Ras Al Khaimah’s real estate landscape has grown copiously over the years. The emirate has emerged as a top tourist destination that has catapulted its position as an investment hotspot. Consequently, many off-plan projects continue to grace the city’s property sector, adding to the investors’ interest. This off-plan real estate is governed by strict rules and regulations that protect the rights of all parties and strengthen the buyers’ confidence.
Let’s take a closer look at RAK off-plan property laws. We have noted the importance of these rules, what they are and how they streamline the off-plan property processes in the emirate.
RAK Off-Plan Property Regulations – Key Provisions
Law No. 12 of 2023 regulates the real estate sector in Ras Al Khaimah. Sheikh Saud bin Saqr Al Qasimi, the Ruler of Ras Al Khaimah, enacted this law on August 21, 2023 and it officially came into effect in October 2023. This decree outlines the rights and obligations of real estate developers, off-plan sales and property transactions in the emirate.
Here are some important RAK off-plan property laws that Decree No. 12 outlines.
Real Estate Committee for Off-Plan Projects
As per Article 3 of Law No. 12, a committee oversees the ongoing and new real estate projects in RAK. The Real Estate Regulatory Administration (RERA) oversees the real estate development in the emirate. The committee also has certain tasks, such as reviewing applications to build real estate development projects in the emirate or issuing developer licence.
Real Estate Developers Register
In line with Articles 4 and 5, a Real Estate Developers Register records all real estate developers in the emirate. Only those listed in this register can engage in real estate development activities. Developers must also inform the authorities of any changes to their registered details within 30 days. Moreover, to record a real estate project in the register, the developer must submit the required documents, such as a title deed of the plot.
Developers can not begin infrastructure work, construction or sell any units in a project unless the project is registered in this official register. Also, as per the RAK off-plan property laws, the committee can delete a developer’s record from the register in certain cases, such as bankruptcy.
Real Estate Developer Licence
The Ras Al Khaimah property law for developers also focuses on the licence to practice real estate development. The Authority issues it after obtaining a permit from the Administration. Moreover, this permit does not replace any other licences or approvals the developer must obtain.
Off-Plan Property Developer Guidelines in RAK
According to Article 10 of Law No. 12, the property developers in RAK must adhere to the following rules:
- The developer must complete the project according to the approved designs and timeline.
- The developer must build all necessary infrastructure and services for the project.
- Developer must inform buyers about all project and unit details, including their rights, restrictions and any changes.
- The developer must register the unit in the buyer’s name and give them all related certificates and documents.
- The developer must hand over the unit to the buyer with all services in working condition.
Financing for Real Estate Projects
Another of the RAK off-plan property laws is related to financing. The developer must submit a financial plan to the Administration showing how the project will be funded. This plan must include at least 20% of the project cost from the developer’s funds and should not rely entirely on off-plan sales.
Also, a developer can mortgage real estate to get financing for project completion, but only if more than 50% of the construction is done. The units must be in the developer’s name and the full loan amount must go into the escrow account. The buyer’s name should be registered with the mortgage noted.
Escrow Accounts
Under RAK’s law no. 12 of 2023, developers must open an escrow account before they can sell units off-plan. This account must be in the name of the specific real estate project and managed by a registered escrow account trustee. Developers are also required to provide monthly statements showing all transactions related to the account.
Trustees must keep 5% of the project’s total cost in the escrow account for one year after completion to cover any maintenance issues. An official register of escrow account trustees is maintained and all trustees must follow reporting rules. These steps protect buyers and keep the project’s finances transparent.
Off-Plan Property Sale Laws in RAK
As per articles 26 to 28 and 31 of the RAK off-plan property laws, a developer can only sell real estate units off-plan after obtaining a sale permit from the Administration. To get this permit, the project must be registered, an escrow account opened and sales documents approved. Also, any off-plan sale made without this permit is considered void. Developers must get approval before advertising off-plan units and include key project details in the ads.
When a project is registered, all units are marked as ‘Vacant.’ All off-plan sales or related transactions must be recorded in the initial land register otherwise, they are invalid. Developers may register unsold units in their name after depositing the price in the escrow account. They must also record each sold unit in the buyer’s name within five working days of contract signing. Additionally, if they fail, the buyer can approach the Administration to complete the registration.
Developing a Management System
Before selling any units, the main developer must create a Master Community Management System for the overall project. It should be approved by the Administration. Similarly, sub-developers must prepare and get approval for a Building Management System for their specific project or phase. Any changes to these systems that affect owners’ rights need prior approval from the Administration.
Off-Plan Fees
According to RAK off-plan property laws, developers must meet certain requirements to sell units off-plan. They must also register sold units in the land register within five days of signing the contract and both developers and buyers are responsible for paying the required registration fees.
Once the project completes, the buyer acquires the title within 30 days after full payment, along with the payment of applicable fees. The law also includes a fee and fine schedule for violations and outlines how unpaid amounts will be collected. These rules ensure accountability and financial transparency in off-plan real estate sales.
Cancellation of a Real Estate Off-Plan Project
The committee can cancel or remove a real estate project from the project register for certain reasons. For instance, if the developer delays starting the project beyond the allowed time, the project will be removed. However, cancellation only happens after all buyer payments are refunded and all dues to contractors, consultants, escrow trustees and others are settled. Canceling the project does not release the developer from any responsibility toward the government or others involved.
FAQs
How do I register an off-plan property in RAK?
When buying an off-plan property in RAK, register by visiting RAK’s municipality website.
Select RERA and choose the ‘Off-Plan Sale Registration Service.’ You’ll need to submit the required documents and pay a fee of AED 3,000.
What documents do I need for off-plan property registration in RAK?
To register an off-plan property in RAK, submit a copy of your passport, Emirates ID and the Sales and Purchase Agreement (SPA). The SPA should include the property details, payment plan and escrow account information. For new developments, an undertaking form is necessary.
What is the real estate regulatory agency Ras Al Khaimah?
The Real Estate Regulatory Administration (RERA) in RAK is the official authority responsible for regulating and overseeing real estate activities.
These were some of the crucial RAK off-plan property laws. These regulations are essential for streamlining the emirate’s off-plan sector and boosting the investors’ confidence. Besides, such strict laws make buying a property in RAK a safe investment.
To learn more about off-plan property laws in the UAE, keep reading dubizzle’s real estate blog.
