International Business Opportunities

September 18 - 2008 (Source: AME Info)
Alexis Waller, Partner in legal firm Clyde & Co’s real estate department, explains why the emirate’s new property laws 13 and 14 mark a new point in the city’s bid to increase regulation and transparency, and why investors should see the benefits.

Over the course of the past 18 months Dubai has pushed through a number of new legislative initiatives covering the city’s real estate sector.

This has served to increase transparency in the emirate’s property market and give direction to a sector that had been perceived as being unclear, and therefore higher risk, by outside investors.

The initiatives that have been put through include the creation of the Real Estate Regulatory Authority (Rera), which has undertaken to cover all aspects of the property market, including the creation of a price index for different types of property across the emirate.

More recently, in 2008, Laws 13 and 14 covering the registration of offplan property sale contracts and mortgages were also passed, legislating on pre-existing units, as was the Strata Law, which directly affects the owners of completed units.

‘We’re still waiting for the exact regulations from the Strata Law, although it was released in April,’ says Waller. ‘We’re also looking for the guidelines and the actual practice of the pre-registration and mortgage laws. Further laws on written guidelines aren’t going to be issued, so you have to ask questions as they come up and then a ruling on that point is issued.’

Legally-binding Land Court

Effective from the beginning of October a specialized Land Court will come into being to rule on all property-related legal disputes, significantly cutting down the waiting time, sometimes up to five years, and expense previously associated with taking matters to the civil courts.

‘Rera had a complaints department that was able to mediate but it had no enforcement power. Rera would pass cases to the civil courts, and they would then clog up the judicial system. Now the new Land Court will take everything on, I think there are already 500 pending cases, and the decision will be legally binding.’

This will also cover areas such as the ongoing disputes between investors and Saudi Arabian developer Sokook in the Ivory Tower development in Dubai’s International Media Production Zone.

In this case, where the developer has threatened to cancel existing contracts for breach of payment, despite the project not having broken ground, the cancellation of contracts will now have to be done through the Land Department. Sokook cannot now arbitrarily go ahead even if they disagree with Rera’s ruling on the case.
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