A Critical Compliance Advisory for Buyers, Sellers, and Real Estate Agents in Dubai
It has become increasingly common for third parties to assist buyers by issuing manager’s cheques on their behalf. While this practice is legally permissible, it is important to always remember your compliance obligations and practical limitations that must be understood and addressed from the outset to prevent legal, financial, or regulatory complications.
At fäm Conveyancing, we ensure that all transactions involving third-party payments are fully compliant with UAE law, aligned with anti-money laundering (AML) regulations, and executed with complete transparency and documentation.
This article provides essential guidance on how third-party payments should be handled to protect all parties involved in the deal.
The Risk: Accepting Third-Party Manager’s Cheques Without Proper Due Diligence
A third-party payment occurs when a person or entity other than the registered buyer issues a manager’s cheque toward the purchase of a property. While this can be convenient in family or business arrangements, improper handling can expose all parties to risk, including:
- Lack of transparency over the origin of funds.
- Violations of anti-money laundering regulations.
- Legal disputes regarding ownership rights or beneficial interest.
⚠️ Important: Third-Party Cheques May Not Be Accepted If the Seller Has a Mortgage
When the seller's property is financed, some banks strictly require the manager’s cheque to be issued from the buyer’s own bank account not from any third party. This is a critical factor that must be checked with the seller’s bank in advance, as failure to comply may result in cheque rejection, delays in clearance, or refusal to settle the outstanding mortgage.
What Buyers, Sellers, and Brokers Must Do to Remain Compliant
To avoid disruptions and legal consequences, the following steps must be strictly followed when third-party funds are involved:
1. Collect Full Identification of the Third Party
- Valid Emirates ID and passport copies must be obtained and retained.
- Ensure that the third party is clearly identified and documented.
2. Obtain a Third-Party Payment Authorization (NOC)
- A formal, signed letter by both the buyer and the third party confirming:
- The third party is providing the funds willingly.
- The third party has no claim, interest, or right to the property.
- The buyer is the sole legal and financial party in the transaction.
3. Secure an Indemnity Letter
- The buyer must sign an indemnity holding all parties harmless from any future claims or liabilities arising from the source of the funds.
4. Verify Bank Policy in Seller’s Mortgage Cases
- Confirm whether the seller’s bank accepts third-party manager’s cheques.
- If not, ensure the manager’s cheque is issued directly from the buyer’s bank to prevent rejection.
5. Maintain Clear and Complete Documentation
- All related documents must be included in the transaction file to demonstrate proper due diligence and compliance in the event of regulatory review.
Legal Reference: UAE Anti-Money Laundering (AML) Regulations
The UAE's AML laws impose strict requirements on all real estate professionals to verify the identity and intent of all individuals contributing funds to a property transaction.
Failure to meet these standards may result in transaction delays, penalties, or regulatory enforcement actions.
Consequences of Non-Compliance
If proper third-party cheque procedures are not followed, consequences may include:
- Rejection or delay of the transaction by the trustee or bank.
- Legal disputes or challenges to property ownership.
- Regulatory examination or mandatory reporting under AML/CFT laws.
Protect Transactions Through Full Compliance
Third-party manager’s cheques are permitted, but only when supported by full disclosure, written authorization, and strict documentation.
At Fam Conveyancing, we ensure that all parties buyers, sellers, and brokers are protected through structured and compliant transaction frameworks. This includes working with banks, mortgage providers, and trustee offices to verify cheque acceptance policies in advance.
Need Assistance? We’re Here to Support You
We provide:
- Ready-to-use templates for third-party authorization and indemnity letters.
- Professional legal support for documentation and verification.
- End-to-end transaction compliance services.
📞 +971 58 822 9107 | +971 52 128 9592
📧 [email protected]
🌐 www.famconveyancing.com
Your transaction’s success starts with proper compliance. Let’s protect your deal the right way.