The New UAE Civil Transactions Law 2025: A Practical Guide

Welcome back to Lawgical with Ludmila, where we untangle the legal knots, so you do not have to. I am Ludmila Yamalova, a US-qualified lawyer based in Dubai. In each episode, we break down complex areas of UAE law into practical insights that you can actually use.

Today's topic is one of the most significant legal developments the UAE has seen in decades. We are discussing the new UAE Civil Transactions Law, introduced by Federal Decree-Law No. 25 of 2025, which came into force on 1 June 2026.

This law replaces the Civil Code that had governed civil relationships in the UAE since 1985. It represents the most comprehensive overhaul of the country's civil legislation in more than forty years and modernises the legal framework that underpins almost every civil and commercial relationship. Because of its scope, there is a lot to cover. In this episode, we will look at why this law matters, the new age of majority and what it means for minors, guardianship, contract formation, negotiations, governing law, damages, unjust enrichment, property rights, and several important developments affecting real estate.

Let us begin with the most fundamental question.

Why This Law Matters

The Civil Transactions Law is often described as the backbone of civil and commercial life in the UAE, and for good reason. It governs contracts, property, obligations, liability, and countless legal relationships between individuals and businesses. Whether you are renting an apartment, purchasing property, lending money, hiring a contractor, signing an employment agreement, or entering into a commercial transaction, this law forms the legal foundation for those relationships. In other words, almost every agreement you enter into is built upon the principles contained in this legislation, whether you realise it or not.

For more than four decades, those principles were governed by the Civil Code enacted in 1985. As of 1 June 2026, that framework has been replaced by an entirely new Civil Transactions Law, drafted in clearer and more modern language while preserving many of the principles that have long guided UAE civil law.

It is also important to understand the scope of this legislation. The new Civil Transactions Law applies to the UAE's onshore legal system. It does not apply to the Dubai International Financial Centre (DIFC) or the Abu Dhabi Global Market (ADGM), both of which operate under their own independent legal systems.

Another important point concerns timing. As a general rule, contracts signed before 1 June 2026 continue to be governed by the previous Civil Code, while contracts entered into on or after 1 June 2026 fall under the new legislation. Therefore, when considering your rights and obligations, one of the first questions to ask is when the contract was signed, because that will generally determine which legal framework applies.

Although the new law introduces a number of important changes, many of its foundational principles remain consistent with the previous Civil Code. For that reason, we are unlikely to see a dramatic shift in judicial interpretation overnight. Instead, the law builds upon familiar concepts while clarifying and modernising many aspects of UAE civil law.

The New Age of Majority

One of the most widely discussed changes introduced by the new Civil Transactions Law is the reduction of the age of majority from 21 to 18 years. This change is set out in Article 84, which now measures age using the Gregorian calendar rather than the Hijri calendar.

At first glance, lowering the age of majority by three years may appear to be a relatively modest amendment. In reality, it has significant legal consequences because the age of majority determines when an individual acquires full legal capacity to exercise their civil rights independently. Reading Articles 84 and 146 together, an individual who has reached the age of 18 can now:

• Sign contracts.
• Grant powers of attorney.
• Manage their own finances.
• Dispose of their own property.
• Sue or be sued in their own name.

Importantly, all of these actions can now be taken without requiring a guardian.

Under the previous Civil Code, these rights generally became available only at the age of 21. This amendment also resolves an inconsistency that had existed for several years. The Commercial Transactions Law had already reduced the trading age to 18 in 2022, allowing young adults to own and operate businesses. Similarly, many banks had already begun allowing customers aged 18 and above to manage their own accounts. However, despite these developments, the Civil Code continued to treat those individuals as minors for many civil purposes. As a result, someone could legally own a company while still requiring a guardian to execute certain contracts or legal documents on their behalf. The new Civil Transactions Law brings these different legal frameworks into alignment by recognising 18 as the age at which a person generally acquires full civil capacity.

