Abu Dhabi Issues Resolution No 64 2010 Regulations on Property Ownership

General Shaikh Mohammad Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, on Wednesday issued Resolution No. 64 of 2010 which aims to encourage real estate developers and investors in the emirate to register their real estate ownership and makes the process of transferring property ownership easier and faster, the official news agency WAM reported.

The resolution also aims to facilitate the process of acquiring loans to finance real estate investments. It specifies the framework and general rules related to property rights registration procedures.

Registration

The resolution stipulates that the director of the property registration department must register all dealings pertaining to the emirate's properties, or any property rights related to ownership, land development lease contract (Musataha) and long-term leases taking place both in and out of investment zones.

The director must also register mortgage contracts, and direct contracts concluded with banks and financing parties.

"It gives the purchase contract legitimacy and will help the buyers [get] access to finance and mortgage finance which is crucial to end-users. I’d love to see more openness in property regulations. I hope Abu Dhabi Finance will expand financing expatriate buyers," said Wael Tawil, chief executive of Baniyas Investment and Development Company (BID), which is developing the residential Bawabat Al Sharq project in Abu Dhabi.

Gurjit Singh, chief operating officer of Sorouh Real Estate, one of Abu Dhabi’s top real estate developers, said the resolution will help boost real estate development.

Confidence booster

"It's going to give a lot more confidence to the real estate market — to investors, property purchasers and developers," said Singh.

According to the resolution, real estate property ownership is limited to all Emiratis, and to people, companies and bodies who will be specified by a decision issued by the Abu Dhabi Executive Council.

Gulf Cooperation Council nationals and corporate bodies wholly owned by them are also allowed to own property as long as it is within the investment zones.

Non-Emiratis or corporate bodies will enjoy the right to own, buy, sell, rent, mortgage and invest in investment zones.

The registrar will also have to register these people and corporate bodies, who own apartments and storeyed buildings. The registrar will also issue title deeds to them after they have presented the necessary documents.

They may hold usufruct or Musataha right for up to 50 years (subject to renewal for a similar duration) and usufruct contract for up to 99 years and long-term tenancy contract in properties located in investment areas.

The registrar will register non-Emiratis or corporate bodies in the real estate registry as owners of these rights, after they have presented the necessary official documents specified in the regulations and laws issued by the director of the municipal affairs department

Ahmed Shaikhani, managing director of Memon Investments, a Dubai based property developer, welcomed the move which would boost market confidence. He said it would also encourage new projects by the developers as a law has been issued on the property registration. At a time when new investments into the real estate sector have slowed down a bit, this development would be helpful in attracting investors’ attention, he said.

Shaikhani said properties were already being registered in the emirate. Now those transactions have got a legal cover, he said.

Investors purchase freehold property in Dubai through offshore company now need to set up an offshore firm with Jebel Ali Free Zone (Jafza).

Investors looking to purchase a freehold property in Dubai through a company now need to set up an offshore firm with Jebel Ali Free Zone (Jafza). Titles to freehold properties will not be registered unless a no-objection certificate (NoC) is procured from the free zone.

This follows the signing of a recent deal between the Dubai Land Department (DLD) and the free zone in a bid to maintain a more concise register of land and property transactions. This new policy, however, does not affect the ownership of properties registered in the name of local entities that were issued title deeds prior to October 26, 2010.

Improving transparency

According to Michael Lunjevich, partner and head of real estate at law firm Hadef & Partners, "It's for the Land Department to have some visibility on who the shareholders and directors are in an offshore company. It's very important to know who the beneficial owners are, and the transfer of property shouldn't be allowed off the Register."

While offshore companies were popular among expatriates, particularly the Muslim community, in Dubai owing to uncertainty over inheritance issues in the region, those established in offshore jurisdictions such as the British Virgin Islands (BVI), the Isle of Man and the Cayman Islands also legally avoid having to pay certain types of taxation on profits and income. "Some international investors don't want assets in their personal name since they could get sued internationally for assets you own in a different country. Transferring it from your name will minimise that risk," explains Brent Baldwin, associate at the law firm.

Despite the fact that the Jafza deal is expected to emphasise information access to shareholder details, investors can still ensure that the asset cannot be traced to their name.

"You may still have situations where the Jafza company is owned by an offshore trust or a nominee company. If you structure your investments well, you can ensure that nothing traces back to you. But, it will be more difficult to sell the structure onto someone else. You will have to transfer two companies and many companies may not be willing to take up collective liabilities," suggests Lunjevich.

Stringent reporting norms

Industry experts believe the DLD could make the reporting requirements for existing foreign offshore firms more stringent. "They might introduce more stringent reporting requirements on those grandfather acquisitions. The Land Department may sometimes enable free transition from a foreign offshore company to a local offshore firm, without charging a fee," Lunjevich says.

