The SPA should be drafted by an experienced lawyer Image Credit: Shutterstock

In Dubai mandatory unified real estate contracts must be used in property sale and purchase transactions. There are currently three models of unified contracts:

• Form F for seller and the buyer contracts;

• Form A for seller and the broker contracts; and

• Form B for buyer and the broker contracts.

Form F enables the buyer and seller to quickly populate the main terms of the sale and purchase transaction, such as the party’s names, the property, the price and the completion date.

However, while form F documents the main terms of the sale and purchase transaction, it does not go into any greater detail. Contractual agreement on material issues, which are ordinarily expected in any sale and purchase contract, are not dealt with in sufficient detail in form F. Such items include warranties and representations, apportionment of liabilities, deposits, termination, compensation and dispute resolution.

In addition, form F effectively balances the interests of both seller and buyer. However, this style of contract is not suitable for all transactions.

Given the insufficiency of form F, it should be augmented (using a schedule, an attachment or incorporation by reference) by the parties entering into a separate sale and purchase agreement (SPA) or memorandum of understanding (MOU).

Increasingly, parties are relying on poorly drafted SPAs or MOUs by real estate brokers, which may appear to save the parties some money in the short term, but actually expose them to serious risk and liability in the long term. The SPA or MOU should be drafted by an experienced lawyer. Given the mandatory requirement for form F, the parties should ensure that form F is properly completed and validated at the Dubai Land Department (DLD).

Form F should not, however, displace the need for further protection in the form of a professionally drafted SPA or MOU. Form F and the SPA or MOU should be linked to enable the parties to not only comply with the DLD requirements, but also ensure contractual protection and certainty that a professionally drafted SPA or MOU affords.

Shahram Safai is partner and Anna White is associate at Afridi & Angell. The views expressed here are their own.