Due to the necessity for signed documentation, approval processes, and registration of transactions, property transactions in Dubai generally require a person who is physically present in the UAE to manage the interaction between buyers and sellers. Oftentimes this can create problems, because there are times when an investor or property owner cannot be physically present in the country. In order to allow an appointed attorney or agent the ability to act on behalf of a property owner or investor, it will be necessary for them to have a Power of Attorney (PoA) that is applicable to the property transaction. Understanding how a Power of Attorney will work in Dubai will help save time, alleviate stress, and create a smoother transaction for the parties involved.
What Is a Power of Attorney in Dubai?
In Dubai, a Power of Attorney is a document that gives an individual the authority to represent, or represent another person (the “principal”), in a legal capacity. With respect to property transactions, a Power of Attorney allows the individual that has been appointed by the principal to manage, lease, sell, register, or mortgage the property as specified by the principal’s authority. In Dubai, Power of Attorneys are strictly regulated to ensure the protection of property owners and to prevent any misuse of the document.
Types of Power of Attorney for Property
Two principal forms of Power of Attorney exist in property transactions. The General Power of Attorney grants unlimited authority over a variety of topics, including banking and legal issues, and property transactions. The Special Power of Attorney, on the other hand, is limited to specific actions relating to the property, such as sale of a specific property, signing leases on behalf of the owner, etc. Generally, Special Power of Attorney is preferred by Dubai authorities for real estate transactions, because it can be clearer about what the appointed attorney has been authorized to do and eliminates many of the risks associated with a General Power of Attorney.
Who Uses PoA?
You may want to use a Power of Attorney when you are located internationally, are unable to attend your property because of being away for other reasons, or want to have someone you know & trust manage your property for you. Most investors will create a Power of Attorney for the purpose of allowing other individuals such as advisors, family members, lawyers, etc., to complete actions on their behalf to ensure they are actively participating in their real estate transactions and to reduce the length of time between closing and possession of the property.
Legal Requirements and Attestation
There are very specific legal requirements for a Power of Attorney to be considered valid in Dubai. When you sign a Power of Attorney in the UAE, you must have the document witnessed by a notary public located in the UAE. When you sign a Power of Attorney outside the UAE, you must have the document witnessed by a notarization from your home country, attested to by the UAE embassy, and attested to by the Ministry of Foreign Affairs once the document arrives in the UAE. The Power of Attorney must also be translated into Arabic by a certified legal translator if you drafted your Power of Attorney in a different language.
Limitations and Scope
The most important factor regarding a PoA is understanding how much authority you are giving the person that you issued the PoA (the agent). Dubai has a very strict policy on wording, especially with respect to Property Sales and Mortgages, and any ambiguous or generalised wording will more than likely result in a Rejection with the DLD. It is also imperative to note that an agent cannot act outside of the powers granted and to misuse the authority as an agent will have legal consequences. Property Owners must be careful to limit the Scope to only the Necessary.
Risk Management, Revocation and Duration
A PoA can be issued in Dubai for a specific Period or be valid until such time as it is Revoked. A Property Owner has the Right to Revoke a PoA at any time by Notarising the Revocation (unless the Property Owner has already completed a binding transaction). When issuing a PoA it is extremely important to appoint a Reliable Agent because any actions taken by the Agent will legally bind the Property Owner. Many Investors prefer to appoint their Lawyers or Regulated Professionals as Agents to Reduce Risk.
Dubai Property Common Use Cases
Power of Attorneys (PoAs) have been used extensively for registering properties, signing sale and purchase contracts, leasing units, collecting rent and dealing with developers, as well as managing service charges. PoAs are beneficial for non-residents who manage several properties and/or have invested in off-plan property developments.
Final Thoughts
A Power of Attorney provides a great deal of flexibility and convenience in a rapidly changing real estate environment in Dubai. If you have a quality PoA which is properly drafted, notarised and drafted by an individual with a proven track record of performance in the industry, your paperwork will be handled professionally even if you cannot be physically present. However, given the many legal ramifications associated with the use of a PoA, it is highly recommended that you consult with a qualified real estate lawyer to ensure that your interests are always adequately protected.