Decree No (23) of 2022, regulating the grant of Musataha Right over commercial lands in the Emirate of Dubai issued by H.H. Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.
Purpose of the Decree
The Decree aims to organise and control exploitation of commercial land in the Emirate of Dubai through granting Musataha rights over such lands and to provide and enhance investment opportunities in the Real Estate sector in the Emirate of Dubai.
Musataha
Article (1) of the Decree defines the right of Musataha as a right in rem granted by the owner of the Commercial land to the Musatih (i.e. the party to whom the right in rem is granted). Musataha right is created through Musataha agreement in accordance with the Decree.
According to Article (13) of the Decree, Musataha right shall transfer to the legal heirs of the Musatih subject to any regulation by the Dubai Land Department and may also be acquired through a Will.
According to the Decree, the Musatih shall have the right to exploit, build and own the buildings on the commercial land during the period of the Musataha agreement, sell or otherwise execute any legal transactions in respect of the constructions and buildings on the commercial land upon the issuance of final completion certificate by the competent authority. The Musatih, subject to the requirements of the Decree, may mortgage the Musataha right and carry out off-plan sales.
Commercial Land
The Decree defines commercial land as a land designated for commercial or industrial purposes and owned by the government of Dubai or by companies fully or partially owned by the government of Dubai.
Competent authority
Dubai Land Department is the competent authority responsible for implementation of the Decree and has certain authorities in this regard.
Agreement form and registration
Article (9) of the Decree provides for the setting up of a Musataha registry by DLD for the registration of Musataha agreements and transactions arising from the grant of Musataha right. Musataha agreements must be in the form prepared by DLD and registered, otherwise it will be void. Musataha agreements can also be registered in the registry of the Dubai International Financial Centre. Registration fee shall be borne by the Musatih.
Period
The parties to Musataha agreement have the right to agree to Musataha period not exceeding 35 years and may agree on renewals provided that the total Musataha period does not exceed 50 years (the maximum Musataha period is in line with Article 1356/1 of the Civil Transactions Act).
Musataha period shall commence from the date of registration of the Musataha agreement unless terminated earlier by mutual consent. Renewal requires 2 years advance notice by the Musatih to the owner of the commercial land unless otherwise agreed.
The Decree further regulates other matters related to Musataha right over commercial lands in Dubai such as the obligations of the Musatih and the termination of Musataha right.
It is worth mentioning that the Civil transactions Act regulates Musataha right under Articles 1353 to 1360.
If you have any questions about this or any other query related to Banking & Islamic Finance, please get in touch with the author Nidal Alsayed directly on n.alsayed@alsuwaidi.ae
Nidal Alsayed is the Head of Banking & Islamic Finance at Alsuwaidi & Company. Nidal has deep understanding, and knowledge of the UAE banking laws and regulations and extensive in-depth knowledge on Islamic Sharia’ compliant banking products and transactions.