Categories of Minors

Although the age of majority has been lowered, the law continues to distinguish between different categories of minors based on their legal capacity. Rather than treating everyone under the age of 18 in the same way, the law recognises different levels of capacity depending on age and the nature of the legal act involved.

Children Under Seven

Under Article 85, children below the age of seven have no legal capacity. Any legal acts carried out by a child in this age group are void, and a guardian acts entirely on the child's behalf.

The rationale is straightforward. Children of that age are not considered capable of understanding the legal consequences of their actions.

Discerning Minors: Ages Seven to Eighteen

From the age of seven until the age of eighteen, the law recognises what it describes as a discerning minor. Unlike younger children, a discerning minor has limited legal capacity. Whether a particular act is valid depends on the nature of that act. The law distinguishes between three categories:

• Purely beneficial acts, such as accepting an unconditional gift, are generally valid.
• Purely harmful acts, such as acting as a guarantor or giving away valuable property without receiving anything in return, are generally void.
• Mixed acts, including transactions such as buying or selling property, are voidable in the minor's favour. This means the transaction may be upheld or set aside depending on the circumstances and whether it serves the minor's interests.

This approach reflects a balance between protecting minors from potentially harmful transactions while allowing them to benefit from arrangements that are clearly advantageous.

Managing Property from the Age of Fifteen

The law introduces another important milestone at the age of fifteen. Under Article 149, a discerning minor who has reached the age of fifteen may apply to the court for permission to manage some or all of their own property. Whether that permission is granted depends on the individual circumstances and the court's assessment of the minor's ability to manage those affairs responsibly.

This does not mean that every fifteen-year-old automatically gains control over their assets. Rather, it provides a legal mechanism through which capable minors may gradually assume greater responsibility over their financial affairs under judicial supervision.

A Practical Point

One question that often arises is whether the reduction of the age of majority automatically changes every age-related legal requirement in the UAE. The answer is no.

Not every age requirement is found within the Civil Transactions Law. For example, the age for carrying on commercial activities is governed by the Commercial Transactions Law, while banking requirements are determined by Central Bank regulations and the internal policies of individual financial institutions.

What the new Civil Transactions Law does is establish a consistent framework for civil legal capacity. As of 1 June 2026, the general rule is that an individual who reaches the age of 18 is recognised as having full legal capacity for civil matters. This removes the uncertainty that previously existed where different areas of law recognised different levels of legal capacity. It is a relatively simple amendment on paper, but one that has practical implications for families, businesses, educational institutions, financial organisations, and anyone entering into legal relationships with young adults.

Guardianship

Having discussed minors and legal capacity, the next logical question is: who acts on behalf of those who cannot legally act for themselves? That brings us to guardianship.

Under the new Civil Transactions Law, guardianship refers specifically to the management of a minor's property and financial affairs. It is important to distinguish this from issues such as custody or day-to-day care of a child, which are governed by the UAE's Personal Status Law. The Civil Transactions Law is concerned with protecting a minor's legal and financial interests.

Who Can Be a Guardian?

Article 150 establishes a clear order of priority for the guardian of a minor's property. The order is as follows:

1. The father.
2. A guardian appointed by the father.
3. The paternal grandfather.
4. The court, or any person appointed by the court.

This framework provides certainty regarding who is authorised to act on behalf of a minor in relation to property and financial matters.

The law also sets minimum standards for anyone acting as a guardian. Under Article 151, a guardian must be capable, trustworthy, and able to manage the minor's interests responsibly. The role carries significant legal obligations, and the guardian is expected to act in the minor's best interests at all times.

What Can a Guardian Do Without Court Approval?

Not every decision requires the court's involvement. For ordinary day-to-day matters, a guardian may act independently. These include routine decisions that are necessary for managing the minor's affairs and preserving their property. Examples include:

• Entering into short-term leases.
• Collecting money owed to the minor.
• Paying debts or expenses.
• Maintaining the minor's property.
• Spending money on the minor's reasonable needs.

These are considered ordinary acts of administration and generally do not require judicial approval.

When Is Court Approval Required?

