What is the Sales & Purchase Agreement (SPA) in Dubai?

Whether you’re a buyer looking to invest in your dream home or a seller aiming to close a deal, understanding the real estate purchase and sales agreement is essential.

The Dubai real estate market is ripe with opportunity, but for anyone making a move it’s essential to understand the legal framework that supports Dubai property transactions.

One of the most critical documents in this process is the Sales and Purchase Agreement (SPA). This is a legally binding contract between a buyer and a seller; this document outlines the terms of the sale, ensuring that both parties are clear on their obligations and rights.

The SPA serves as a safeguard, protecting the interests of both the buyer and the seller throughout the transaction process.

Legal and transactional importance of SPAs in Dubai property transactions

The Sales and purchase agreement is not just a formality; it plays a vital role in the real estate transaction. For buyers, it provides assurance that the property they are purchasing is legally recognised and that the seller has the right to sell it.

For sellers, the SPA is a way to formalise the sale and ensure that they receive payment as agreed. Without an SPA, both parties are exposed to risks and uncertainties that could lead to disputes.

Things to know about Sales and Purchase Agreements

A Sales and Purchase Agreement (SPA) is a legally binding contract that is enforceable by law, requiring both parties to adhere to its terms. This agreement includes essential details such as the purchase price, property description, payment plans, and any contingencies that may apply.

Developers and real estate agents play a crucial role in this process, as they often assist in drafting the SPA to ensure it meets legal requirements and adequately protects the interests of both parties.

It's important to note that SPAs can vary significantly between off plan properties, which are still under construction, and completed properties, particularly in terms of payment schedules and completion timelines.

What does a Sales and Purchase Agreement (SPA) include?

A typical SPA includes several key components:

Property details: This section provides comprehensive information about the property, including its location, type (apartment, villa, etc.), and specific features. It’s essential for both parties to verify that these details are accurate to avoid future disputes.

Purchase price and payment terms: The SPA outlines the total purchase price and the payment schedule. It also includes timelines for payments and penalties for any delays, ensuring that both parties are aware of their financial commitments.

Completion and handover: This section details the expected completion date of the property and the process for handover. It outlines the responsibilities of both the buyer and seller regarding the transfer of ownership and possession of the property. It’s crucial to have clear timelines to avoid misunderstandings.

Conditions precedent: These are specific conditions that must be met before the sale can be finalized. This might include obtaining necessary approvals from relevant authorities or ensuring that the property is free from any legal encumbrances. Both parties should be aware of these conditions to ensure a smooth transaction.

Dispute resolution: The SPA should include a clause outlining how disputes will be resolved. This may involve mediation or arbitration, which can save both parties time and legal costs compared to going through the courts. Having a clear dispute resolution process is essential for protecting both parties' interests.

Signatures and witnesses: Finally, the SPA must be signed by both parties, and it may require witnesses to validate the agreement. This step is crucial as it signifies that both parties agree to the terms laid out in the document.

Differences Between Off-Plan and Completed Property SPAs

The terms of a sales and purchase agreement in Dubai vary depending on whether the property is off-plan or completed:

• Off-plan properties: Typically involve payment schedules tied to construction milestones and longer completion timelines
• Completed properties: Have more straightforward payment terms, as they’re ready for immediate handover

FAQs About Sales and Purchase Agreements in Dubai

What is the meaning of a purchase and sale agreement?

A sales and purchase agreement (SPA) is a legal document outlining the terms and conditions for a real estate transaction. It serves as a binding contract between the buyer and seller, detailing key aspects such as the purchase price, payment schedule, property details, and dispute resolution process.

When do you sign a purchase and sale agreement?

Typically, the purchase and sale agreement (SPA) is signed once both parties have agreed on the property’s terms, price, and payment structure. This generally happens after an initial agreement has been reached, and both parties are ready to formalise the deal.

Who signs the purchase and sale agreement first?

The purchase and sale agreement is usually signed by the seller first. Once the seller has signed, the buyer can review the contract and sign it. This formalises the commitment to the sale.

How can I ensure my SPA protects my interests?

To ensure your sales and purchase agreement protects your interests, it’s crucial to work with a trusted company like haus & haus. Experts can help you draft an SPA that adheres to legal standards and includes all essential clauses to protect your rights. You can also refer to our Buyers Guide for tips on safeguarding your property investment.

Are there different SPAs for off-plan and completed properties?

Yes, sales and purchase agreements differ depending on the property’s status. For off-plan properties, the SPA includes payment terms aligned with construction milestones and projected completion dates. For completed properties, the terms focus more on immediate payment and handover schedules.

What should I check before signing a sales and purchase agreement?

Before signing an SPA, ensure that all essential details are covered: property specifics, purchase price, payment terms, completion dates, and dispute resolution mechanisms. It's vital to check that the terms are fair and clear to avoid future conflicts. Refer to our Sellers Guide for further guidance.

Consult Experts for Dubai Property Transactions

Understanding the Sales and Purchase Agreement is vital for anyone looking to navigate the Dubai real estate market. It not only protects the interests of both buyers and sellers but also ensures that the transaction is conducted smoothly and legally.

If you’re considering buying or selling property in Dubai, it’s advisable to consult with real estate experts who can guide you through the process and help you draft a comprehensive SPA.

Speak to a haus & haus agent today.