How is real estate in Dubai examined before a purchase?

The demand for real estate in Dubai continues to grow. It’s important when concluding a property purchase to inspect the property beforehand. This means analyzing the condition of the property and evaluating it. A comprehensive check allows the potential buyer to make an informed decision on the transaction.

Contents:

• The Dubai real estate market
• What is the reason for a property inspection?
• What is checked?
• When is the inspection carried out?
• Who should inspect the property?
• How to check the cleanliness of real estate in the UAE before a transaction?
• Inspection before buying a property in Dubai
• What could the results of a legal inspection of real estate be?
• We will help you choose a property in Dubai

The Dubai real estate market

In 2021, more than 41,000 properties were sold in Dubai and experts predict an increase in this number in 2022 due to new, innovative projects and a favorable legal framework for foreign investment. Against the background of the rapid growth in the UAE real estate market, a negative trend has also begun to develop: cases of debt collection, deprivation of property rights and other legal and financial problems have become more frequent. Due to this, a comprehensive inspection of the premises, or due diligence, has become relevant.

What is the reason for a property inspection?

In real estate, due diligence is a process that allows the buyer to give the property a legal, technical and financial assessment. It also verifies the accuracy of the information provided by the seller. Only specialists who understand regulatory documentation and have experience in analyzing the condition of a property can assist with this task.

There is a misconception that when you obtain a mortgage loan, a banking organization examines the real estate for compliance with all financial and legal criteria. In fact, the powers of such institutions are limited to checking the property for the possibility of transferring ownership and collateral to it. In addition to these issues, the client must carefully analyze the history of the transfer of ownership, the financial situation of the parties involved in the purchase and sale transaction, and other issues.

If you neglect these important stages of inspecting real estate, you‘re at risk of the following consequences:

• The buyer will not be able to own the purchased property;
• The buyer will become involved in legal proceedings with third parties whose property rights were violated by the previous owner;
• Persons with the right to lifelong residence in the house will be found;
• The former spouse or spouse of the previous owner will declare their rights to the property acquired through marriage;
• The buyer will become involved in legal proceedings related to the financial obligations of the previous owner;
• The heirs of the previous owner will be found and they can declare their rights to the property;
• The buyer will be forced to move since the building is recognized as an emergency, subject to demolition or reconstruction;
• Persons who did not participate in the privatization of the property will be found (for example, if the privatization took place without the participation of the children of the previous owner).

What is checked?

In the table above, you can see the average due diligence prices in typical cases. Keep in mind that a comprehensive check of non-standard real estate with a large number of renters can cost much more.

When is the inspection done?

Verification of the legality of the transaction when buying real estate should be carried out after the parties conclude a preliminary agreement and discuss all the details of interest. In other words, it is necessary to conduct due diligence before signing an official contract.

If during the inspection of the facility, defects or encumbrances of property rights are found that the client has not been notified in advance of, the preliminary agreement may be terminated. In this case, the seller must return the deposit.

Who should inspect the property?

A buyer privately inspecting and apartment or villas in Dubai is not common in practice. Usually, experts from various fields – real estate agencies, lawyers, notaries, investment project analysts, etc. - do this task. Most often, one company organizes consultations with specialists to help the client at all stages of the transaction.

How to check the cleanliness of real estate in the UAE before the transaction?

The legal examination of real estate before buying in the UAE must be carried out under the following conditions:

1. Regulatory review. The Dubai Land Department is the main real estate management body in the Emirate. It gives investors documents of ownership of the purchased property. Before concluding a transaction or paying a deposit, the client or his attorney must contact the department and make sure that the person selling the residential or commercial space is really the owner.
2. Judicial review. The investor must make sure that there are no lawsuits related to the real estate and receive confirmation that it is free from any legal obligations. The parties who have obtained a court decision in their favor to receive funds may initiate proceedings and seize the debtor's property if the latter does not fulfill payment conditions. Therefore, you need to check the property for the absence of encumbrances before any transaction.
3. Checking the transfer conditions. An investor should always become familiar with the terms of the transfer of ownership before investing any funds in a building. Before signing the contract, you need to check the payment terms, mortgage options and other provisions.
4. Checking debts. The investor should check whether there are overdue payments due to the Dubai Electricity and Water Authority. Usually, the seller himself receives a certificate of no objection from the general developer and the owners' association and also transfers the name of the new owner to the utility provider after the transaction is concluded.

Examination before buying a property in Dubai

The previous paragraph described the legal aspects of checking a property in Dubai before buying. Now consider the remaining 2 types of inspection.

The financial and tax due diligence consists of the following:

1. Verification and confirmation of the availability of mortgage loans, collateral or other obligations to financial institutions.
2. Determining the exact value of the property with the help of an independent specialist or company.

All the rules of a technical inspection in the UAE aim to find out whether the physical property meets market conditions, quality standards and the information provided by the seller. During this examination, specialists check the area of the rooms, plumbing and electricity, floors, walls, windows, doors and other movable and immovable features.

What could the results of a legal examination of real estate be?

After checking the legality of the purchase and sale transaction, experts summarize the results and prepare a legal opinion. The results of due diligence can be as follows:

1. The property is recognized as legally clean and optimal for investment. Experts have not found any factors that may lead the buyer to negative legal consequences in the future.
2. Contradictions have been identified, which can be dealt with by following the recommendations of the expert. During the inspection, factors were found that could lead the buyer to negative legal consequences but the problem can be solved with the help of certain actions.
3. The area is recognized as an unsuitable property for investment. Experts have identified adverse factors that are likely to lead the buyer to negative legal consequences. This conclusion suggests that in the future, the court may annul the sale and purchase transaction and the owner will lose ownership of the purchased house or apartment in the UAE.

The buyer also receives detailed advice from specialists where they justify their decision and provide several legal recommendations to minimize risks. After the client receives a legal opinion and listens to expert advice, he can ask them any further questions.

We will help you choose a property in Dubai

Each stage of concluding a purchase and sale transaction requires in-depth knowledge of the UAE market. Therefore, the best solution would be to contact experts from a real estate company.

In the Dubai market, EMIRATES.ESTATE’s team enjoys the trust of buyers. We have been helping people from different countries buy real estate in the UAE for more than 10 years. In the company's catalog, you can find the best residential and commercial properties, as well as building plots. EMIRATES.ESTATE cooperates with the most reliable developers and agencies in the UAE. Specialists in our organization offer the following:

• Select houses that best meet the wishes and capabilities of the client;
• Accompany the client at all stages of a purchase and sale transaction;
• Advise the client on any issues of interest;
• Help in obtaining a residence permit and UAE citizenship, opening a deposit account in the country and other financial and legal transactions.

Contact the experts from EMIRATES.ESTATE and get one step closer to your dream home right now!