The nature of offshore firms not needing to disclose details of the beneficiary has lent itself to fraud and money laundering in many instances. "There have been examples where offshore companies, mostly BVIs, collected money for developments, did not put it into an escrow account and the directors disappeared. Whether it was done fraudulently or they were victims of circumstances, I wouldn't want to speculate," Lunjevich adds.

Residency departments will not renew the residence visas of expatriates if they are wanted by police for financial obligations

Residency departments will not renew the residence visas of expatriates if they are wanted by police for financial obligations, Interior Ministry officials said

Residency departments will not renew the residence visas of expatriates if they are wanted by police for financial obligations, Interior Ministry officials said.Residency visas of expatriates, their relatives and their employees will be renewed only after the settlement of the financial disputes.

Several residents told  that their applications to renew their visas were rejected because banks had lodged complaints against them with police, who had issued arrest warrants.Police have instructed residency departments to arrest these expatriates or send them to the authorities.

While this is the rule, Interior Ministry officials said they consider some cases on humanitarian grounds.

Lawyers, however, stressed that the police have no right to ask residency departments to arrest people who have defaulted on bank loans or other financial issues.Residency departments, lawyers said, are administrative units and have no right to arrest or punish people by not renewing their residence visas for such matters.

Major-General Nasser Al Awadi Al Menhali, Assistant Undersecretary in the Ministry of Interior for Naturalisation, Residency and Borders, told  that if banks file a case with police against a person for financial issues, such as delayed payments of loans or bounced cheques and an arrest warrant is out, no transaction is carried out for that person.

He said residency departments do make exceptions.

“We look at the case on humanitarian grounds. We renew the residency visa if the person has a family, wife and children,” he said. “The ministry does not want to increase the number of illegal residents. The residency department does not arrest people if they are involved in bank loans but we ask them to sort the matter out.”

Dr Khalifa Rashid Al Sha’ali, a lawyer and legal expert, told  that when police ask to bar a person from getting his visa, it is meant to pressure him into paying his dues and protect the other party’s rights.‘Illegal pressure’.However, Dr Al Sha’ali said not renewing the person’s residency visa is a kind of punishment or pressure that is illegal and unjustified.

“It is illegal if the residency department does not renew someone’s residence visa if they do not pay their bank loans. There is no article in the law which says residency will not be renewed for not paying banks, for example,” he said.

A businessman told  that this step by the residency department is illogical.

“It punishes the company for an issue that involves the employee. The loan defaulter in turn is punished using a different tool and is made illegal.”

UAE residency visa, labour card validity cut to two years

New rule to reduce the life of the labour card for all workers and employees in the private sector to come into effect next month.A new decision has been approved to reduce the life of the labour card for all workers and employees in the private sector, to two years from the current three, officials confirmed on Tuesday.

A senior official at the Labour Ministry told Gulf News the rule will be implemented in January 2011. "As the labour card will be for only two years, naturally the residency visa will also be for two years," the official explained.

According to a statement by Humaid Bin Deemas, Acting Director-General of the Ministry of Labour, carried by WAM, "The UAE Cabinet has reduced the validity of labour cards of all categories of people who work in private sector from three years to two years in a bid to regulate the labour market."

The Cabinet decision aims to unify the labour card validity for all work categories to be similar to that of drivers, domestic helpers and other similar categories who are given only two-year labour cards and residence visas by the Department of Residency and Foreigners Affairs, while other professions currently get three-year labour cards and three-year residence visa.

Major General Nasser Al Awadi Al Minhali, Assistant Undersecretary at the ministry's Naturalisation and Residency Affairs department told Gulf News the change in the validity of the labour card will impact the expiry date of the residence visa issued to expatriates.

"When we get an application for a residence visa we look at the validity of the labour card issued by the Ministry of Labour; if it is for two years then we will issue a two-year residence visa," he explained.

Significant amendments

He also revealed that the ministry is currently studying significant amendments to the current law which deals with residency and foreigners' affairs.

Bin Deemas said the decision will help private sector employers to "save Dh678 million annually", as ministry statistics show that 70 per cent of labour cards are cancelled before two years have passed.

He said total licence and work permit fees for 2009 were Dh2.25 billion, and that it cost 70 per cent of employers who paid the three-year irretrievable fees, a sum of Dh1.757 billion.However, they could have saved Dh678 million if the cards were valid for two years.

"The decision would also achieve certain flexibility in the relationship between employers and employees; it would give both parties the ability to end the relationship without big losses for the employers and in a way that will not violate the labour laws," he said, adding that for the employees, the decision will help enhance competitiveness and movement in the job market.

Guideline to register Properties in the name of offshore companies in Dubai