The position changes where the proposed transaction could significantly affect the minor's assets. For major financial decisions, the guardian must first obtain the court's authorisation. These include transactions such as:

• Selling the minor's property.
• Mortgaging property.
• Lending the minor's money.
• Entering into settlement agreements.
• Any other significant transaction that may materially affect the minor's financial interests.

The reasoning behind this is straightforward. The greater the financial risk to the minor, the greater the level of judicial oversight required. Rather than allowing a guardian complete discretion, the law places the court in a supervisory role to ensure that important decisions genuinely serve the minor's interests.

A Practical Observation

The Civil Transactions Law establishes the overall framework for guardianship, but it does not contain every rule relating to guardians. Many of the detailed provisions concerning the appointment, supervision, removal, and responsibilities of guardians continue to be found in the Personal Status Law. For that reason, these two pieces of legislation should be read together whenever a matter involving a minor's property arises. From a practical perspective, if you are dealing with property owned by a minor, it is always worth confirming two things before proceeding:

• Whether the person acting is the legally recognised guardian; and
• Whether the proposed transaction requires prior court approval.

These are issues that are often overlooked but can have significant consequences for the validity of a transaction.

What Makes a Contract Valid?

Let us now turn to what is perhaps the most fundamental part of the Civil Transactions Law: contracts.

Almost every legal relationship, whether personal or commercial, begins with a contract of some kind. Understanding what makes a contract legally enforceable is therefore essential. The new Civil Transactions Law preserves the same basic principles that have long existed in UAE law while presenting them in a clearer and more structured manner. Under Article 124, every valid contract rests on three essential elements.

1. Mutual Consent

The first requirement is mutual consent.

This means there must be a genuine offer by one party and a corresponding acceptance by the other. Both parties must agree to exactly the same essential terms. If there is no true meeting of the minds, there is no contract. For example, if one party offers to sell a property for AED 1 million and the other responds by agreeing to purchase it for AED 800,000, there is no acceptance of the original offer. Since the parties have not agreed on the same terms, no binding contract has been formed.

2. Subject Matter

The second requirement is a valid subject matter.

The subject of the contract must either exist or be capable of existing, and it must be sufficiently clear and identifiable. Simply agreeing to sell "a villa" without identifying which villa is unlikely to create an enforceable agreement. Similarly, if essential commercial terms are missing, the agreement may fail altogether. The law expects parties to clearly identify the essential elements of their bargain before a contract becomes enforceable.

3. A Lawful Purpose

The third requirement is that the contract must pursue a lawful purpose.

The UAE courts will not enforce agreements whose purpose is illegal or contrary to public policy. Regardless of how carefully such agreements are drafted, they cannot create enforceable legal rights.

Capacity Is Separate

One point that is sometimes misunderstood is the role of legal capacity.

Capacity is undoubtedly required for a contract to be binding, but it is not one of the three essential elements of contract formation. Instead, it is dealt with separately under Article 146. The distinction is important because it affects the legal consequences. If one of the three essential elements is missing, there is generally no valid contract in the first place.

By contrast, where a party lacks legal capacity, the contract is often voidable rather than automatically void. This means the contract exists and may produce legal consequences unless and until it is challenged or set aside. Understanding that distinction can make a significant difference when disputes arise.

Good Faith in Negotiations

One of the most notable developments introduced by the new Civil Transactions Law concerns the negotiation stage.

Historically, the duty to act in good faith primarily applied once a contract had already been concluded. The new law extends that obligation to negotiations themselves. This represents an important shift because it recognises that legal responsibility can arise even before a contract is signed.

That does not mean parties are forced to reach an agreement. The law fully recognises that negotiations may fail and that either party remains free to walk away. What it does require is that negotiations are conducted honestly and fairly. A party who enters negotiations without any genuine intention of reaching an agreement, or who conducts negotiations in bad faith, may now be liable for the actual losses caused to the other party.

