UAE’s rapid development in business and commercial environment alluring investors from around the world in large numbers, wherein property investments and security of their interest should go hand in hand. The real estate sector in UAE has witnessed natural growth in past couple of years and is currently considered as the most recommended place for large development projects, wherein foreign expatriates are allowed own real estate in the country as opposed to previous restrictions.
The UAE Civil Code defines different types of property rights in the country such as freehold, usufruct and mustaha. Most expatriates opt for freehold as it is the most convenient way of possessing the property in the country, whereas, usufruct and mustaha comes with some restrictions and are governed by laws of each Emirate. The Property Lawyers of Dubai, however, will discuss the laws pertaining to mustaha agreements signed within Dubai considering the consistent growths in mustaha agreements within Dubai.
The Basics of Mustaha
The agreements of Mustaha in UAE are alternatives to rights in rem offering the right to an owner to construct on a piece of land. Albeit, this right is authorized under UAE Civil Code, yet it has been recently recognised by the residents. The rights for mustaha are restricted primarily because they are granted to UAE nationals or non-UAE nationals within the free zones or companies owned by them.
The rights under mustaha are granted for 50 years, referring to Articles 1353- 1360 in UAE Civil Code. In addition, the law grants authority to each Emirate for issuing their own rules and regulations for governing mustaha agreements within their respective state. The major difference in a mustaha right and right in usufruct or freehold is that the mustaha rights are only granted to construct or build on a piece of land, whereas, in usufruct or freehold property, the owner has real property rights in the land for a certain period, where he is allowed to utilise the property for personal use. The termination of mustaha agreements are straight forward as the agreement itself. They can only be terminated upon the completion of the time period or when the owner fails to submit relevant payments for 2 consecutive years.
In furtherance, the Lawyers of Dubai considers it important to discuss the laws of Dubai regarding mustaha agreements. Dubai Land Department is the relevant authority and has issued some guidance on registration of mustaha agreements in the Emirate. In order to register a mustaha agreement, the owner shall submit the plan of a plot land with the Land Department. In addition, the owner shall submit the original tittle deed, 3 copies of the agreement and a NOC from the seller of the land.
Importantly, land used for commercial properties can only be registered as a mustaha agreement and not residential property. In addition, the owner shall submit 1% of mustaha contract amount as a fees to be paid with the land department for registration and enforcement of mustaha agreements.
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