Dubai has become one of the most sought-after real estate markets in the world, attracting investors, expatriates, and residents alike. One increasingly popular option is co-owning property with a friend, relative, or business partner. But is it legal? The short answer is yes—co-ownership of property in Dubai is legal, but it is strictly regulated under local laws.
In this article, we’ll break down the legal framework, important articles of legislation, and best practices for co-owning real estate in Dubai.
Understanding Co-Ownership in Dubai: The Legal Foundation
The legal basis for co-ownership in Dubai is governed by Law No. (6) of 2019 Concerning Ownership of Jointly Owned Real Property in the Emirate of Dubai. This law provides a robust structure for managing shared ownership of units, whether residential or commercial.
Joint Ownership Rights and Restrictions
According to Article 13 of the law:
“A Unit jointly owned by two (2) or more Persons may not be subdivided amongst them unless that subdivision is permitted under the Master Community Declaration; the DLD approval is obtained; and the necessary licenses are granted by the Competent Authority.”
This means that while two or more individuals can legally co-own a property, subdividing the unit into separate parts (for individual ownership or sale) is only allowed under certain conditions. These include:
- Approval from the Dubai Land Department (DLD)
- Permission under the Master Community Declaration
- Licensing from the competent local authority
Pre-Emption Rights: What Happens If a Co-Owner Wants to Sell?
One of the most critical aspects of co-owning property in Dubai is understanding pre-emption rights, as outlined in Article 14 of the same law.
How Pre-Emption Works
If one co-owner wants to sell their share of the property to a third party, existing co-owners have the legal right to buy that share first. This is known as a pre-emption right, and it functions as follows:
- Every co-owner has the first right of refusal
- The right is proportional to their existing share
- If multiple co-owners wish to buy the share, it will be divided proportionally among them
However, this right does not apply in certain cases. If the seller is transferring their share to:
- Spouse
- Ascendants or descendants
- Relatives up to the fourth degree
- In-laws up to the second degree
Then pre-emption rights are not triggered.
Legal Steps and Notifications: Article 15 Explained
Under Article 15, there are specific notification and procedural requirements when a co-owner wishes to sell their share:
- The selling co-owner must provide a written notice to the other co-owners about their intent to sell.
- This notification should include details of the sale, including the price and intended buyer.
- Other co-owners must respond within a defined timeline if they want to exercise their pre-emption rights.
- If no response is received within that period, the sale can proceed to the third party.
Failure to follow this procedure can invalidate the sale, so legal compliance is crucial.
DLD Registration Fees and Subdivision Costs
Article 3(4) of the Executive Council Resolution No. (30) of 2013 outlines how registration fees work during subdivision:
“The fees for registering the subdivision of co-owned Real Property shall be paid by the co-owners in proportion to their respective shares prior to the subdivision.”
This means:
- DLD registration fees must be paid proportionally by all co-owners.
- Subdivision costs cannot be avoided unless co-owners have agreed otherwise in writing.
If you and your friend intend to subdivide the property now or in the future, these fees and approvals need to be budgeted and planned in advance.
Why a Co-Ownership Agreement is Essential
To prevent future disputes and clarify each party’s responsibilities, it is strongly recommended to draft a comprehensive co-ownership agreement. This document should include:
- Percentage of ownership (as reflected in the title deed)
- Initial capital contributions from each party
- Ongoing expenses and maintenance responsibilities
- Terms for sale, exit, or dispute resolution
- Use rights (e.g., who can live in or rent the property)
- Terms for leasing or mortgage decisions
A well-drafted co-ownership agreement is legally binding and helps protect the interests of all parties involved.
Can You Take a Mortgage as Co-Owners in Dubai?
Yes, mortgaging a co-owned property is possible, but it involves extra steps. All co-owners must agree on the mortgage terms, and typically, all names must appear on the loan agreement. Banks may also assess the combined income and creditworthiness of both parties.
Important Note: In case of default, the bank may proceed against the entire property, even if only one co-owner is responsible for missed payments. Therefore, mutual trust and legal clarity are essential.
Taxation and Ownership for Foreigners
One of the biggest advantages of buying property in Dubai is the absence of property tax. However, buyers should be aware of:
- One-time registration fee (usually 4% of the property value, paid to DLD)
- Service charges and maintenance fees (applicable in most communities)
Dubai allows foreigners to own property in designated freehold areas. So, co-owning with a foreign friend is permitted as long as the property lies within a freehold zone.
Inheritance and Succession Planning for Co-Owned Property
In the absence of a will, Sharia law may apply to the deceased co-owner’s share. To avoid complications, co-owners should:
- Register a will with the DIFC Wills and Probate Registry
- Clearly define beneficiaries and inheritance rights
- Consider setting up a holding company or special purpose vehicle for complex ownership structures
Risks and Challenges of Co-Ownership in Dubai
While co-ownership offers flexibility and shared financial responsibility, there are potential risks:
- Disputes over usage, maintenance, or rental income
- Difficulty in exiting the agreement if one party is uncooperative
- Legal complications in the event of a co-owner’s death or divorce
Proper legal documentation, regular communication, and professional legal advice can mitigate these risks.
Conclusion: Co-Ownership is Legal and Viable—But Needs Planning
Co-owning property in Dubai is entirely legal and regulated. With the right paperwork, legal understanding, and mutual trust, it can be a smart and cost-effective way to invest in Dubai’s thriving real estate market.
However, buyers must pay attention to legal obligations, pre-emption rights, subdivision rules, and registration fees. A formal co-ownership agreement is not optional—it is essential.
For anyone considering co-ownership, consult a licensed property lawyer in Dubai to navigate the laws, draft agreements, and ensure a smooth property ownership journey.
