In Dubai, every real estate transaction requires the drafting and signing of specific documents to ensure the protection of the parties’ rights. These documents have been developed and implemented by RERA (Real Estate Regulatory Agency), the regulatory authority overseeing the real estate market in the emirate.
One important document in Dubai’s real estate transactions is Form F provided by RERA, commonly known as a Memorandum of Understanding (MoU). Essentially, it functions as a contract for the sale of real estate. So, read the article and find out more about Form F in Dubai.
What Is Form F?
Form F holds significant importance in the Dubai real estate market and is officially known as the Property Sales Contract between the Seller and the Buyer.
Once the buyer has selected a property and negotiated the price and transaction terms with the seller, the Property Sales Contract (Form F) is finalised. The contract is prepared by the brokers overseeing the transaction. It is crucial to note that Form F, like all other documents in Dubai, must be drafted in both English and Arabic languages. In the event of any inconsistencies or conflicts, the Arabic language takes precedence.
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Form F is considered valid only when it is signed by both parties involved in the transaction. Each signature must be accompanied by a date and certified by the broker representing the respective party. Once the contract is signed, both parties are granted a period of 30 days to gather the necessary documentation and proceed with registering the transaction at the Dubai Land Department. It is crucial to note that if the registration is not completed within the specified timeframe, the sales contract becomes void on the 31st day from the date of signing, necessitating the preparation of a new contract.
Making A Deposit
During the signing of a sales contract (Form F), it is customary for the buyer to provide a deposit to the seller. Typically, this deposit amounts to 10% of the total cost of the purchased property, unless alternative terms have been mutually agreed upon by the parties involved. The broker overseeing the transaction retains the document that serves as proof of the deposit transfer.
In the event that the transaction proceeds smoothly and without any unforeseen issues, the buyer will receive a refund of the deposit. However, if the buyer decides not to proceed with the purchase or is unable to do so for any reason, the deposit will be retained by the seller. Conversely, if the seller decides to withdraw from the agreement, they are obligated to return double the amount of the deposit to the buyer.
The Contents of the Document
The sales contract (or F contract) comprises six pages containing the following information:
The First Page
The first page of the Dubai Land Department Form F consists of four information blocks, each serving a specific purpose.
- Property Details:
In this block, you will find comprehensive information about the property. It includes the precise location and type of property, the assigned land plot number, the name of the project to which the lot belongs, the title deed number, and the exact area of the property. Additionally, this section provides details regarding the current use of the property, specifying whether it is intended for residential or commercial purposes. It also indicates the type of sale, whether it is a cash transaction, involves a mortgage loan, or is structured with instalments. Furthermore, the availability of a No Objection Certificate from the developer will be mentioned in this block.
- Property Financials:
This block outlines the following figures: the sales price agreed upon between the seller and the buyer, the original price (the initial purchase price of the property, indicating the value at which it was acquired), as well as the amount of the deposit made and the amount payable. Finally, this section must indicate the amount of the service charge for the maintenance of the land and common areas in the building.
- Mortgage Information:
In this section, the contract specifies the details of the buyer's mortgage loan if applicable. It includes information such as the name of the bank providing the loan, the total amount of the loan, the validity period of the mortgage agreement, and whether a No Objection Certificate has been obtained from the bank.
- Tenancy Contract Information:
This section briefly outlines the details of the tenancy contract if the property mentioned in the agreement is currently rented out.
The Second Page
The second page of DLD Form F contains two sections:
- The property owner’s details.
This section includes the personal details of the seller, such as their full name, ID card number, passport number, and its expiration date. It also provides information about the seller's nationality and contact details, including their mobile number, postal and residence addresses, fax number (if applicable), and email address.
- The buyer’s details.
This section’s contents are identical to the previous one but give the buyer’s details.
The Third, Fourth, and Fifth Page
These pages of contract F Dubai Land Department encompass the terms and conditions of the contract, outlining the crucial details of the deal. This includes the seller's confirmation of being the current owner of the property or their authorised legal representative through a valid power of attorney. Additionally, the seller commits to providing all necessary documents for the transaction and adhering to the required procedures and obligations for transferring the property to the buyer's name promptly after the buyer takes possession of it.
The seller also confirms that the property is free from any disputes, mortgages, debts, rights or any other claims. If any of these occur, the seller will be responsible.
Furthermore, the buyer acknowledges having inspected the property and accepts purchasing it in its current condition. The buyer also commits to providing a deposit cheque to the seller upon signing the contract, with the specific amount stated in AED. Moreover, the buyer undertakes the responsibility of settling the remaining balance for the property by cheque or any other approved and secure payment method listed on the official website of the Dubai Land Department.
Within this section, a condition is outlined that safeguards the deposit cheque held in trust. It explicitly states that the seller or their representative is prohibited from utilising or cashing the cheque without a written order duly signed by both the buyer and the seller. Any violation of this condition will result in legal action.
Furthermore, included within the conditions is an agreement regarding the payment of a commission equivalent to 4% of the property value, payable to the Dubai Land Department. Both the buyer and the seller have the option to contribute to this commission in equal or unequal proportions. The contract explicitly states the specific percentage of the commission for each party involved.
The contract also includes provisions regarding additional financial obligations of both the seller and the buyer. In the event that the buyer fails to fulfil the agreed-upon payment obligations or does not transfer the funds on the specified date, the seller has the right to terminate the agreement and retain the deposit. Conversely, if the seller breaches the obligation to transfer the property within the agreed-upon timeframe, they are obligated to compensate the buyer for the entire period of the delay.
The Sixth Page
This page solely includes the contract number for reference and identification purposes.
In A Nutshell
A sales contract (form F by Dubai Land Department) is a crucial document for any property deal in Dubai and how well the details are outlined in each clause determines the success of the transaction. It is imperative to note that the broker responsible for drafting Form F should read the agreement aloud in the presence of both parties. They must ensure that each clause is clearly understood by both the seller and the buyer, addressing any concerns or objections they may have.
Cover photo: drobotdean (Freepik)