For example, imagine a company spends months negotiating the purchase of a business. Professional advisers are appointed. Due diligence is carried out. Significant costs are incurred. If it later becomes apparent that the other party never genuinely intended to complete the transaction and was simply attempting to delay a competitor or obtain confidential commercial information, that conduct may now give rise to liability.

Importantly, the law focuses on actual losses. It does not compensate a party for the profits they hoped to earn from a contract that was never concluded. Instead, it allows recovery of genuine losses resulting from bad-faith negotiations, such as professional fees, due diligence costs, and other wasted expenses.

This reflects an important principle. Freedom to negotiate remains protected. Freedom to abuse the negotiation process does not.

The Duty to Disclose

Closely connected to good faith is another important concept introduced by the new law: the duty to disclose.

The Civil Transactions Law now requires each party to disclose information that is material to the other party's decision to enter into the contract. In other words, if there is information that would significantly influence whether someone decides to proceed with a transaction, deliberately withholding that information may have legal consequences.

Perhaps even more importantly, this duty cannot simply be excluded by contract. Any contractual clause attempting to remove or limit that obligation is itself void. Where deliberate non-disclosure occurs, the innocent party may be entitled to seek annulment of the contract, even if ownership or possession has already passed.

This principle is likely to have significant implications across a wide range of commercial transactions, including property sales, mergers and acquisitions, and other transactions where one party possesses information that the other cannot reasonably discover on their own. It reinforces a broader theme running throughout the new Civil Transactions Law: transparency, fairness, and good faith are no longer confined to the performance of a contract. They begin well before the contract is signed.

Contracts of Adhesion

Another important concept carried forward by the new law is the treatment of contracts of adhesion, sometimes referred to as "take it or leave it" contracts. These are agreements where one party has little or no opportunity to negotiate the terms. Instead, the stronger party prepares the contract in advance, leaving the other party with only two choices: accept it or walk away. Most people encounter these contracts regularly, often without giving them much thought. Examples include:

• Residential tenancy agreements.
• Insurance policies.
• Bank terms and conditions.
• Telecommunications contracts.
• Car rental agreements.
• Standard sale and purchase agreements for property.

In situations like these, there is often a clear imbalance in bargaining power. One party drafts the contract, while the other simply signs it. Recognising this imbalance, Article 120 requires courts to interpret contracts in a manner that promotes justice and good faith. Where contractual language is ambiguous, that ambiguity will generally be interpreted in favour of the weaker party. If a particular provision is found to be unfair or excessively one-sided, the court also has the power to modify or disregard it where appropriate.

This is not an entirely new principle. Similar protections existed under the previous Civil Code. However, the new law preserves those protections and reinforces the importance of fairness when interpreting standard-form agreements. The practical takeaway is straightforward. Simply because a clause appears in a standard contract does not necessarily mean it will always be enforced exactly as written.

Abuse of Rights

One of the most interesting principles found throughout the Civil Transactions Law is the doctrine known as abuse of rights. At its core, the principle recognises that having a legal right does not automatically mean that every exercise of that right is lawful. In other words, the law looks not only at whether a person has a right, but also at how that right is exercised.

Article 106 identifies four situations in which exercising a legal right may itself become unlawful. These are where:

1. The right is exercised solely to harm another person.
2. The benefit gained is disproportionate to the harm caused.
3. The purpose is contrary to law, public order, or morals.
4. The exercise of the right exceeds what is accepted by custom.

These principles are designed to prevent rights from being used as instruments of oppression or unfairness.

Consider a simple example. Imagine someone carries out an act that technically falls within their legal rights, but does so for no reason other than to inconvenience or harm a neighbour. Although the right itself may exist, the law may refuse to protect that conduct because it constitutes an abuse of that right.

One of the refinements introduced by the new Civil Transactions Law is a stronger emphasis on proportionality. Rather than looking solely at whether a legal right exists, the court also considers whether the benefit obtained justifies the harm caused to another party. The greater the imbalance between those two factors, the more likely it is that the conduct may be regarded as an abuse of rights. Ultimately, the principle reinforces an important idea that appears repeatedly throughout the new legislation: legal rights should be exercised responsibly, fairly, and for legitimate purposes.

