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WWW.DLAPIPER.COMrights. To differentiate between theMost non-owner occupiers in bothof term, the commencement date,two types of interest, a usufructuarythe residential and commercialany renewal rights and sufficientright is a right to use and exploitsectors are lessees under leases.detail to identify the premises.the property of another whereas aNon-UAE nationals (and companiesA memorandum (short form) leasemusataha right is a right to build orowned in whole or part by non-UAEcan be registered in lieu of a full lease.plant on the land of another.nationals) may only be granted longleases (being leases for a term ofUnlike in the rest of Abu Dhabi,The real estate laws of Abu Dhabi25 years or more) within one of theagreements for lease (a pre‑leasein relation to usufructs anddesignated investment areas.contract often signed when amusatahas apply to such rightsdevelopment is under construction/located throughout Abu Dhabi,There is an obligation to registernot quite ready for occupation andincluding those located within theall leases within Abu Dhabi.use) can also be registered on theADGM where such rights wereFailure to register a lease, orADGM Land Register.created prior to 3 March 2015amendments thereto, will resultThe recognition of agreements(the date upon which the ADGMin the lease documentation (orfor lease allows the parties toregulations came into force) andsuch amendments) between thesensibly split the development andwhere no election has been madeparties being considered to be notoperational obligations betweenby the parties to the musataha orenforceable save for the personaltwo separate documents.usufruct (as applicable) to convertobligations between the parties.the relevant agreement to a lease.1.4 Granted landUnder the ADGM regulations,There are two lease registrationThe government of Abu Dhabiusufructuary and musataha rightssystems in Abu Dhabi:may grant land to UAE nationalsare not recognized interests and sono further usufructuary or mustahainterests will be created within theADGM following the implementationof the regulations.(i.e. provide it to them at no cost). Tawtheeq – for leases with a termof less than 4 years; and Tamleeq – where a lease is for aterm greater than 4 years.Following the grant of such landthe UAE national must registertheir interest in the property andwill have the right to use, exploitand dispose of the real propertyNon‑UAE nationals may hold withinThe associated registration fees areprovided that where the land andthe designated investment areasset out in further detail in the Taxbuildings have been established forusufructary rights of up to 99 yearssection of this guide.a specific purpose, that purpose isand musataha rights for a term ofnot changed. UAE nationals may50 years (which may be renewed1.3.2 WITHIN THE ADGMnot dispose of houses granted toonce for a further term of 50 yearsWithin the ADGM, leaseholdthe public unless they obtain priorby mutual agreement of theinterests (which give the tenant theapproval from the Executive Council.parties). UAE nationals may acquireright to use and occupy the propertyusufructary rights and musatahafor a specified period of time) areWhere ownership of low cost housingrights throughout Abu Dhabi.recognised as interests in land.(being housing designated for UAESuch interest could also includenationals without consideration) isA standard form musatahaone or more sublease interests butgranted, the interest in the propertyagreement has been introducedexcludes occupational (or otherwise)may be transferred and registeredfor use within Abu Dhabi forlicense arrangements.to other nationals provided priorgovernment-owned property.1.3 Leasehold1.3.1 WITHIN ABU DHABI BUTEXCLUDING THE ADGMIn Abu Dhabi, a lease is a personalcontract of hire, more akin to alicense and not an interest in land.approval from the Executive CouncilThe landlord is responsible foris obtained. Given this, where theregistration of the lease on theproperty is being used as securityADGM Land Register, which must befor finance from a bank, the bankdone within 28 days of the partiesshould ensure that the relevantsigning. In order to be registered,approval has been granted prior tothe lease should contain keyreleasing funds.details such as the parties, length5

