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Welcome to the Legal Hour on Drive Live. Our guest for today’s session is Ludmila Yamalova from Yamalova & Plewka. Ludmila, we’ve had a lot of questions to get through, and we’ve only just started.
Host
We’ve had a very interesting question text in. I think if we can start with some of those questions from last week. The first one is from Mick. This question is, if I were to purchase a property jointly, 50-50 ownership with a non-UAE resident that will provide full funding for their share of the property, one thing first, can I take out a mortgage on my share separately, and will both parties appear on the title deed?
Ludmila Yamalova
In short, no, that’s not possible. And this is because there is no way for the bank to only have security over half of the property in practical terms. So therefore, if there is a mortgage on the property, the mortgage will be for the full amount. And it’s because the system of registering a lien or mortgage of security to a property in the UAE is fairly simple still and is still in its evolution. So therefore, for a bank, whenever they register their security to the property, if you look at the title deed, they have to ultimately register their interest over the entire property. There’s no other way of segregating it.
Host
And just a supplementary, if, for example, they didn’t need a mortgage, is it possible for the non-UAE resident to have the property on their name? Is that something that’s workable?
Ludmila Yamalova
That’s a great question. Absolutely. In order to own property in the UAE, one does not need to be a UAE resident. In fact, in Dubai at least, there is an option that when someone owns property, they can actually become a UAE resident on the basis of their investment in the property as long as the property is valued over AED 1 million.
Ludmila Yamalova
Let me turn that question slightly differently. If a property is jointly owned, is it possible to get a mortgage to begin with, and can that mortgage be attached to one person or both people? In short, it is possible for a mortgage company to give a mortgage to one of the owners. But usually, they will also register, to some extent, the interest of the other owner. They don’t necessarily require financial information from the other owner as long as the main owner satisfies all the financing requirements in terms of being subject to that mortgage.
Ludmila Yamalova
For example, if Tim and I own the property together and only I want to take out a mortgage over the property, it is possible without bringing Tim into the equation as long as I satisfy the bank’s requirements. But Tim needs to be aware that once the bank is brought into the equation, even though he doesn’t have a mortgage of his own, he won’t be able to dispose of his interest in the property without my and the bank’s sign-off.
Host
Okay, so this is only possible with a real, for want of a better phrase, gentlemanly agreement between the two parties to work in that way. There has to be a level of trust there that most of us probably don’t have.
Ludmila Yamalova
Exactly. That’s why we’ve seen a lot of cases with jointly owned properties, often between spouses or non-related parties. This is also possible—people don’t need to be related to be registered as joint owners. But disputes between joint owners are common. One party cannot sell their interest without the sign-off of the other party or the bank, if a mortgage is involved.
Host
We have another real estate-based question. This one says: “A realtor stated they were the agent for a property, but there was no contact with the owner. The agent said the villa would be available from February 2017. We gave the checks and deposits, but 60 days later, the villa was still not available. We canceled our contract but are still waiting for the return of our checks and deposits. What are our options?”
Ludmila Yamalova
This is a common issue, unfortunately. Ideally, before handing over checks or signing any documents, you should ensure you’re giving the checks to the right party.
Ludmila Yamalova
In this case, the tenant gave money to the broker, relying on their representation. The villa wasn’t delivered on time, and now the tenant wants their money back. To prevent such issues, tenants should hand over money directly to the landlord or someone with a valid power of attorney from the landlord. Before doing this, tenants should conduct due diligence, such as requesting a copy of the title deed or a fresh verification from the land department to confirm the property ownership.
Ludmila Yamalova
If the landlord or their authorized representative breaches the contract, it’s easier to claim a refund. But when dealing with a third party, like a broker, it becomes more complicated. Your options now are to either resolve the issue with the broker amicably or file a claim with the rent committee to recover your money.
Host
If the broker has already cashed the checks and the tenant doesn’t have sufficient funds to cover them, could this lead to further issues?
Ludmila Yamalova
Yes, it can become a criminal matter if the checks bounce. In the UAE, a bounced check is treated as a criminal offense. If the broker cashes a check and it bounces, the tenant could face police action.
Ludmila Yamalova
It’s also important to note that there’s no mechanism to recall or cancel a check in the UAE. Even if the conditions under which the check was issued are not met, the bank or authorities cannot stop the check from being processed. The only recourse is to take the matter to court.
Host
We have another question about checks. Ashwin asks, “Is it possible for someone to use a copy of a check to release it? Some brokers ask for copies before transactions.”
Ludmila Yamalova
In short, no. A copy of a check is not an enforceable instrument.
Host
Why would brokers ask for it if it’s not enforceable?
Ludmila Yamalova
Sometimes it’s for emotional comfort or to show seriousness in the transaction. For example, a broker might want to prove to one party that the other is committed to proceeding with the deal. However, a copy of a check has no legal standing and cannot be enforced.
Host
Another question on checks comes from Abu, who asks, “My friend gave me undated checks for money they borrowed. Now they can’t meet their obligations. What are my options?”
