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, knowing what an SPA entails is crucial.

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 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 for buyers and sellers

The SPA 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.
 

Stay in the know

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.