All you need to know about Abu Dhabi’s new property law

With ambitious plans of making emirate’s property market the best in the region, Abu Dhabi government introduced new property regulations and effectively enforced it at the beginning of 2016. The new law (Law No. (3) of 2015 Regulating Real Estate Sector in the Emirate of Abu Dhabi) not only aims to make investing in off-plan properties more easier for all, it also looks to empower investors by allowing them to terminate their off-plan purchases in certain cases. Let’s skim through the various clauses of the new law and see how its will help an average person buying property in Abu Dhabi.

Restrictions on developers
Ownership of land
The government has placed a restriction on off-plan property sales under which property developers are barred from selling off-plan units until they have proved direct ownership of the land and opened an escrow account for off-plan sales.

Escrow Account
Not just that, developers will only be allowed to take money from the escrow account after they have completed 20% of the construction works from their own pockets. Also the developers will not be allowed to take all the money out at once as the law only allows withdrawals in stages.

Mandatory Disclosure Statement
In order to prevent developers from hiding anything about the development from the buyers, the new law requires them to attach a “disclosure statement” providing prescribed information on the development to the sale and purchase agreement in order to inform buyers of all the relevant facts before purchasing.
10-year liability

The new law has also placed a 10-year liability on developers concerning defects in the basic structure of a building. The law makes property developers legally responsible to fix any defects that may occur within 10 years of handover.

Strengthening buyers
Buyers can cancel off-plan purchase
Under the new law, buyers can cancel an off-plan purchase in case of “substantial prejudice”. According to the law, the term “substantial prejudice” refers to significant changes in sale and purchase agreement or major defects in property’s construction.

Buyers to get compensation for delayed projects
If a project has been delayed for more than six months, the Department of Municipal Affairs (DMA) will fine developers to compensate buyers. Interestingly, compensation may also apply to existing developments depending on their stages of completion. Also the DMA has been empowered to appoint a new developer or even cancel a project if delayed significantly by developer.

Ownership guaranteed via official real estate register
The new law also creates an official real estate register which will register all real estate projects and off-plan sales. This means that a buyer’s unit will be recorded in a central government database and buyers may also get an official document clarifying their ownership.

Buyers exempted from paying registration fees
The new law also prohibits developers from collecting registration fees from buyers. Developers can, however, charge administrative fees, which must also be approved by the DMA. This new regulation has brought a nice treat for buyers and investors of Abu Dhabi property as they will not be required to pay the customary 2 percent registration fee applicable on resales.

Creation of owners associations
The new law has also allowedreal estate developments to have owners associations with a legal status, a definite constitution, holding title to common property, and responsibility for the property’s repair and maintenance. If a unit-owner fails to pay the services charges, under the new law, owners associations can apply to the courts to sell defaulter’s unit.

The new law definitely ho9lds developers accountable and is clearly pro-investor. Thanks to the new regulation, people will now feel even safer while buying properties in the years ahead. Not only will their investments be secured via escrow accounts, they will also be compensated for delayed projects. Sounds like true empowerment.

By Bayut.com