Tuesday, May 26, 2009

Dubai to introduce a standard property contract

Dubai plans to establish a standard property contract, which would form the norm for all real estate transactions. This is being done with the sole aim of avoiding small print misleads.

A senior official at Dubai Land Department mentioned that having a basic contract would be the norm, and that it would be difficult for buyers and developers to wriggle out of contracts or add fine print to current contracts.

A senior legal advisor at Dubai Land Department, Emmad Eldin Farouq, said that it would provide a clear, transparent guide to the rights of both developer and buyer.

The contract is ready, and we are awaiting directions, Farouq revealed. These will be standard contracts, to be given for all properties.

The contracts will remain unaltered, whether completed or incomplete. Any contractual agreement will have to be simple, clear and transparent. There are too many small prints in contracts now, Farouq said.

There are chances that developer can make additions to any contract, as different developments have different regulations. But the basic contract will remain the same, said Assistant Director-General of Land Department, Mohammad Sultan Thani.

According to the Lawyers, the main points of contract will remain the same, but more clauses may be included. The Partner at Hadef and Partners, Michael Lunjevich, said the standard contract would be for completed properties, signed between the buyer and seller. But, an element of freedom is necessary in a contract. Therefore, it will have standard terms as per the market norms, and thereafter, any alterations will go to a separate section, to avoid any confusion.

A single basic contract will seem easier for buyers and developers, reducing the number of disputes.

Dubai's RERA, together with the Land Department are trying hard to make the real estate sector more secure, but, are insisting that there ought to be a large onus on the buyer to read contracts in full.

During the peak times, several investors entered Dubai market with the sole intention of purchasing property and concentrated less on the contracts, than they would otherwise do so in more mature markets.

"The contract should be clear, and people should read them carefully," Thani pointed out.

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