Governing Law

As business increasingly crosses international borders, determining which country's law governs a contract has become an important question. The new Civil Transactions Law provides greater clarity on this issue. Article 19 reinforces the principle of party autonomy, allowing parties to choose the law that will govern both the form and substance of their contract. This is particularly important in international transactions involving businesses or individuals from different jurisdictions. Where the parties have expressly agreed on a governing law, that choice will generally be respected.

However, not every contract contains such a provision. Where no governing law has been chosen, the Civil Transactions Law provides default rules to determine which legal system applies. As a general principle:

• If both parties share the same domicile, the law of that domicile applies.
• If they are domiciled in different countries, the governing law will generally be the law of the place where the principal obligation under the contract is to be performed.

For example, imagine one party is based in Australia and the other in the UAE, but the contract is to be performed in the UAE. In the absence of a governing law clause, UAE law would generally apply.

Important Limits

Although parties enjoy considerable freedom to choose the law governing their contract, that freedom is not unlimited. Article 27 makes it clear that foreign law will not be applied where doing so would conflict with:

• Sharia.
• UAE public order.
• UAE morals.

In addition, certain matters remain subject to UAE law regardless of what the parties agree. These include:

• Rights relating to real property located in the UAE.
• Employment relationships in the UAE.
• Registered commercial agencies.

These mandatory rules reflect areas that the UAE considers sufficiently important to remain governed by its own legal framework. The practical lesson is that governing law clauses are valuable and often highly effective, but they cannot override mandatory provisions designed to protect the UAE's public policy.

How Contracts Come to an End

Understanding how a contract is formed is only part of the picture. Equally important is understanding how it comes to an end.

The starting point under Article 232 is simple. A valid contract is binding. Neither party is free to walk away simply because circumstances have changed or because they no longer wish to perform their obligations. Instead, contracts come to an end only through legally recognised mechanisms.

1. Mutual Agreement

The simplest method is by mutual agreement. If both parties agree to terminate their contractual relationship, they are free to do so and may also agree on the terms upon which the contract will end. This is recognised under Article 233.

2. Court-Ordered Termination Following Breach

Where one party fails to perform its obligations, the other party may apply to the court seeking termination of the contract. Before doing so, however, the breaching party must generally be given formal notice. Once the matter reaches court, the judge has several options. Depending on the circumstances, the court may:

• Order the breaching party to perform the contract.
• Grant additional time for performance.
• Refuse to terminate the contract if the breach is considered minor.
• Order termination together with appropriate compensation.

This flexibility allows the court to tailor its decision to the facts of each individual case rather than automatically terminating every contract where a breach occurs.

3. Automatic Termination Clauses

Many commercial agreements contain clauses stating that the contract will automatically terminate if one party fails to perform. The Civil Transactions Law recognises these provisions. However, an important practical point is often overlooked.

Even where a contract provides for automatic termination, formal notice is generally still required unless the parties have expressly agreed otherwise. This principle is not new. It was also recognised under the previous Civil Code and continues under the new legislation. Accordingly, parties should not assume that an automatic termination clause allows them to bypass every procedural requirement.

4. Force Majeure

Contracts may also come to an end because performance becomes impossible. This is the concept commonly known as force majeure, addressed in Article 236.

Where an event outside the control of the parties makes performance impossible, the contractual obligation may be extinguished. The key point is impossibility. Performance must genuinely be incapable of being carried out, rather than merely becoming more difficult or more expensive.

5. Hardship

The law also recognises situations that fall short of impossibility.

Sometimes unforeseen events do not prevent performance altogether but make it excessively burdensome. In those exceptional circumstances, Article 224 allows the court to intervene and reduce the obligation to a reasonable level. Many people became familiar with this principle during the COVID-19 pandemic, when businesses and tenants sought relief because circumstances had changed dramatically after contracts had already been concluded. The hardship doctrine provides flexibility while preserving the contract wherever possible.

