Dubai’s property market continues to bring in investors, families and overseas workers from all over the world. Another option becoming popular in the market is shared or joint ownership of property. This means that the buyer will joint-own the property with one or more other individuals (known as co-owners), with the buyer and the other co-owners owning a defined proportional share of the property. Although there are benefits of joint ownership, such as greater financial security and greater flexibility in financing, there are also legal and operational issues that all potential purchasers must understand before committing to the agreement.
What Does Joint Ownership Mean in Dubai?
Joint ownership occurs when two or more individuals (known as “co-owners”) have an ownership interest in the same property and the buyer will own a defined proportional ownership share of the property that has been purchased. In the United Arab Emirates, the regulation of joint ownership is controlled by the Dubai Land Department (DLD), which provides a framework to ensure that joint ownership interests are legally protected and that all parties involved understand their responsibilities.
Owners can be:
- Spouses
- Family members
- Business partners
- Friends or investment partners
Each owner’s share is officially recorded on the Title Deed, making ownership legally enforceable.
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Ownership Shares in Joint Property in Dubai
When purchasing property in Dubai, it is up to the parties involved to agree to how their respective shares of the property will be defined. The options are equal ownership (i.e., all parties owning equal shares) or unequal ownership based on their respective financial contribution(s). After the joint ownership has been registered with the Dubai Land Department, the ownership percentages are legally proportional.
Therefore, once the percentages are registered, they cannot be changed without written consent from all parties. Because of the complexity of changing ownership percentages, it is very important that all parties finalize the percentages of ownership that will be registered with the Dubai Land Department before they complete their purchase and have them legally recorded accordingly.
Joint property ownership in Dubai is available to investors through legislation that establishes a simple and flexible way for local (UAE) nationals, Gulf Cooperation Council (GCC) nationals, and foreign nationals to jointly acquire and own property in designated freehold areas in Dubai. In this way, joint property ownership is not limited to individuals who are related by blood or individuals who hold residency in the UAE, enabling individuals all around the world to invest in Dubai while maintaining a common interest (joint ownership) in the same property with their friends, family or partners for many years to come.
Legal Rights and Financial Responsibilities
If the owners are separate entities, such as a company or corporation, each owner has a legal right to the property and the benefit of its use and rental income. In addition, each Owner shares the responsibility of liabilities related to the Property, including but not limited to: service charges, maintenance costs, and mortgage payments.
In most cases, all Owners will be jointly and severally liable for any outstanding mortgage debt on the Property, which means that if the bank takes action against one of the Owners for default, all other Owners will also be affected. Therefore, the Owners must have faith and confidence that they will be financially aligned with each other.
Selling or Transferring Ownership Shares
The complexities of Selling or Transferring an Owner’s share of a Jointly Owned Property in Dubai can be significant, as opposed to Selling or Transferring an Owner’s Asset in Full. There are no restrictions regarding the right of a Co-Owner to sell his/her share of the real estate in Dubai, however, in practice, it can be a challenge to find a Buyer for a partial ownership interest.
Another concern arises when one of the Co-Owners wishes to sell, but other Co-Owners wish to continue ownership of the Property, causing conflicts. To avoid prolonged and expensive litigation and conflict, it is advisable to have provisions in a Co-Ownership Agreement outlining the exit management process for all Co-Owners when they determine to Sell their interest in the Property.
Benefits of Joint Ownership
- Lower financial burden
- Easier access to premium properties
- Shared maintenance and service costs
- Ideal for families and long-term investment partnerships
Risks to Be Aware Of
- Disputes between owners
- Complications during resale
- Legal issues if ownership terms aren’t documented clearly
- Inheritance-related delays
Consequences of Death on an Owner’s Share
Inheritance is important for expatriates when considering ownership of property. If an owner dies then:
– Their ownership interest does not pass directly to the other Owner
– The distribution of the deceased’s ownership interest will occur according to the laws of inheritance in the UAE unless there is a registered will that indicates otherwise.
– It is advisable to register a DIFC Will in order to ensure that the distribution of your assets is in accordance with your wishes.
Benefits & Risks
Together, with co-ownership, investors are presented with a financial advantage that provides the means to purchase real estate as well as access real estate priced in a range beyond their own financial means due to sharing costs/risk with others.
Co-ownership also exposes investors to the potential for conflict, litigation and difficulties selling their investment when fellow owners’ expectations differ from each other’s expectations. Risks increase when ownership agreements (i.e. joint venture or co-ownership agreements) between partners are unsubstantiated (e.g. no documentation) making professional legal advice essential.
Final Thoughts
When implemented correctly, joint-ownership of real estate in Dubai is an effective tool for investors to use as a means of creating an investment opportunity or a shared-living arrangement with an investor. Successful joint-ownership requires effective communication between partners, a set of clearly documented terms of ownership and comprehensive legal planning. If executed properly, co-ownership creates long-term stability and provides the investor with economic and emotional benefits in the ever-changing real estate market in Dubai.