Legal Procedures on Selling Heirs’ Inherited Property in the UAE

Posted by Awatif Mohammad Shoqi Advocates & Legal Consultancy on August 30th, 2023

Introduction

In the United Arab Emirates, inheritance and wills are governed by a combination of Sharia law and civil laws. The legal framework for Muslim individuals’ wills and inheritance is primarily based on the Federal Law No. 28/2005 on Personal Status (known as the Personal Status Law), which adheres to Sharia law principles.

Additionally, Federal Law No. 5/1985 On Civil Transactions (known as the Civil Code) and Federal Law No. 41/2022 On Civil Personal Status have been introduced to further regulate wills and inheritance matters for non-Muslims in the UAE.

Inheritance Rules under the Personal and Civil Personal Status Law

Under the Federal Law No. 28/2005 on Personal Status Law, Muslim individuals can draft a will to bequeath up to one-third of their estate to specific beneficiaries of their choice. The remaining two-thirds of the estate will be distributed according to Sharia law principles among the rightful heirs, such as spouses, children, parents, and siblings.

Article 1(2) of Federal Law No. 28/2005 states that non-Muslim expatriates with assets in the UAE have the option to make a will under the laws of their home country to govern the succession of their Dubai-based assets. This provision grants them the flexibility to follow their home country’s legal framework for inheritance and ensure that their assets are distributed according to their wishes.

Legal Procedures for Selling Heirs’ Inherited Property in the UAE

In the Emirate of Dubai, the sale of residential real estates inherited by heirs is governed by two key legal decrees: Dubai Decree No. 23/2020 on the Regulation of the Sale of Residential Real Estates by the Heirs and Dubai Decree No. 25/2023 Establishing the Estate Court.

Dubai Decree No. 23/2020 – Regulation of the Sale of Residential Real Estates by the Heirs:

This decree focuses on the regulations surrounding the sale of residential properties inherited by heirs in the Emirate of Dubai.  Dubai Decree No. 23/2020 applies to all residential properties located in Dubai (except for residential properties granted under the Mohammed bin Rashid Housing Establishment).

It does not make a distinction between properties that are located in designated and non-designated areas for foreign ownership and is therefore applicable to all nationalities. It ensures that the process of selling inherited properties adheres to legal requirements and protects the rights of all parties involved, including the heirs and potential buyers. The law sets out specific procedures and documentation that must be followed to initiate and complete the sale transaction, safeguarding against fraudulent practices and ensuring transparency in the real estate market.

Key Steps and Requirements under Dubai Decree No. 23/2020:

• Conditions and Procedures for Selling: Heirs or their legal representatives can submit applications to the Department for approval to sell inherited property. The Department, in collaboration with relevant governmental bodies, conducts a case study to evaluate applications. Key criteria include heirs having alternative housing, no legal impediments, and no potential harm to vulnerable individuals such as minors or those with disabilities. Other acceptable cases can be considered. The Department notifies other heirs to gather their opinions within 30 days of notification.
• Approval of Selling the Property: Upon unanimous approval from all heirs, the Department proceeds with the sale. The sale can occur at market value or through auction. Conditions include the buyer being a national (if applicable), settling due or deferred amounts to government entities, depositing the selling amount with the Department for distribution to heirs, and any additional conditions set by the Department.
• Provide Alternative Residential Solutions: If a case study reveals that heirs lack alternative housing and might be adversely affected by the sale, the Department coordinates with relevant entities to offer alternative residential solutions. If no solution is provided within a year or if solutions fail to materialize, the application for sale is temporarily halted until alternatives are arranged.
• Refusing to Sell the Property: In cases where heirs reject the sale or do not respond within a specified time, the Department seeks a friendly settlement among heirs. If agreed upon, a contract is signed, and the Department proceeds with the sale. If disputes persist, the applicant can file a lawsuit for selling the property through the Court.
• Appeal against Decisions: Individuals can appeal decisions or procedures made by the Department or Establishment within 10 working days. The Court assesses and decides on appeals according to established procedures.
• Formation of the Judicial Committee: The Court handles applications, claims, and disputes arising from property sales, as well as appeals against Department or Establishment decisions. Procedures are governed by relevant laws.
• Selling the Property through the Committee: The Court may order an auction if in-kind division is unfeasible or detrimental to the property’s value. The Court ensures no harm befalls vulnerable heirs. An official document from Article 6 is required for any related application or claim.

Dubai Decree No. 25/2023 – Establishing the Estate Court:

This decree establishes the Estate Court within the Dubai Courts system, specifically to handle inheritance and estate-related matters, including the sale of inherited residential properties. The Court plays a pivotal role in overseeing and facilitating the legal procedures involved in selling inherited properties, ensuring fair resolutions to any disputes that may arise during the process.

The Court holds exclusive jurisdiction over Estate Claims and Partition of Common Property Claims, including disputes related to inherited residential properties. It streamlines the litigation process, reducing the need for multiple judicial bodies and ensuring effective resolution of claims.

Conclusion

Selling heirs’ inherited property in the UAE involves navigating legal procedures that are influenced by Sharia law and civil laws. For Muslim individuals, the Personal Status Law governs wills and inheritance in accordance with Sharia principles. Non-Muslim expatriates have the option to make a will under the laws of their home country to govern their assets in the UAE.

Additionally, the Dubai Decrees No. 23/2020 and No. 25/2023 govern the sale of inherited residential properties in Dubai, ensuring a transparent and fair process for heirs and potential buyers alike. The Estate Court plays a vital role in overseeing the sale process and resolving any disputes that may arise. By adhering to these legal procedures, heirs can confidently sell inherited properties and ensure a smooth transfer of ownership while safeguarding the interests of all parties involved.

Full Article: https://www.alrowaad.ae/legal-blog/legal-procedures-on-selling-heirs-inherited-property-in-the-uae/