A Critical Advisory for Property Owners and Investors in Dubai
In our dynamic real estate market, it has become increasingly common for owners to simultaneously sell an existing property and purchase a new one. While this strategy can be efficient, it carries significant financial and legal risks if not carefully structured and planned.
At fäm Conveyancing, we regularly assist clients navigating these complex transactions. Our experience highlights a key advisory: simultaneous sale and purchase transactions require strategic planning to avoid legal exposure, financial strain, and unnecessary risk.
This article aims to provide essential guidance for property owners and agents to proactively manage their transactions — ensuring a smooth and protected experience.
The Risk: Simultaneous Transactions Without Proper Planning
Typically, an owner may enter into a Sale Contract to dispose of a villa, plot, or apartment often with a standard 30-day completion timeline while simultaneously signing a Purchase Contract for a new property with similar deadlines.
Key questions must be carefully addressed before proceeding:
- What happens if the Buyer of the property being sold by the owner requests an extension or fails to complete the transaction?
- Will the same owner have the financial means to meet the payment obligations of the new property that intend to purchase without the sale proceeds of their own property?
Without contingency planning, owners’ risk severe consequences, including contract breaches, loss of deposits, financial liability, and reputational damage.
Essential Steps for Property Owners and Investors
To mitigate risks and protect your interests, owners should:
1. Study All Timelines and Terms Carefully
Ensure that the sale timeline is realistic and allows sufficient time for a successful closing before critical purchase payment dates arise.
2. Avoid Financial Dependency Between Transactions
Where possible, finalize the sale before committing to a new purchase. If simultaneous transactions are necessary, confirm that financial obligations under the purchase are independently manageable.
3. Negotiate Longer Timelines for Purchases
Aim to secure a 60-day (or longer) completion window for the purchase to provide flexibility in case of unexpected sale delays.
4. Transparently Disclose Conditions
If the purchase is contingent on completing a sale, ensure this condition is clearly documented in the purchase agreement to safeguard against penalties.
5. Arrange Financial Backups
Owners must plan for alternative funding sources to fulfill purchase obligations if the sale does not complete as intended.
The Consequences of Inadequate Planning
Failure to plan appropriately can result in:
- Breach of contract obligations.
- Forfeiture of deposit amounts.
- Legal claims, penalties, and damages.
- Financial and reputational hardship.
Strategic Planning is Key
Executing a sale and purchase simultaneously can be a beneficial strategy when structured with foresight. Owners must not assume that both transactions will conclude seamlessly within standard timelines.
At fäm Conveyancing, we strongly recommend:
- Completing your sale prior to finalizing a purchase.
- Negotiating longer and more flexible completion timelines in the Purchase Contract to mitigate the risks of potential delays in the Sale transaction.
- Seeking professional legal advice to include contingency clauses safeguarding your position.
How fäm Conveyancing Can Assist
Our expert team is ready to support you with:
- Drafting and negotiating protective contract clauses.
- Structuring sale and purchase transactions strategically.
- Advising on legal exposure and risk management.
📞 +971 58 822 9107 | +971 52 128 9592
📧 [email protected]
🌐 www.famconveyancing.com
Your financial security and legal protection deserve careful care. Let us help you structure your real estate transactions with confidence and peace of mind.