REAL ESTATE INVESTMENT IN ABU DHABI1.5 Jointly ownedproperty1.5.1 WITHIN ABU DHABI BUT,EXCLUDING THE ADGMLaw No. 3 of 2015 (and associatedregulations) came into effect on1 January 2016 and aims to increaseprotection to purchasers in relationto the sale of off-plan units, throughthe mandated registration of allpending sales with theAbu Dhabi Municipality andincreased regulation of theownership and management ofjointly owned property.Where a development involvesjointly owned property, suchproperty is required to be shown ona site plan or recurring floor plan tobe registered with the LRD. The siteplan or recurring floor plan mustclearly show the subdivision of theland/building as approved bythe Abu Dhabi Municipality, identifythe common areas to be managedby the owners’ association andattach a copy of the relevantmanagement regulation (see belowfor further details).In addition to registering a site planor recurring floor plan to record thesubdivision of the land/building,the master developer must also: prepare and register alongsidethe plan a managementregulation which provides adetailed set of obligations to beperformed by the developer andunit holders and describes theeasements existing withinthe sub-divided site; and establish an owners’ association6Each unit owner is required toas security for its developmentcontribute towards the maintenanceobligations for the project and theand operation of the jointly ownedregistration of a strata plan onproperty by paying a service chargethe ADGM Land Register.which will be specified in the MainDevelopment Plan governing theIt is currently unclear as to whetherwider development.the strata title registration systemin the ADGM will work in isolation1.5.2 WITHIN THE ADGMfrom, or in tandem with, theThe ADGM has introducedAbu Dhabi Municipality land registry.regulations which provide for a setof strata-specific laws which dealThe strata regulations introducewith the stratification of real estatespecial developer rights which mayinterests situated within the ADGM.be registered contemporaneouslyThe regulations are similar in manywith a strata plan. These rightsrespects to the strata title systeminclude rights reserved for theadopted by the Dubai Internationaldeveloper to, among other things,Financial Centre, which itself drawsexercise certain developmentupon the legislative strata titlerights, make improvements, reserveframework of jurisdictions such aseasements in its favor over commonSingapore, Australia, Canada andproperty and create rights for otherSouth Africa.matters. There does not appear tobe any restriction as to the lengthThe strata regulations appear, on thesuch rights can be created for,whole, to apply to developments onnor is it clear what other mattersAl Maryah Island that are structuredrefers to. In the case of mixed-useor sold on a leasehold basis. Underdevelopments, this may create athe regulations it is mandatory for anymechanism for the developer (anddeveloper of a leasehold structuredtheir appointed hotel operator,development to apply the provisionsif relevant) to reserve certainof the regulations to its project.development rights which mayIt is not clear whether existingprovide them with a desired leveldevelopments which have been soldof flexibility and control over theoff‑plan on a leasehold basis will needshared areas and facilities of theto fall in line with the regulations,development. This is highly desirableincluding any timeframe to do so.in the context of a mixed-usedevelopment, such as one whichWhere the strata regulationsincludes an international five-starapply to any future leaseholdhotel, and will be viewed favorablydevelopment, the developer willby developers and hotel operators.be required to satisfy variousobligations. These include theThe introduction of the strataestablishment of an owners’regulations should be consideredassociation for management anda step forward and a positivecontrol of the common areas,development for the ADGM.the establishment of a bodyIts legal framework is based uponwhich will be a committee madecorporate for each use withinsophisticated and well-developedup of the unit owners who (as ana development, the opening ofinternational strata systems.association) collectively managea project escrow account withDevelopers ought to find that theyand operate the jointly owneda licensed institution within thecan use the regulations to structureproperty. Such association will beADGM and the deposit of a sumtheir project with a degree ofgoverned by an Articlesequivalent to between 10‑25% offlexibility and control which will beof Association.off‑plan purchaser deposits receivedattractive to them.

