Transferring Real Estate Property between Companies and Individuals (or vice versa) in Dubai

Renowned for its opulence and remarkable real estate market, Dubai has long captivated individuals and businesses worldwide. It comes as no surprise that property investments in this vibrant emirate are highly sought after. Consequently, property transactions in the “city of gold” are commonplace. Among these transactions, gifting property in Dubai between companies and individuals or vice versa is a frequent pursuit.

Dubai property gifting between companies involves the transfer of real estate ownership from a corporate entity to the individual owner(s) of the company or their immediate family members. Conversely, gifting property from an individual to a company entails the transfer of real estate ownership from an individual to their own company. This practice is carried out for various reasons, such as estate planning and asset protection. However, it is crucial to fully understand the legal and procedural aspects associated with this process.

In this blog, we will delve into the intricate process of transferring property between individuals and companies. We’ll explore the reasons behind such transfers, the legal framework involved, and the necessary steps to facilitate a seamless transition. Join us as we navigate through this complex journey of gifting property.

Reasons for Gifting Property

There are several reasons why one might contemplate transferring company property to an individual as a gift.

1. Asset Protection: Transferring property from an individual to a holding company can offer asset protection by safeguarding them against potential creditors. This practice is commonly observed among high-net-worth individuals seeking to shield personal assets from potential risks associated with their business ventures.
2. Estate Planning: Including property gifting as part of a comprehensive estate plan in Dubai can offer various advantages. By gifting properties, one can bypass the lengthy probate process, facilitating a faster distribution of assets to beneficiaries. Depending on individual circumstances, it may also be advisable to hold real estate under the name of a legal entity, such as a foundation. This approach can optimize the overall estate planning strategy and ensure a smoother transition of assets.
3. Succession Planning: To minimize the likelihood of family conflicts, transferring company-owned property to immediate family members of the owner can ensure a smooth succession of assets to future heirs. This approach facilitates a seamless transition while preserving the original intent.

Legal Framework

Dubai boasts a robust legal framework for property transactions. Whether transferring property from a company to an individual or vice versa, it is crucial to comprehend the legal obligations and limitations. Familiarize yourself with the Dubai Land Department (DLD) regulations and other pertinent laws. Seeking guidance from a legal expert or esteemed real estate advisor is strongly advised to ensure adherence to all legal formalities.

1. Documentation: To ensure legal ownership, it is important that the property you wish to gift to yourself or your immediate family members is registered solely under your company’s name. Similarly, if you intend to transfer your property as a gift to a company, you must be the sole owner of that company. The Dubai REST app allows owners to conveniently download their title deeds. Additionally, securing a No Objection Certificate (NOC) from the Developer and/or Mortgagee (if applicable) and obtaining a Valuation Certificate are also necessary documentation steps.
2. Corporate Structure: To facilitate a gift transfer from a company to yourself, it is important that the property is solely owned by the company, with you being the sole shareholder/owner. Valid commercial documents issued by the relevant authority (mainland or free zone) will be required to establish the legitimacy and ownership of the corporate entity. These documents include the trade license, memorandum & articles of association (MOA), share certificate, certificate of incumbency, and certificate of incorporation. It is worth noting that certain legal entities registered in specific jurisdictions within the UAE are not permitted to own property under Dubai laws. Therefore, it is advisable to check the eligibility of a company structure before proceeding with property ownership in Dubai.
3. Legal Beneficiary: Gifts between a company and an individual are only permitted when the individual is the sole shareholder/owner of the company. Moreover, a company can only gift properties to the first-degree relatives of its shareholder. According to Dubai laws, first-degree relatives include spouses, parents, and children exclusively. Siblings, aunts/uncles, grandparents/grandkids, or any other second-degree relationships are not eligible for property gift transfers.

Steps for Gifting Real Estate Property from Company to Individual

To ensure a smooth & successful property gifting, consider the following steps:

1. Consult Legal and Corporate Professionals: Consulting with experienced real estate conveyancers or lawyers is highly recommended to navigate the process effectively. Their expertise and guidance can provide invaluable assistance throughout the entire journey.
2. Comply with Local Laws: It is imperative to comply with all applicable local laws and regulations pertaining to property transfers. It is crucial to ensure adherence to legal requirements when engaging in any transfer of property.
3. Due Diligence: To ensure a hassle-free property transaction, it is imperative to confirm that the property is devoid of any encumbrances or legal disputes. Moreover, obtaining an accurate valuation of the property is of utmost importance. The Dubai Land Department (DLD) or a certified property valuator can provide guidance in this regard. The precise valuation of the property will directly impact the transfer fees levied by the DLD (0.125%), underscoring the significance of accuracy in this process.

Conclusion

Transferring property in Dubai between companies and individuals is a complex practice driven by diverse motivations. Whether it’s safeguarding assets, planning estates, ensuring succession, or establishing a financial legacy, this process offers extensive benefits. However, it’s crucial to approach such transactions with thoughtful deliberation and seek professional guidance to navigate them effectively.

Get in touch with our team at PRO Consultancy POA today to kickstart the property gifting process in the UAE.

Disclaimer: The information provided on this page is intended for general purposes only and should not be construed as legal advice or relied upon for making specific decisions or taking action. Nothing on this page establishes a lawyer-client relationship or substitutes for professional legal advice tailored to individual circumstances. Users of this website are encouraged to consult their own legal counsel for advice on specific legal matters.