Real estate transactions, particularly secondary sales, involve complex processes requiring careful attention from both buyers and sellers. Ensuring legal compliance and the smooth progression of the transaction is crucial for all parties involved. This guide provides an overview of the key steps, necessary documentation, and considerations for buyers and sellers during the MOU stage, governed by the Unified Contract F under the Dubai Land Department (DLD).
For Buyers: Key Steps and Considerations during MOU Drafting
1. Buyer’s Information
- Personal Details: Buyers must provide their passport, Emirates ID, email, and contact number for inclusion in the DLD system by the brokerage company during the drafting of Unified Contract F. Accurate details are crucial for generating the MOU link by DLD and send to the registered email.
- Transaction Participation: Buyers should specify if they will attend the transaction personally or designate a Power of Attorney (POA). Fam Conveyancing can assist with acting as a POA holder, if necessary.
- Payment Method: The buyer must confirm whether payment will be via mortgage (handled by the buyer’s bank), or cash buyer where the buyer pays via manager cheque, cash, or bank transfer. For cash payments, a court declaration from the Seller is mandated by DLD, confirming the Seller’s receipt of funds from the buyer without further claims.
- Bank Account Status: If a third-party cheque is involved, a third-party NOC letter may be required to confirm that the third party is using the cheque on behalf of the buyer without any interest in the property.
- Escrow Services: If the buyer does not have a bank account or POA, Fam Conveyancing can assist the client tooffering escrow services.
2. Minor as Buyer (Under Age 21)
- Legal Guardianship: If the buyer is a minor (under 21), the legal guardian (typically the father) must attend the transaction with the minor’s passport.
- Required Documentation: The minor’s birth certificate, attested by the Emirates Consulate in the country of origin and the Ministry of Foreign Affairs, along with a translation into Arabic, is required.
3. Documents Required
- Passport and Emirates ID
- Visa (if applicable)
- POA form & ID (if applicable)
- Booking deposit copy (cheque)
- If purchasing through a company:
- Trade License/Certificate of Incorporation
- Authorized signatory’s passport, visa, Emirates ID
- Power of Attorney (attested, if applicable)
- Memorandum of Association (both Arabic and English)
- Other relevant company documents
4. Buyer’s Obligations
- Initial Deposit: A deposit of 10% of the sale price, held by the conveyancer/broker until the transfer date, must be paid. This is later replaced by a manager’s cheque of the full selling price amount during the transfer.
- Additional Fees: Buyers are responsible for DLD transfer fees, trustee fees, and other relevant charges such as brokerage fees, conveyancing fees, and service charge refunds to the Seller for unused portions. These fees are typically based on the selling price.
For Sellers: Key Steps and Considerations
1. Seller’s Information
- Personal Details: Sellers must provide their passport, Emirates ID, email, and contact number for inclusion in the DLD system. These details are essential for generating the MOU link.
- Transaction Participation: Similar to the buyer, the seller must confirm if they will attend the transaction personally or designate a POA. Fam Conveyancing can assist with acting as a POA holder if needed.
- Payment Method for Sale Price: Sellers must confirm whether the buyer’s payment will be made via manager’s cheque, bank transfer, or cash. In the case of cash payments, the seller must also provide a court declaration from Dubai Courts.
- Beneficiary of Sale Price: The seller must confirm whether the manager’s cheque is to be made out in their name or a third-party POA holder’s name, with the POA requiring verification by DLD and the buyer’s bank (in case cheque is required to be under third party name).
2. Minor as Seller (Under Age 21)
- Legal Consent: If the seller is a minor (under age 21), a court letter or NOC is required to confirm Court’s consent for the sale to Dubai Land Department.
- Property Proceeds: The minor’s share will be issued in the name of Dubai Courts until the minor reaches the age of 21, at which point they can claim the proceeds directly from Dubai Courts.
3. Documents Required
- Passport and Emirates ID
- Visa (if applicable)
- NOC from developer (if applicable)
- Any required documents for third-party involvement (POA, NOC)
4. Seller’s Obligations
- Selling Price: Sellers must confirm the sale price and ensure all outstanding amounts (e.g., developer dues, mortgage discharge fees) are settled.
- Rent and Security Deposits: If the property is rented, the seller must ensure the rent and security deposit are prorated and refunded to the buyer on the transfer date.
5. Additional Fees
Sellers are responsible for various fees, including NOC fees, mortgage discharge fees, and brokerage/conveyancing fees. These should be settled before the transaction is completed.
6. Property Details
The seller must confirm whether the property is mortgaged or on an off-plan payment plan and clarify who will settle the mortgage or developer dues, whether the seller or the buyer. Sellers must also disclose whether the property is rented, including tenancy contracts and eviction notices, if applicable.
Key Transaction Considerations for Both Parties
1. Extension and Cancellation of Unified Contract F
- Contract Duration: There is no minimum duration of the MOU in DLD unless the Seller is financed, in which case it is a minimum of 60 days. The maximum duration is 180 days.
- Extension: The validity of the Unified Contract F can be extended if both parties mutually agree. The duration of the extension is flexible and not limited, and the extension link will be visible in the DLD system until the expiry date of the MOU.
- Cancellation: If both parties mutually agree to cancel the MOU then they can generate cancellation link in DLD. But if the MOU expires and no extension or cancellation is agreed, the only option available in the DLD system is to raise a dispute since they consider the contract in default.
2. Amendments to Form F
Once the Unified Contract F (Form F) has been signed by both parties, no amendments can be made to the document. This includes adding or replacing buyers or modifying any of the original terms and conditions. In the event that changes are necessary after the signing of Form F, the following process applies:
a. Cancellation and Re-issuance of Form F:
If it becomes essential to make any amendments, the existing Form F must be cancelled, and a new Form F must be created to reflect the updated terms. Both parties must sign the new Form F, ensuring that the latest agreements are formally documented.
b. Breach of MOU:
Any failure to adhere to the agreed terms, including changes made to Form F without proper amendment (i.e., adding or replacing a buyer), will be considered a breach of the Memorandum of Understanding (MOU). In such cases, the affected party may seek remedies, which could include raising a dispute with the Dubai Land Department (DLD) for resolution.
c. Addendums for Temporary Adjustments:
In instances where minor updates are needed but do not constitute a complete cancellation of the contract, it may be advisable to create an addendum or a temporary manual Form F. This document should reflect the revised terms and ensure both parties are in agreement, pending the creation of a formal new Form F if required.
d. Contract Default:
If either party does not comply with the procedures for updating Form F, the system will flag the contract as being in default. The only option thereafter will be to escalate the matter by raising a formal dispute, as amendments and additions cannot be processed after the contract has been finalized.
3. Client Details Updates
Clients must ensure that their contact details are accurate in the DLD system. If updates are required, they should be made directly at the DLD Trustee office to avoid delays.
Real estate transactions in Dubai are governed by a well-defined set of rules, and it is essential that both buyers and sellers understand their obligations and rights. Ensuring all legal requirements are met can help prevent future disputes and ensure a smooth transaction process. Fam Conveyancing is committed to providing professional, reliable guidance through every step of the property transaction process. We are dedicated to protecting your interests and ensuring the legal security of your transaction.
Contact Us for Further Assistance
For expert assistance or inquiries, contact Fam Conveyancing at:
Phone: +971 58 822 9107 and +971 52 128 9592
Email: [email protected] | [email protected]
Website: www.famconveyancing.com
Stay informed and legally compliant to ensure a smooth and successful real estate transaction.