In brief:
- The substance of the real property rights attaching to the various categories of person as defined in the Abu Dhabi property legislation has not changed and this further reinforces the fact that the legislation is primarily aimed at enabling registration of the various rights and does not seek to amend the basic property rights of persons within Abu Dhabi apart from clarifying the Musataha and Usufruct rights for foreigners.
- It is hoped that the Resolutions and Regulations, referred to in Article 10 and still to be issued, will provide the necessary clarity relating to the form and substance which title deeds will take, and deal with the management of common areas in multi-storey buildings, pending the expected introduction of a strata law in the Emirate of Abu Dhabi.
The Resolution
Article 5 states "The Registrar shall register all dispositions properties or any real estate right (principal real right, right of land development lease, usufruct and right of long term lease) inside and outside investment zones in the real estate register, including mortgage contracts in respect to properties or any real estate rights and direct contracts that are concluded with banks and financers of projects."
The Resolution reiterates the position relating to the various categories of real estate ownership as they currently exist within the Emirate of Abu Dhabi in Articles 2, 3 and 4. These articles confirm the position that "Nationals and those persons having similar status" as well as persons, companies and entities that are determined by resolution of the Executive Council have the right to own properties. GCC nationals and Corporate persons wholly owned by them are also entitled to own properties within Investment Zones. Article 3 distinguishes the rights of non-national, non-resident natural or corporate persons by stating that such persons have only the right to own, purchase, sell, lease out, mortgage and invest floors and apartments, excluding lands, in investment zones.
Article 3 furthermore states that the registrar shall register such natural or corporate persons in the real estate register as "Owner" of apartments and floors, excluding lands, in Investment Zones and issue certificates or deeds of title to such persons once they submit the documents referred to in the regulations or resolutions made by the Chairman of the Department.
Article 4 states that "Non-national resident or non-resident natural and corporate persons may acquire, own and enjoy the right of land development lease up to 50 years renewable at the mutual accord of the two parties for a similar duration as well as a usufruct contract up to (99) years as well as long term lease over the properties that are situated inside Investment Zones."
Article 7 simply makes mention of the fact that the Chairman of the Department of Municipal affairs shall set the "terms and conditions of establishment of Owners or Usufructuaries associations" and shall deal with the associations powers relating to the common property.
The Resolution, in Article 8, also deals with inheritance rights and seeks to clarify the rights of heirs to receive registration of properties inherited by them.
Article 9 deals with registration of mortgages and states that "the registrar shall register the mortgage in the real estate register and give contracting parties a certificate confirming registration of the mortgage, signed by the competent official and stamped by seal of the Municipality." This should give some measure of comfort to banks and financial institutions. However, a more detailed mortgage law is required.
Article 10 states that the Chairman of the Department shall issue necessary "resolutions, regulations and instructions" to enforce this resolution within 60 days from the effective date of the present Resolution".
Comment
The substance of the real property rights attaching to the various categories of person as defined in the Abu Dhabi property legislation has not changed and this further reinforces the fact that the legislation is primarily aimed at enabling registration of the various rights and does not seek to amend the basic property rights of persons within Abu Dhabi apart from clarifying the Musataha and Usufruct rights for foreigners.
It is not clear what form a certificate or deed of title will take in the case of the "Owner" referred to in Article 3. The introduction of a strata law will assist the Registrar in the registration of apartments and floors in multi-storey buildings. It is however not certain how such strata law can be implemented effectively if ownership of land in investment zones is restricted to UAE nationals and GCC nationals. The fact of the matter is that apartments and floors in most, if not all, multi-storey buildings in investment zones are owned by all categories of owners some of whom may be entitled to a share in the ownership of the common property and others not by virtue of this restriction.
It is furthermore not clear what will be decided by the Chairman of the Department of Municipal affairs relating to Owners' Associations, but it is submitted that the uncertainty cannot be resolved by simply legislating that ownership of the common property will vest in the Owners' Association because the Owners' Association will be a corporate body comprised of partly foreign owners. If this is the intention, then the Executive Council will have to grant exemption to each Owners' Association as is envisaged in Article 3 of Law No. (19) of 2007 and re-stated in Article 2 of the Resolution.
It is submitted that a further issue which needs to be addressed before an effective title deed can be issued in respect of an apartment is to provide for reference to a plan which defines the boundaries of the unit, as would be the case in a conventional strata title development.
Our view is that the question of land ownership in investment zones for foreign nationals needs to be addressed in order to satisfy the needs of all investors in real estate and banks within the Emirate of Abu Dhabi and to enable the proper implementation of a strata title law along the lines of that introduced in Dubai.
It is hoped that the Resolutions and Regulations, referred to in Article 10 and still to be issued, will provide the necessary clarity relating to the form and substance which title deeds will take, and deal with the management of common areas in multi-storey buildings, pending the expected introduction of a strata law in the Emirate of Abu Dhabi.
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