The role of Power of Attorney when selling your property in Dubai

  • Better Informed
  • 10 Dec, 2019
The role of Power of Attorney when selling your property in Dubai

Power of Attorney or POA is a legal document in which a Grantor or a Principal assigns and allows a Grantee to fulfil a defined set of functions on behalf of him or her. The Grantee can represent the Grantor in private affairs, business and other requirements. The Grantor can offer authority to a trustworthy representative to act on behalf of them during a real estate transaction.

While a POA can be issued for a specific purpose, like to put a specific property on the market,  they can also be issued for a general set of reasons. However, this is usually done between immediate family members. The POA shall become effective upon legalisation unless the POA states otherwise. A POA could become void upon the death of the Grantor, when the Grantor loses their mental capacity or, if required, a Grantor can void a POA at any time.

In Dubai, a POA must be notarised by the Dubai Notary Public which is a part of Dubai Courts. If the POA is granted outside of the UAE, the POA should be signed before a Notary Public based in that country. The POA must then be legalised in the UAE Embassy in the foreign country and finally it should be attested at the UAE Ministry of Foreign Affairs.

However, when concluding real estate transactions in Dubai, the Dubai Land Department (DLD) suggests and urges the original parties to be present when finalising the documents for the real estate transaction – especially during the sale of a real estate property in the emirate. The primary reason is to prevent fraudulent activities. Having said that, most of the investors in Dubai might not find this completely practical since most Dubai property investors are based outside of the UAE. This is where the POA comes into effect.

What requirements should be present in a POA? Generally, a POA should be valid in the United Arab Emirates. The POA document should either be written in Arabic or English or both languages. If the POA document has been written in English, a legal translation in Arabic should be legalised at the Notary Public in the UAE. The Arabic translation shall always prevail over the English if there are any inconsistencies in the translation.

The POA becomes void once its validity expires

When it comes to the role of a POA in real estate transactions, the POA is sometimes restricted by several regulations and requirements imposed by the DLD. For instance, a POA in a real estate context could be valid for only two years from the date it was stamped. If a POA has expired it may be revalidated at the Dubai Courts with an updated stamp.

The principal should present the required documents to the Notary Public proving his ownership rights with their original copies. These documents should include the Title Deed and their original ID.

The point is, the Grantor can decide what their Grantee is allowed to do on behalf of them with the  POA. However, what authority the POA entails may be broad or specific depending on the Grantor’s requirements. Let’s further explore the things a POA can and can’t do when selling your real estate property in Dubai.

The POA cannot decide where the funds end up

The DLD does not let the attorneys take funds in the attorney’s personal name during the process of selling the property, even if the POA clearly allows it. This could create a complex situation for the property owners who do not have bank accounts within the UAE and are not able to take the proceeds from their sale of the property. In instances like these, approval from DLD should be taken to make sure that the attorney should be approved to receive the proceeds of the sale in their name on the day of the transfer. Nevertheless, the approval for a fund transfer is generally only given to those who are immediately related to the Grantor. This relationship should be proven with a birth / marriage certificate.

Gifting the real estate property for you

This is not quite as easy as it looks. The Grantor cannot gift the property with a general POA. The POA should specifically mention the intent of the Grantor to gift the property or transfer the property as a gift (hiba). If the POA fails to mention these facts in its content, it is highly unlikely that the DLD would allow the Grantee to execute the whims of the Principal. The same regulations would apply if the Grantor is receiving the Gift. The wording of the POA is of the utmost importance.

The role of POA can also be limited by the regulations and rules of Dubai authorities as well. This means a document granting POA is not necessarily an all-powerful document when considering selling a property on behalf of a Principal.

Selling real estate property for you

A Power of Attorney document for selling real estate property is quite different from a Power of Attorney document that dictates the list of rights of the Grantee. According to the regulations in Dubai, the Power of Attorney document should specify the particular property that the Principal wishes to sell.

The names of the Grantor and the Grantee mentioned in the POA should be the same as it is on the Title Deed and the passport details. Other necessary details that should be mentioned on the POA include the unit number, building name, plot number and the community as mentioned in the Title Deed. The Title Deed usually includes the full name and the passport details of the Grantor.

Why so much work? These measures have been made a critical part of the process primarily to safeguard the property seller’s interests. These measures ensure that a particular POA has the right to execute the sale of that property only.

What all this means is that a POA for selling a property on the Dubai market is not general for all properties owned by the Principal, unless they are specifically listed by the Grantor.

The DLD will take the original POA on the day of the sale, to protect the seller’s interests even after the sale.

The POA cannot be granted to a real estate agent

The DLD no longer allows anyone employed by a real estate company to act as POA for selling or purchasing a property on behalf of the Principal. This is an important regulation that avoids conflict of interest between the POA and the real estate brokers or agents. These rules and protective measures have been imposed to provide necessary protection for the investors of all kinds of property in Dubai.

By giving the POA to a trusted Grantee, you do not have to be present in Dubai during the times when otherwise your presence would have been needed. Your Grantee can take care of everything and represent you regardless of where you are located.

With regulations that address issues like restricting real estate agents from being granted POA, a property owner can be protected against fraudulent and negligent activities since a real estate agent with POA could focus more on the sale of their next property than the one for which they have the POA.

Does all this sound like what you need? Then granting someone the POA might be the right move for you. All you need to have is that one trustworthy point of contact who is completely dedicated to your real estate concerns instead of focused on making a sale or a commission.

A POA can save a lot of money and hassle during the sale

You can save an enormous amount of time and money with a POA. Plus, a POA can save you the hassle of having to travel around the world even when it is inconvenient. The amount of funds you would spend on flights, hotels and even time off work is primarily why Dubai’s property owners who are based elsewhere choose to seek the services of a POA. Without a POA, depending on the seller’s status, the seller may have to be present in Dubai 2-3 times during the course of a sales transaction.

The benefits of appointing a POA do not stop there. If you want to avoid the the stress and nuisance of visiting offices in person to understand the process of selling real estate properties in Dubai, a POA would be of great help. Many property owners in Dubai are not really aware of the correct procedure or steps of such complicated and significant transactions and the procedure can involve government authorities and financial institutions if the Grantor has a loan to clear.

A Grantee given a POA will be a real source of information

Any Grantee must be able to lead you through the required processes, while providing advice, updates and even feedback on the ongoing real estate activities. However, granting the POA to someone should not be taken lightly. Make sure you do your homework about your prospective candidates. Make sure you understand what responsibilities and duties you are granting to the POA before you appoint someone as the Grantee.

While there are many benefits of granting someone POA, there should also be caution taken in this situation. It is also always advised to appoint a POA if you have more than one property on the market.

Receipt of proceeds from selling the property

Regardless of the amount of power a POA has, they cannot take on the errors caused during the sale of the property mentioned in the document. The DLD makes sure that no fraudulent activities have taken place during the transaction as a result of the involvement of the POA. Therefore, the payments from the sale of the property with the use of a POA have to be made in the name of the Principal only. 

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