The Dubai Land Department ("DLD") published Administrative Resolution No. 134 of 2013 (the "Resolution") on 2 April 2014, about the Registration of leases in Dubai. Previous to the Resolution, a grey area arose regarding the Registration of leases with periods of greater than five but less than ten years. There was no clear advice in the law on this, and we think the Resolution was made to clear up the ambiguity. Based on DLD practice, it was widely assumed that leases of more than ten years were registrable on the Real Estate Register, although this was never officially established in legislation.
However, with the passing of the Resolution, it aims to resolve with the following:
- Any lease lasting more than ten years and up to 99 years shall be considered a long term lease. It shall be registrable following Dubai Law No. 7 of 2006 Concerning Real Property Registration (Dubai Real Property Law) in the Emirate of Dubai. Such leases are legally registered as dispositions on the DLD's Real Property Register. However, the legislation failed to specify a minimum lease period for when a lease would be considered a registrable disposition on the Real Estate Register.
- Any lease lasting less than ten years shall be registrable under Dubai Law No. 33 of 2008 (amending the provisions of Dubai Law No. 26 of 2007), Regulating the Landlord-Tenant Relationships in the Emirate of Dubai. These types of leases are registrable on the Ejari Register, which is kept by the Real Estate Regulatory Authority ("RERA").RERA has accepted leases with periods of up to 5 years as being recorded on the Ejari system in practice.
What has been cleared by Administrative Resolution No. 134 of 2013 (the Resolution)?
The Resolution clarifies the appropriate place for the Registration of leases based on the term duration. This clarification will help business renters fully understand the consequences of signing a lease for more than ten years. Additionally, it clarifies for lenders when they may seek Registration of a legal mortgage with the DLD while providing finance to a renter. Let's understand the terms Long term and Short leases as defined by the Resolution.
- Long term leases
According to Dubai Administrative Resolution No. 134 of 2013, a long-term lease is defined as one that lasts more than ten years and up to 99 years.
Article 9 of Dubai Law No. 7 of 2006 mandates that long-term leases be recorded in the Real Property Register of the Dubai Land Department (the "DLD"). It's essential to remember that the Tenancy Laws don't apply to long-term leases, and the Rental Dispute Settlement Centre doesn't have authority over them.
Further, Article 4 of the Dubai Real Property Law of 2007 provides that UAE and GCC citizens (and their wholly-owned subsidiaries) may engage in long-term leases in all regions of Dubai. A foreign citizen may obtain a long lease in a specified area for a maximum of 99 years according to Dubai Law No. 7 of 2006. The DLD registration cost is 4% of the entire rent amount (i.e. the total value of rent payable throughout the lease term, including any premium payable).
- Short term leases
Leases for less than ten years must be registered with the Real Estate Regulatory Authority (RERA) following Dubai Law No. 26 of 2007 (as amended by Law No. 33 of 2008). This legislation mandates the renewal of all leases (except in limited circumstances). The Rent Dispute Settlement Centre adjudicates all rent issues, allowing parties to submit their disagreements to arbitration. An Ejari certificate is given upon Registration, enabling the tenant to establish a DEWA (Dubai Electricity and Water Authority) account for the property.
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What is the Registration of property with the Ejari system in Dubai?
EJARI is a web-based application created by RERA for recording tenancy agreements for all kinds of property in the Emirate of Dubai, under Law No. 26 of 2007, as modified by Law No. 33 of 2008. EJARI is the first step in regulating the leasing and management of the real estate. All tenants and landlords must register their rental and leasing arrangements with EJARI. Ejari is a web-based electronic registration system that is solely dedicated to implementing the legislative requirements and the goal and purpose of creating an effective regulatory system to manage the Emirate's rental market. This regulatory framework is in place to safeguard the interests of all parties engaged in rental transactions.
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Where to register a property for lease – Real Property Register or Ejari System?
One of the most significant consequences of whether a lease is registerable as a real property right on the Real Property Register or the Ejari system is that the former is an ownership interest recognized as a right in rem (available against the whole world) rather than just a contractual right. According to Administrative Resolution No. 134 of 2013, if the lease is for not less than ten years and not more than 99 years, the lease agreement must be registered with the Dubai Land Department. However, if the lease is for a term of less than ten years, the lease must be registered on the Dubai Land Department's Ejari system.
The purpose of this article is to provide an overview of the subject. It is not intended to provide any legal advice. For your specific situation, seek our professional advice. To know more about the Registration of lease in Dubai, Contact our property lawyer in Dubai today.