Tim Elliot: Now we’re recording this episode of Lawgical, nominal ownership of property interests in the U.A.E. We’re also live on TikTok while we are recording. A couple questions for you, Ludmila, that have come in. I’ll start with this one. I have an off-plan property. Is it possible for me to sell it before settlement in Dubai?
Ludmila Yamalova: Yes, it is. An off-plan transfer of property rights has been very commonly used in Dubai and is perhaps one of the tools that has allowed Dubai to benefit so much from bringing in so many investors because it has been easy to sell off-plan property. There are some conditions that are attached to this. To sell off-plan property, first of all, you have to have an Oqood, which is the presale or preregistration, and then also you will still need to get what’s called the approval or signoff of the development company or the developer, and we have seen this before, that they may contractually have their own fee that will be attached to the transfer of interest prior to completion. This was introduced when flipping was a very common practice in Dubai in particular, so that practice was introduced where not only the land department would charge their interest, but also even the developer would add on their interest. You can sell off-plan property, but first of all in order to get the Oqood, you will have had to pay the 4% of the total value of the property to the land department, and then second of all, when you transfer your off-plan property to someone else, they too would have to pay 4% on the new property value or on the value of the transaction. Then in addition to that, the developer may have their own fee to allow for the transfer. Yes, it is all possible, but it has to be done by virtue of conditions and a specific mechanism through the authorities and with the developer’s help.
Tim Elliot: Okay. Another question for you. What areas, and this is a very broad question, in what areas can expats buy property in Dubai?
Ludmila Yamalova: There are many areas. The default in the U.A.E. used to be that only nationals can buy properties in the U.A.E. That was the default rule. Then from there, everything else was an exception, unless it was a special designated area, or designated as a freehold in that designated area, then expats could buy property. It started out and Dubai perhaps led the way in that department, and it opened up one area. The Dubai Marina, for example, was one of the first areas, and since then, they have all grown. These are all codified. This was not just announced in the newspaper. There are regulations, resolutions, and circulars specifically designating a particular area as a freehold area, and these are all codified in specific documents from legislative authorities. Those areas are called freehold areas where expats can own properties. In Dubai, basically these days there are too many areas to mention perhaps, and it is easier to say where you cannot own property in Dubai, but more and more areas are being designated. Certainly, for example, Jumeirah, and there are a lot of expats that live but who have been renting villas from locals and those properties in Jumeirah, for the time being right now, in terms of villas in particular, that is still reserved only for U.A.E. nationals, but otherwise as long as it is a freehold area, then expats can own.
While we are on TikTok, those who are still listening live, there is another question that just came. I will answer it if you are still online.
If I buy property on a loan which is under my friend’s name, and I lose my job, would I still be liable for paying the remaining amount?
The loan is the same as perhaps as a title deed. If the loan is in your friend’s name, then it’s your friend that is responsible for the loan. For the same reason, that is the loan is a contractual document, a document that would be registered not only with the banks, but also with the authorities such as the land department because if it’s a loan, it is perhaps a mortgage, and the mortgage would be registered with the land department. In that case, it is whoever the party to that loan agreement or to that mortgage in the title deed that will ultimately be responsible for the liabilities that are still outstanding, and the liability being the loan. Therefore, unfortunately for your friend, it will be your friend that would still be liable for that loan. Whether you lose a job or not, it’s not your legal headache. Now, obviously you have moral obligations and ethical obligations to your friend, and your friend can still have a claim against you, for example, for repayment or compensation for damages or repayment of whatever amount they are able to show that they have incurred on your behalf. But otherwise it is very dangerous arrangement, and I perhaps would not recommend for this to be a common practice because the friend is the one who will be held liable on the one hand, and on the other hand, also if anything were to happen, let’s say, what if your friend lost a job? Then, the bank would foreclose on the loan and then you would lose the property. There is that. Also, if the loan is in your friend’s name and then chances are the property is also in his name. Once again, we go back to the same problem that we said before. If the property is in your friend’s name, then the property is your friend’s property, and not yours.
Tim Elliot: A nice friend to have if that friend sticks by you. There is another question that has just come in there. This is an interesting one because it relates directly to what we were talking about on the podcast. If I buy a property as a gift for my fiancé, and now we’re separated, is there a way to claim it back? By inference, you would think that property is in the fiancé’s name. What happens then?
Ludmila Yamalova: A great question. Yes. In this case as well, the property is obviously your fiancé’s because it is in her name. Now, the gift one is interesting. The short answer is that you should not have a reasonable expectation to get the property back. The best scenario is if you get part of the payment back or the money that you paid for the property back. That would be the best-case scenario. But if it was a gift, it was a gift. A gift is very hard to undo and then in this particular case, the circumstances around this particular transaction would be instrumental. For example, if there are messages saying, listen, this is a gift, love you very much. I am very generous, and here is a gift, that in and of itself perhaps would be very difficult to dispute. Even if there is that kind of a relationship, it’s not an official relationship, it’s not codified, for example, as a marriage, but just by saying it’s a gift, certainly that would be very difficult to undo. If there are some other kinds of documents or messages where, for example, she says, thank you very much for this generous gift, and I understand this is very generous, but as we’ve agreed before, if we separate and so forth, I will give this back to you. These kinds of messages might help you, and at least it will give you perhaps a chance to try to challenge it. But I would say ultimately it would be very, very difficult and certainly you would not be able to get the property back, but you might be able to, depending on the express and written proof or with documents you might be able to claim at least some of the payment back, but manage your expectations. Usually if it’s a gift, it’s just a gift, and we have seen recently courts, by the way, issue decisions but these were more in the marriage context, but even then, if it’s a gift, it’s a gift. You have to basically prove that somehow there it was not just a gift, but there was an expectation to get it back and what the terms of that ultimately were.
Tim Elliot: So, if it wasn’t an acrimonious split. One more question, Ludmila, for you. Can I sell a property which was under my father’s name? He meant to gift it to me before he passed away, before he was able to transfer it.
Ludmila Yamalova: No. You will not be able to because officially that property is now in your late father’s name and until the probate process has been finalized, i.e., the distribution of the estate has been finalized, and until the actual new owner steps into the feet of your now deceased father, you won’t be able to do anything with the property. In other words, even if you have probate and you have to do it through the court, and need to get a court order that states that the property goes to you, but even in that case, before you are able to sell it, you would have to be registered as a holder and owner of the property on the title deed before you are able to register it. Just because your father meant to give it to you, even if it was in the will, until officially it is reflected in the land registry, you won’t be able to dispose of it.
