Dubai issues law regulating use of commercial lands

Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, and Ruler of Dubai, has issued Decree No (23) of 2022, regulating the grant of ‘Musataha’ rights on commercial lands in Dubai.

According to state news agency, WAM, the decree regulates the use of commercial lands in Dubai by granting the right of ‘Musataha’ to develop real estate projects.

The agreement creates a real property right that authorises its holder to construct a building or invest in, mortgage, lease, sell, or purchase a plot of land belonging to a third party for a period of up to 35 years.

The agreement can be extended to a maximum of 50 years, and the request for renewal has to be submitted two years ahead of the agreement’s expiry date.

The holder of the agreement has to follow a number of rules and regulations, including not changing the use of commercial land without the prior approval of the owner. The holder of the agreement also has to register the agreement with the Dubai Land Department (DLD) registry or the Dubai International Financial Center (DIFC) registry.

DLD is mandated to specify the terms and conditions, and responsibilities of parties in ‘Musataha’ agreements. It will also identify commercial land plots for which ‘Musataha’ agreements can be signed, in coordination with relevant government entities. DLD is also authorised to conduct inspections of commercial land plots to ensure full compliance with the ‘Musataha’ agreement.

Additionally, DLD is tasked with enabling the amicable resolution of any conflicts resulting from complaints and grievances, without violating the provisions and amendments of the Government Claims Act No (3) of 1996.

The decree specifies the setting up of a specific registry for ‘Musataha’ agreements at DLD. It also lists fines that will be charged for failure to issue a certificate of completion for projects built on commercial land under the purview of the agreement.