WWW.DLAPIPER.COM2. Acquisition of ownership2.1 Formalrequirements2.1.1 WITHIN ABU DHABI BUTEXCLUDING THE ADGMAll transfers of ownership of realestate in Abu Dhabi which arecapable of registration(the LRD is not currently acceptingapplications in relation to transfersof property in all parts of Abu Dhabi)must be recorded at the LRDand the transfer process is thesame regardless of the type ofproperty involved e.g. commercialor residential. A failure to registermeans that ownership does notpass to a purchaser. The propertyownership register maintained bythe LRD is not available to the publicand therefore a potential purchasermust request a copy of the seller’stitle deed rather than carry out apublic search.Personal attendance by all theparties involved (e.g. purchaser,seller, lender, real estate brokeretc.) is required at the LRD, which isauthorised to accept applications fortransfers of real estate.A party not able to attend in personmay appoint a representative byusing a power of attorney eitherexecuted before a notary inAbu Dhabi or executed overseasand authenticated and legalized foruse in the UAE.The parties must sign the relevantstandard forms at the LRD andmanager’s cheques are commonlyused to pay the purchase priceand are required to pay the feesarising from a transfer of ownership.Written consent is likely to berequired from any person with asecurity interest over the propertybeing sold and from any occupiersof the property to confirm theyare vacating.Law No. 3 of 2015 imposes variousover the property then the LRD willobligations on developers regardingissue the original title deed tothe development, registrationthe lender.and marketing of off-plan sales,including requiring developers to2.1.2 WITHIN THE ADGMset up project escrow accountsThe ADGM provides that a definedto hold the purchaser monies.list of conveyances (including anyAny developer who wishes to sellsubsequent variations) must beoff-plan units must open a projectregistered on the ADGM Landescrow account with the Abu DhabiRegister. Agreements to createMunicipality to be managed by ansuch conveyances must also beaccount trustee (who will typically beregistered on the ADGM Landa financial institution). The developerRegister. The obligation is on theand the account trustee willgrantor of the conveyance toconclude an Escrow Accountregister it. Conveyances shouldAgreement to create the accountbe executed in English and, if not,in which the monies received froma translation into English shouldpurchasers will be deposited to bebe provided.exclusively used for the purposesof constructing the project andAn interest which is required tosettlement of financing payments.be registered does not convey aninterest in real property until theContracts for the sale of off-planinstrument is registered. However,real estate units in Abu Dhabinothing in the ADGM regulationsare required to be registered onprevents an instrument that isthe Interim Real Estate Register(i) not eligible for registration; ormaintained by the Abu Dhabi(ii) lodged for registration but notMunicipality. Upon completionyet registered from operating asof the development project anda contract between the partiessatisfaction by both parties of theirthereto, or from being otherwisecontractual obligations attachedenforceable according to its terms.to the sale, the real estate unitwill need to be removed from theA registered owner will hold theInterim Real Estate Register andregistered interest free from allthe transfer of the ownershipother interests except for interestsinterest to the purchaser recordedthat are already registered,on the Real Estate Register ateasements or public rights ofthe LRD.way, rights in favor of the relevantauthority, implied easements orThe documentation required to bestatutory charges.submitted to the LRD to register aninterest will differ depending on theThe ADGM Land Register shall benature of the transaction. Followingpublically searchable and the ADGMattendance at the LRD,shall issue certificates of title tothe application to transfer isinterested parties and also priorityprocessed. This may be completedsearches (which can be used byon the same day or within a fewlenders when taking security).days. Upon completion, the LRDThese are very useful featuresissues a new title certificate inthat are not currently availablethe name of the purchaser. If thethrough the Abu Dhabi landpurchaser has granted a mortgageregistration system.7

REAL ESTATE INVESTMENT IN ABU DHABIThere are no express references2.2.2 WITHIN THE ADGMdoes not imply any warrantiesin the ADGM regulations toRegistration fees are charged on ainto the sale and purchase ofcompensation being paidtransfer of title relating to real estatereal estate so it is important for ato purchasers who rely on incorrectin the ADGM at 2% of the value ofpurchaser to carry out as detailedinformation in the registered titlethe property. There is no cap on thean investigation as possible beforemaintained by the ADGM Landfees that may be charged.entering into a binding agreement.Register or fraudulently registeredA valuation will be conducted byconveyances. By comparison,The fee for registration of aa bank if the purchaser is seekingthe Dubai International Financialmortgage is 2% of a principalto grant a mortgage over theCentre, a similar free zone,amount of mortgage per transactionproperty. Generally, the purchasermaintains a compensation fundcapped at USD300,000.and seller will not enter into a saleto allow it to pay compensation toaffected parties in such instances.2.2 Registration fees2.2.1 WITHIN ABU DHABI BUTEXCLUDING THE ADGMRegistration fees are charged on atransfer of title relating to real estatein Abu Dhabi at between 1% to 4%of the value of the property.In respect of transfers of offplan units, the fee is capped atAED2 million per transaction.A further fee of AED1,000 willbe payable in order to transferthe regist ration from the initialreal