Restoring the Parties

Regardless of how a contract comes to an end, the general objective is to restore the parties, as far as possible, to the position they occupied before entering into the agreement. Where appropriate, each party returns what it received, and any remaining issues are resolved in accordance with the law.

Damages and Penalties for Breach

One of the most common questions that arises after a contract has been breached is: what can the innocent party actually recover?

The new Civil Transactions Law provides a clear framework for answering that question, while largely preserving the principles that have long existed under UAE law. The starting point is an important one. UAE law generally prefers performance over compensation. In other words, where possible, the law seeks to ensure that contractual obligations are fulfilled rather than simply replaced with a financial payment. If performance remains possible, the court's primary objective is often to require the breaching party to honour the agreement. Only where performance has become impossible, delayed, or defective does compensation become the appropriate remedy.

Compensation for Breach

Under Article 336, a party who fails to perform its contractual obligations may be required to compensate the other party for the loss suffered. This applies where performance becomes impossible, is delayed without justification, or is carried out improperly. However, liability is not automatic. A party may avoid liability if it can demonstrate that the failure resulted from an external cause beyond its control, such as circumstances amounting to force majeure.

Another important procedural requirement is that, in most cases, the breaching party must first be placed in default through formal notice before compensation can be claimed. This requirement ensures that parties are given a fair opportunity to remedy the breach before legal consequences follow.

How Are Damages Calculated?

Where the contract does not specify the amount of compensation payable, the court assesses the actual loss suffered by the innocent party. The purpose of damages is to compensate for proven loss rather than to punish the party in breach.

For example, if a supplier fails to deliver goods and the buyer is forced to purchase the same goods elsewhere at a higher price, the court may award the difference between the original contract price and the replacement cost, together with any other losses that can be properly established. The emphasis remains on actual, demonstrable loss supported by evidence.

Penalty Clauses and Liquidated Damages

Many commercial contracts include provisions fixing the amount of compensation payable in the event of a breach. These are commonly known as penalty clauses or liquidated damages clauses.

A common misconception is that once the parties have agreed on a figure, that amount automatically becomes payable. That is not the case. Under Article 340, the agreed amount serves as a starting point, but the court retains the authority to review and adjust it where appropriate. The court may reduce the agreed compensation if:

• It is excessive when compared with the actual loss suffered.
• The breaching party has substantially performed its obligations.
• The innocent party contributed to the loss through its own conduct.

This final point represents a notable clarification under the new law. The legislation now expressly recognises contributory fault as a factor when assessing agreed damages. Conversely, the court may award compensation exceeding the agreed amount where the innocent party establishes fraud or gross fault on the part of the breaching party. Importantly, parties cannot remove or limit the court's power to make these adjustments through contractual wording. Regardless of what the contract says, the court retains the authority to ensure that the compensation ultimately awarded reflects fairness and the circumstances of the case.

The overall approach remains consistent with the broader philosophy of the Civil Transactions Law. Compensation should place the injured party in the position they would have occupied had the breach not occurred, but it should not provide an unjustified windfall.

Unjust Enrichment

The next principle is one that quietly underpins many civil and commercial disputes, even though it is often less well known than contract law. It is the principle of unjust enrichment.

The idea is both simple and fundamental. No one should be allowed to benefit at another person's expense without a lawful legal basis for doing so. This principle existed under the previous Civil Code and continues under the new Civil Transactions Law. Although the wording has been modernised, the underlying concept remains the same. Where one party receives money or another form of benefit without legal justification, the law generally requires that benefit to be returned.

The Three Elements

For a claim based on unjust enrichment to succeed, three elements must generally be established:

1. One party has received an enrichment or benefit.
2. The other party has suffered a corresponding loss.
3. There is no lawful basis justifying that transfer of value.

In other words, there must be no contract, gift, court judgment, or other recognised legal reason explaining why the benefit was received. Only where those elements are present does the law intervene to restore the parties to their proper position.

Practical Examples

The principle applies in a wide range of situations. Some of the most common examples include:

• Money paid by mistake.
• An advance payment made for goods or services that are never provided.
• Funds transferred to the wrong bank account.
• A benefit received where no valid legal relationship exists.

