Sale and Purchase Agreements (SPA) in Dubai: Everything You Need to Know

What is a Sale and Purchase Agreement in Dubai?

A real estate Sale and Purchase Agreement (SPA) in Dubai is a legally binding contract between a property buyer and seller. It outlines the terms and conditions of the transaction, including the rights, obligations, and liabilities of both parties. 

This agreement plays a critical role in protecting the interests of buyers and sellers by ensuring transparency and clarity. It details everything from the property’s specifications to the agreed purchase price, making it an essential document for any real estate transaction.

Key Features of a Sale and Purchase Agreement in Dubai

• States the property details, including location, size, and type.

• Specifies the agreed purchase price and payment terms.

• Includes timelines for completing the transaction.

• Outlines solutions for any breach of contract.

• Details the roles and responsibilities of both buyer and seller.

Why is a Sale and Purchase Agreement Important?

The SPA, sometimes called a purchase and sale agreement​, is a fundamental component of real estate sales transactions in Dubai. Here’s why it’s so important: 

Key Components of a Sale and Purchase Agreement in Dubai

A comprehensive real estate sale and purchase agreement​ includes several crucial elements to ensure it is clear and legally enforceable. Here are the main components: 

Buyer and Seller Information

• Full names and identification details of both parties.

• Contact information for future correspondence.

Property Details

• Full address and specifications of the property.

• Any fixtures, fittings, or additional features included in the sale.

Purchase Price and Payment Terms

• Total price of the property.

• Payment schedule, including deposit amounts and deadlines.

Conditions of Sale

• Clauses that must be met before the transaction is completed.

• Examples include mortgage approval or completion of property inspections.

Breach of Contract Clauses

• Penalties for defaulting on the agreement.

• Remedies available to the non-defaulting party.

Governing Law and Jurisdiction

• Confirmation that Dubai laws apply to the agreement.

• Jurisdiction of Dubai courts in case of disputes.

Steps Involved in Drafting a Sale and Purchase Agreement

Creating a draft sale and purchase agreement requires careful consideration of legal and financial details. Follow these steps to ensure accuracy and compliance:

Step 1: Engage Legal Experts

Hire a qualified lawyer or a reputable real estate agent to draft the agreement. Professionals ensure that the document complies with Dubai’s real estate laws, which is crucial to avoid potential disputes or issues down the road.

Step 2: Define Terms Clearly

Work with your legal representative to detail all terms and conditions. Anything not clearly stated within a Dubai sale and purchase agreement, like in any real estate market globally, could lead to disagreements, so it's vital to ensure everything is covered comprehensively. 

Step 3: Include Essential Clauses

Ensure all key components, such as payment schedules, property details, and breach clauses, are included.

Step 4: Review and Approve the Draft

Both buyer and seller should carefully review the draft sale and purchase agreement. At this stage, one or both parties may want to make small changes to the agreement before signing. 

Step 5: Sign and Notarize the Agreement

Once any amendments have been made and both parties are satisfied with the purchase and sale agreement, it should be signed and, if required, notarised for additional legal assurance. 

Legal Requirements for Sale and Purchase Agreements in Dubai

Dubai’s real estate market operates under strict regulations to ensure fairness and transparency. Consulting an experienced professional is crucial when you draft a sale and purchase agreement, as they will consider the following legal requirements:

Compliance with the Dubai Land Department (DLD)

The DLD requires all property transactions to adhere to its guidelines. SPAs should align with the DLD's regulatory framework. 

RERA Compliance

Real estate purchase and sale agreements must comply with regulations set by the Real Estate Regulatory Agency (RERA), which governs Dubai’s property market, including completion of the required RERA forms. 

Payment of Registration Fees

Both parties must pay the applicable DLD fees to register the property transfer. This ensures the transaction is legally recognised.

Timelines for Signing

When do you sign a purchase and sale agreement? Typically, this happens after the buyer pays the initial deposit and both parties agree on the terms.

Conclusion

Understanding the sale and purchase agreement in Dubai is crucial for anyone planning to buy or sell a property. From safeguarding your investment to ensuring a smooth transaction, this document plays an integral role. Whether you're drafting a new agreement or reviewing an existing one, always seek expert advice to ensure compliance with Dubai’s real estate laws.

Engel & Völkers Dubai offers unparalleled expertise for those considering property investments, including comprehensive guidance on property selection, financing, drafting a sale and purchase agreement, and much more. Contact us today to navigate Dubai’s real estate market with confidence.