Ludmila Yamalova
You have two main options:
- Criminal Route
You can date the checks, deposit them, and, if they bounce, report the matter to the police. A bounced check is a criminal offense in the UAE, and reporting it can prevent the person from traveling until the issue is resolved. - Civil Route
Alternatively, you can file a civil case to recover the money. This process can be expensive and time-consuming, especially if the borrower doesn’t have the funds to repay.
Ludmila Yamalova
In business terms, it might be worth negotiating a repayment plan with your friend and securing it with new checks or an agreement. This allows you to recover the money without immediately resorting to legal action.
Host
Thank you, Ludmila. We now have a call from Tahir. Tahir, what’s your question for Ludmila?
Tahir
I rented a one-bedroom apartment last year and issued checks in the name of the landlord. Unfortunately, the landlord passed away. The broker requested that I revise the checks in the name of the landlord’s son. I asked for the title deed to be updated in the son’s name before revising the checks, but they kept pressing me. Recently, the broker informed me that the son doesn’t want to renew the contract and that I need to leave the apartment. Is this eviction notice valid?
Ludmila Yamalova
This is a complex but common scenario. When a landlord passes away, their assets, including the property, enter a legal limbo. Ownership can only be determined after the court issues a decree of distribution, which outlines who the lawful heirs are.
Ludmila Yamalova
Even if the son appears to be the natural heir, you are correct in requesting legal documentation before transferring rent payments or revising the checks. Until there is an official decree and the property’s title is updated, you are under no obligation to act on the broker’s instructions.
Ludmila Yamalova
Regarding the eviction notice, it is not valid. The broker does not have legal standing to issue an eviction notice unless they have a valid power of attorney. And as you correctly pointed out, any power of attorney issued by the deceased landlord is no longer valid after their passing.
Host
So what should Tahir do in this situation?
Ludmila Yamalova
Tahir, you have two main options:
- Hold Your Ground
You can continue residing in the property until legal ownership is resolved. You can deposit your rent with the rent committee or keep it aside, ensuring you have a record of your willingness to pay. - Wait for Legal Documentation
Wait until the court issues a decree of distribution or until the title deed is updated in the new owner’s name. Once you have clear documentation, you can make payments to the rightful owner.
Tahir
If I want to help the landlord’s son, can I request an indemnity letter from the broker to protect myself?
Ludmila Yamalova
An indemnity letter won’t help in this situation. Even if the broker provides one, it doesn’t absolve you of liability if another heir contests the arrangement. You could face legal challenges from other heirs who also have a claim to the property. It’s safer to wait for proper legal documentation before transferring any funds.
Host
Thank you, Tahir, for your question. Ludmila, we have another question from a listener. They ask, “If a mainland sponsor dies, does the business with expat business owners continue to operate? What changes legally?”
Ludmila Yamalova
This is another complex situation. When a mainland sponsor passes away, their shares in the business become part of their estate. Until the court determines the legal heirs and their respective shares, the business can face operational challenges.
Ludmila Yamalova
The court may appoint a trustee to oversee the business until the ownership is resolved. This ensures the company’s funds are not mismanaged. However, the process of resolving inheritance disputes can take years, especially if the deceased had multiple heirs.
Ludmila Yamalova
To avoid significant disruptions, the surviving shareholders can request the court to appoint a trustee to manage the business temporarily. This helps maintain operations while ensuring the rights of the deceased’s heirs are protected.
Host
We have another real estate question. A listener asks, “I’m renting an apartment and found another place. My current landlord refuses to refund my security deposit because I didn’t give 60 days’ notice as per our agreement. What are my options?”
Ludmila Yamalova
If your lease agreement requires a 60-day notice, the landlord is legally entitled to enforce that clause. The security deposit may be used to cover the notice period.
Ludmila Yamalova
However, if the landlord has already found a new tenant or hasn’t suffered financial loss, you can argue that the penalty is disproportionate. You can file a case with the rent committee to contest the landlord’s claim.
Ludmila Yamalova
That said, pursuing legal action may not always be worth the time and expense unless the penalty is substantial. It might be more practical to negotiate with the landlord or pay the penalty and move on.
Host
Ludmila, we have another text. A listener asks, “What’s the process for verifying title deeds with the land department? Is there a template for secondary market purchases?”
Ludmila Yamalova
To verify a title deed, the property owner can approach the land department and request a stamped, verified copy. As a buyer or tenant, you should ask the landlord or seller to provide this verification.
Ludmila Yamalova
For secondary market purchases, the Dubai Land Department offers standard templates for sales and purchase agreements. These are available on the RERA website and can simplify the process for straightforward transactions. However, ensure any contract you sign includes key details such as the property specifications, parties involved, purchase price, and payment terms.
Host
Thank you, Ludmila. That’s all the time we have for today’s Legal Hour.
Ludmila Yamalova
It’s been a pleasure. Thank you for having me.