Closely connected to unjust enrichment is the principle allowing recovery of payments that were never legally due in the first place. If someone pays money under the mistaken belief that it is owed, they may generally seek to recover that payment.

A Practical Lesson

Claims involving unjust enrichment often depend less on disputed legal principles and more on evidence. The question is usually whether there was a lawful reason for the payment or transfer. For that reason, documentation becomes particularly important.

Contracts, invoices, receipts, payment records, correspondence, and bank statements may all play an important role in establishing whether a legal basis existed. From a practical perspective, maintaining a clear paper trail remains one of the simplest and most effective ways of protecting your legal position.

Real Estate Defects

The UAE property market continues to be one of the country's most active sectors, making the rules governing property defects particularly significant. The Civil Transactions Law addresses two distinct categories of defects, each serving a different purpose and applying to different parties. Understanding the distinction between them is important because the available remedies, limitation periods, and parties responsible differ considerably.

Hidden or Latent Defects

The first category concerns hidden, or latent, defects. Under Article 493 and the provisions that follow, every sale carries an implied warranty that the property is free from hidden defects.

Not every imperfection qualifies. For the warranty to apply, the defect must generally satisfy several conditions. It must be:

• Pre-existing.
• Hidden from ordinary inspection.
• Not disclosed to the buyer before the sale.

One particularly important aspect of this warranty is that liability does not depend upon whether the seller knew about the defect. Even an innocent seller may remain responsible if the legal requirements are satisfied.

Available Remedies

Where a qualifying hidden defect is established, the buyer generally has two options. The buyer may:

• Return the property and seek a full refund; or
• Retain the property and claim an appropriate reduction in the purchase price.

The appropriate remedy depends upon the circumstances and the seriousness of the defect.

Time Limits

The law generally requires claims relating to hidden defects to be brought within one year from delivery of the property. However, there is an important exception.

Where the seller deliberately conceals the defect, the seller cannot rely upon that one-year limitation period as a defence. The law therefore distinguishes between innocent non-disclosure and fraudulent concealment. For purchasers, the practical lesson is simple. Inspect the property carefully before completing the transaction and retain records documenting its condition at the time of handover. Good documentation can prove invaluable if a dispute arises later.

Structural Defects and the Ten-Year Warranty

A separate regime applies to structural defects affecting buildings and fixed structures. Unlike hidden defects, these provisions are aimed primarily at protecting the structural integrity and safety of buildings. Under the Civil Transactions Law, contractors and supervising engineers remain jointly liable for a period of ten years where a building suffers:

• Total collapse.
• Partial collapse.
• Any defect threatening the building's structural stability or safety.

This is commonly referred to as decennial liability. It is one of the strongest statutory protections available under UAE law.

The liability is both mandatory and strict. In other words, parties cannot simply agree to exclude or reduce it through contractual provisions. Any attempt to waive these protections is ineffective. Claims relating to structural defects must generally be brought within three years of discovering the defect or collapse. This long period of protection reflects the significant public interest in ensuring that buildings remain structurally safe long after construction has been completed.

Collapse Causing Harm to Others

The Civil Transactions Law also addresses situations where a building causes harm to people or property beyond its own owners. Under Article 270, liability may arise where a person or entity responsible for a building fails to maintain it properly and that failure results in injury or damage.

For example, if part of a building's façade, balcony, or other structural element becomes detached and falls onto a public area, causing injury to a passer-by or damaging nearby property, the person responsible for that building may be held liable. This provision serves as an important reminder that ownership and control of property come with legal responsibilities. Those responsible for maintaining buildings are expected to ensure they remain safe, not only for occupants but also for members of the public who may be affected by their condition.

Property Rights

Beyond contracts and obligations, the new Civil Transactions Law also modernises several aspects of property law. While Emirate-level legislation continues to regulate many practical aspects of real estate ownership, registration, and development, the Civil Transactions Law establishes the underlying legal principles governing property rights throughout the UAE.