estate register to the realestate register.Although it is intended that theseller and purchaser split the feeequally, this is subject to the partiesagreeing otherwise and in practicethe purchaser commonly pays thefull fee.The fee for registration of amortgage is 0.001% of themortgage value, capped at: Mortgages (other than offplan units) – AED1 million pertransaction; and Mortgages of off-plan units –AED2 million per transaction.2.3 Asset dealsand purchase agreement untilthe due diligence is completedIn the case of an asset deal,and is satisfactory. In the event athe above formalities must bemisrepresentation occurs,observed and the applicable feesthe party which did not make thepaid upon completion at the LRD ormisrepresentation can cancelADGM Land Register (as applicable).the agreement if it can establishthat it was deceived or misled byApart from high-value property,the other party into doing what itit is common for lawyers not to bewould not have otherwise agreed toinstructed by a seller or a purchaserdo or if the other party deliberatelyand real estate brokers tend toremained silent on a fact or on a settake a greater lead in the sale andof circumstances which caused it topurchase process.be misled.The register of real estateOnce due diligence has been carriedownership administered by the LRDout, the parties will enter into a saleis not available to the public andand purchase agreement which willtherefore due diligence is limitedeither be drafted and negotiatedto the information that can bebetween lawyers (if instructed)obtained from the seller (althoughor by a broker (if lawyers are notthe principle of buyer bewareinstructed). In the case of sale andapplies). Commonly, a purchaserpurchase agreements produced bywill request a copy of the title deedbrokers, they are also commonlyfrom the seller and this needs to bereferred to as memoranda ofchecked as referring to the sellerunderstanding or letters of intent.and the correct plot number or unitRegardless of the nomenclature,number. If the property has notthis will set out the basic detailsbeen registered, it will also revealof the transaction (including thewhether a mortgage has beenparties’ details, the property details,registered and therefore needsthe purchase price and the timingto be released upon completion.for completion) and any detailsIn contrast, property located withinparticular to the specific transaction.the ADGM will be registered and theIn a more complex commercialregister is publically searchable withproperty, this may include detailscertificates of title being issued toof leases the property is subject to,interested parties.the details of any assignments ofcommercial contracts or warranties8Searches of public utilities cannotto be effected upon completion etc.be done by the public and therefore,The LRD and ADGM Land Registeragain, a purchaser is reliant ondo not require a particular form ofobtaining due diligence materialscontract to be completed by theby request to the seller. The lawseller and purchaser.

WWW.DLAPIPER.COMOnce the sale and purchaserequests certain information fromshare transfer. If no objectionsagreement has been entered into,the seller. Such information includesare received within 14 days of thea binding contract has been made.requesting copies of companynewspaper advertisement, theFor properties location withinconstitutional documents – in thelicensing authority will issue theAbu Dhabi (excluding the ADGM),case of an LLC, the trade license andamended license and list of partnersit is not possible for a purchasermemorandum of association (and itsshowing the names of the newto lodge a priority notice at theamendments) should be requested.partners. The fee payable to theLRD to ensure that the property isAs there is no public share registerlicensing authority will be in thenot transferred to another partyfor LLCs, due diligence must beregion of AED1,200 and that payablebefore the completion date agreedundertaken to ensure that theto the notary public in the regionbetween the seller and purchaser.shareholding information providedof AED1,500.By requiring completion to takeis up to date.place by personal attendance at the2.5 Public auctionsLRD (or a trustee office), the risksIn order to effect a share transfer inReal estate is sold by public auctionassociated with this are mitigated toan LLC, it will be necessary to firstin the event that a lender enforcesa certain extent. In contrast to theobtain an initial approval from theits mortgage over such property,rest of Abu Dhabi, it is possible tolicensing authority. This is obtainedsubject to a court order beinglodge a priority notice at the ADGMby submission of an applicationobtained. A lender is required, priorLand Register in relation to property(in Arabic) signed by the managerto initiating foreclosure procedureswithin its jurisdiction.of the LLC and the transferors andand submitting a request to thethe transferees (or their authorizedmagistrate of summary justice torepresentatives). Following receiptoffer the mortgaged property forIt is permitted for real estate inof the initial approval, it will besale by public action, to:Abu Dhabi to be held by a company.necessary for the transferor andOutside of the investment areas,the transferees (or their authorizedwhere real estate may only berepresentatives) to executeborrower and guarantor (if any)owned by UAE nationals, it can bebefore the notary public in Abuwith acknowledgement of receiptheld by individuals or by companiesDhabi the relevant share transferto inform the borrower of itswholly owned by such individuals.agreement, an amendment

Real estate is important to us. DLA Piper boasts one of the largest real estate practices in the world with over 600 lawyers worldwide practising real estate. We believe that legal services relating to investment into real estate should consist of more than merely helping to acquire title. We believe sound investment in