Due Diligence tools for Dubai real estate
Due Diligence tools for Dubai real estate
If due diligence is not done in real estate matters, there is major potential for lawsuits and monetary loss.
When things go wrong in a real estate matter, it is not surprising to hear “No, I didn’t read the [SPA, MOU, Contract, Lease].” Some people refuse to do even the most basic of due diligence, like reviewing the legal document that they are signing. Others would like to do more, but don’t know where to start.
So, what is due diligence? It is the act of taking reasonable steps to avoid committing a mistake that could lead to legal issues, or a financial loss – doing “homework”.
If due diligence is not done in real estate matters, there is major potential for lawsuits and monetary loss. Luckily, here in Dubai, there are plenty of quick and easy ways to do it online.
The Dubai Land Department (DLD) website is of great use in conducting due diligence – visit the website here. The applications needed are under “Most Used Services”, in the lower left corner of the home page.
Brokers
Buyers, sellers and tenants should always ensure that brokers are certified by DLD’s Real Estate Regulatory Agency (RERA). Unlicensed brokers or “freelancers” are prohibited by law. The easiest way to confirm is to request to see the Broker’s RERA ID. In addition, both brokers and companies can be verified on the DLD website, under “Search for Approved Brokers”. For those who prefer using a mobile, the “Dubai Brokers” app is also available for download.
Power of Attorney (POA)
The parties should confirm that a POA being used in a transaction/lease is valid, and has not been revoked by the Grantor. This can be done via the Dubai Courts’ website – under Public E-Services (then Inquiries/Inquiries about a Document/Authentication Register), using the year of registration and serial number of the POA. If it is issued overseas, the POA should have both a UAE Embassy stamp and one from the UAE Ministry of Foreign Affairs.
Ownership of Property
In order to confirm that someone claiming to be the Seller or Landlord actually owns the property, it has recently been made possible, without having to attend DLD in person. Ownership can now be verified through the Dubai Brokers app (not yet available on the DLD website) using the Ownership Certificate number, year, owner’s name and area size.
Off-Plan Property
Under the Dubai off-plan property laws, both developers and their projects must be registered and approved by RERA prior to marketing properties for sale. On the DLD website, there is a “Search for Approved Developers” service. When the Developer’s name is entered, it will display all projects that have been approved for that Developer.
If a buyer wants to confirm the status of a project, the percentage of completion and other details, it can be done through the “Project Status Tracking Service”. The simplest way to search is by project name. Once the desired project is found, on the right hand of the screen are two boxes. The first one (with the blue stripe) shows all of the information about the project, including the Developer and Master Developer information, as well as Trust Account information.
Clicking on the second box will open a PDF. This will have even more information about the project, including the pictures of the construction progress and inspection notes.
Service Charges
To understand what service charges are being assessed in different projects, there is the “Service Charge Index”. When the Master Community and project have been entered, it will display the total amount of service charges per square foot, as well as the breakdown of where the money is being allocated.
Rental Increase Calculator
Whether a landlord wants to increase the rent, or a tenant has received a rental increase notice from the Landlord, both parties should use the “Rental Increase Calculator”. Once all of the details of the Lease are entered, the calculator will show the average similar rent for properties with the same number of bedrooms in that area. It will also state whether an increase is allowed, and if so, the maximum percentage of increase permitted.
Disclaimer: This blog is intended for informational purposes only, and should not be considered legal advice, nor does it reflect the opinions of any government agency. Majdel Musa will not be held liable for the use, non-use or misapplication of this information, any lost profits, personal or business interruptions, or any other loss.
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