Several of those principles deserve particular attention.

Ownership and Possession

The law distinguishes between ownership and possession, two concepts that are often confused but carry different legal consequences. Ownership is the most comprehensive right a person can have over property. It includes the right to use, enjoy, benefit from, and dispose of that property, subject to the limits imposed by law. Possession, however, is a separate legal concept.

A person may lawfully possess property without actually owning it. Tenants are perhaps the most obvious example. Although they do not own the property they occupy, the law nevertheless recognises and protects their possession. This distinction is important because possession itself enjoys legal protection. A person in lawful possession may, in appropriate circumstances, take legal action to protect that possession, even where they are not the registered owner.

Limited Real Rights

The Civil Transactions Law also recognises a number of rights that fall short of full ownership but nevertheless give a person legally protected interests over another person's property. Among the most common are:

• Usufruct, which gives a person the right to use and benefit from someone else's property while ownership remains with another person.
• Musataha, which grants the right to construct buildings or other structures on land owned by someone else. This right is frequently encountered in commercial developments and long-term property arrangements.

These rights have long formed part of UAE property law. However, the new legislation introduces an important development in relation to Musataha.

Registration of Musataha Rights

Under the new Civil Transactions Law, Musataha rights must now be registered with the competent authority in order to be legally valid. Without registration, the right is considered null and void.

This represents a significant clarification and reinforces the broader trend towards greater certainty and transparency in property transactions. Registration provides an official public record of rights affecting land, helping to reduce disputes while offering greater protection against fraud, forgery, and competing claims. It also serves as a reminder that, in modern property transactions, registration is often just as important as the agreement itself.

A New Action to Stop New Works

Another noteworthy addition introduced by the new law is a new legal remedy allowing a possessor to seek an order preventing construction or other works that threaten their possession. Although this may appear to be a relatively narrow procedural change, it provides an additional mechanism for protecting property rights before damage actually occurs.

Rather than waiting until construction has been completed and the dispute has escalated, an affected party may now have the opportunity to intervene at an earlier stage where their lawful possession is under threat. This reflects a broader objective running throughout the new Civil Transactions Law: preventing disputes where possible, rather than simply resolving them after the damage has already been done.

Conclusion

The new UAE Civil Transactions Law represents far more than a simple update to existing legislation. It modernises the legal framework that underpins almost every civil and commercial relationship in the country while preserving many of the core principles that have guided UAE law for decades.

Among its most significant changes is the reduction of the age of majority to 18, giving young adults full civil legal capacity at an earlier stage of life. The law also clarifies the role of guardians, introduces express duties of good faith and disclosure during negotiations, reinforces protections against unfair contractual terms, and further develops the principle that legal rights must be exercised responsibly.

It also provides greater certainty in cross-border transactions by strengthening parties' ability to choose the governing law of their contracts, while preserving important public policy protections. The rules governing termination of contracts, compensation, and penalty clauses have been clarified, and the long-standing principle of unjust enrichment continues to ensure that no one benefits unfairly at another person's expense.

For property owners, developers, contractors, and purchasers, the law maintains important protections relating to hidden defects and structural liability, while introducing greater emphasis on registration and certainty in relation to property rights such as Musataha.

One topic we have not explored today is limitation periods, namely how long parties have to bring different legal claims under the new Civil Transactions Law. That is a substantial subject in its own right and one we will cover in a future episode.

For now, there is one practical point worth remembering.

As of 1 June 2026, the new Civil Transactions Law governs almost every new civil agreement entered into in the UAE's onshore jurisdiction. However, contracts concluded before that date will generally continue to be governed by the previous Civil Code.

Understanding which law applies to your agreement is often the first and most important step in understanding your legal rights and obligations.

That is all for this episode of Lawgical. If you found this useful, you can find more on our website: lylawyers.com. We are also on Apple Podcasts and Spotify. And for the full experience, you can watch the video podcast on YouTube. Until next time: stay informed, stay safe, and keep things Lawgical.