if you sign an Ejari treaty, which is a legally binding document confirming the authenticity and legality of the lease. Also, you will not be able to connect utilities via DEWA as well as internet providers and TV services without an Ejari. When entering into a lease contract, standard rules apply with the description of the property, agreement on the rental price and payment terms and so on. According to the Law, if any of the terms of the lease are changed, the parties must notify each other in written form at least ninety days before the termination of the contract. You can learn more about how and why the Ejari system can be useful for tenants and lessors in Dubai in this article. Please note! Long-term leases are very common in Dubai. It is concluded for a period of 1 year or more, with the lease either being terminated or extended for a similar period. As for payment, most Landlords expect one cheque with the full yearly amount to be paid immediately, however it can be divided into 3, 4, 6, or sometimes 12 monthly installment cheques with fixed dates. But it is worth remembering that the fewer the cheques, the more likely it is to bargain for a lower c rental cost.

Conclusion

<ol><li>Real estate transactions in Dubai have become more open and transparent both for sellers and buyers with their representatives, due to the established norms and laws of RERA as well as the created forms of contracts.</li><li>When selling or buying real estate, it is advisable to seek exclusively the services of certified RERA brokers and real estate agencies.</li><li>You can re-check the information about licensed brokers on the DLD or RERA website or by installing the “Dubai brokers” app.</li><li>If the contract is terminated, the hirer has to notify the other party of the reason for termination in written form at least one week in advance.</li></ol>