Usually, the parties will sign a memorandum of understanding once the fundamental terms of the deal have been agreed. Alternatively, the parties can proceed to the signing of a sale and purchase agreement. A standard Form F is submitted to the Dubai Land Department to facilitate the registration of the transaction.

A formal sale and purchase agreement may typically contain the following warranties by the seller to the buyer:

• The property is not adversely affected by any easement, right, privilege or liability of which the seller is aware other than those disclosed in the agreement of which the buyer is aware or could have ascertained on reasonable inspection of the property.
• It has authority to sell.
• There is no outstanding debt or mortgage, and any service charge is fully paid.
• Property and development obligations have been complied with.

A developer selling property off-plan will also be required to give the following warranties:

• To repair and remedy any structural defect for 10 years from the date of completion
• To repair or replace defective installations, including mechanical and electrical works and sanitary and plumbing installations, for one year from the date of handing over the unit to the owner

The exact scope of any particular warranty, and whether any particular warranty is to be given, depends on the negotiation between the seller and the buyer.

Under the Civil Code, an agreement becomes legally binding when the following conditions have been met:

• The parties have agreed on the essential terms.
• The subject matter of the agreement exists, is defined or capable of being defined, and is legal.
• The obligations under the contract exist for a legal purpose.

Legal title is transferred upon the execution of the sale and purchase agreement and the payment of consideration; however, title is not perfected until it is registered at the Dubai Land Department/Abu Dhabi Municipality.

The buyer usually pays for the following:

• Buyer’s agent’s fees
• Legal costs
• Due diligence costs for consultants who have prepared building condition reports, valuation appraisals and real estate surveys

The seller usually pays for the following:

• Legal fees
• Agents’ fees

Dubai

The fee for registration of a freehold right at the Dubai Land Department is 4% of the total value of the sale contract or the property value, whichever is higher. The seller and the buyer will split the cost.

The fee for registration of a musataha at the Dubai Land Department is 1% of the total musataha contract payable by the recipient of the musataha.

The fee for registration of a usufruct right at the Dubai Land Department is 2% of the lease value.

The fee for registration of a long lease at the Dubai Land Department is 4% of the total rent value payable throughout the term of the lease, including any premium paid.

Abu Dhabi

In Abu Dhabi, the fee for registration is 1% of the first year’s rent in leases over four years and under 25.

The fee for registration of a lease for over 25 years at the Abu Dhabi Municipality is 4% of the value of consideration.

The fee for registration of a lease for less than four years is AED 100 per registration of each new lease/renewal of a lease.

The fee for a lease with a term of 25 years or more (including any renewals) at the ADGM is 2% of the total value of the contract (or 5% if government-owned land).

The fee for registration for a lease with a term of less than 10 years (including any renewals) at the ADGM is AED 100 per year.