Emirate of Dubai, part of the federation of 7 states of UAE, has experienced extraordinary boom in a couple of decades in Real estate industry. The thing that sparked this boom were new laws allowing expats to own properties in certain locations and developments. What nearly killed it was just the lack of regulation.
In all booming economies, particularly one as comparatively immature as Dubai, always there are gaps and cracks in ministries and laws. These gaps in real estate laws though were the major; until Real Estate Regulation Agency a.k.a. RERA was introduced there were no such standard sales agreements, no authority over seeing the owners association management Dubai, and no training required to become a brokerage house. Considering how much important real estate industry has been and continues to be for the growth of Dubai, making new rules and regulations in this sector was paramount.
To understand the real reason behind deteriorating confidence, and why RERA’s impact is continuing to become so large, it is significant to understand process of purchasing real estate property in Dubai.
For selling or buying house an agreement called Memorandum of Understanding (MoU) or Sales Agreement must be signed by seller and buyer. In most if not all the cases MoU would be drawn up by a broker and could be something from 2 paras to 20 pages. There wasn’t any standard form or no standard clauses as well as no legal requirement for lawyer to help out or check this process. Brokers had no government mandated training sessions and no documentation to prove they were authorized brokers, as a matter of fact there weren’t any system for certifying a real estate broker. Any person could join company on Sunday and start selling on Monday with no prior knowledge of real estate market or the transactions occurs. This is a kind of scary thing considering that for most if not all the people house is their largest investment. But after RERA introduced and made changes in Rules and regulation regarding and started handling ownership association management Dubai, it does not take long to see problems in Dubai real estate industry, how does any buyer get his or her deposit back if any sellers pulls out? What if any agent does not know what they are doing, or they pull fast one on unsuspecting seller or buyer? Where to complain to, or where to ask for investigation if anything goes wrong?