The Registration of Future Interests Regulations 2024 introduced by the Abu Dhabi Global Market represent a significant shift in how future real estate transactions are regulated. A Reservation Agreement is an agreement whereby a person is promised or reserved a future interest in property. The buyer does not obtain ownership of the property immediately; instead, they receive a future right or expectation to acquire the property at a later stage.

Purpose of the Regulations

ADGM introduced these Regulations because many off-plan and deferred property arrangements were not centrally recorded. This created risks such as disputes, double sales, lack of transparency, uncertainty regarding buyers’ rights, and confusion concerning ownership interests.

Information Recorded in the Register

The Register is designed to bring transparency to off-plan and deferred property transactions. It captures detailed information including:

  1. Description and identification of the property
  2. Identity documents of the parties
  3. Property plans and location details
  4. Nature and duration of the future interest
  5. Expected transfer timeline
  6. Full payment structure, including instalments and deferred payments

Mandatory Registration Requirement

Registration is not optional; it is a legal obligation. Grantors are required to register the Reservation Agreement within 30 days of execution. Failure to register the agreement renders it void. Registration itself does not transfer ownership of the property; rather, it records the future interest in the property.

Enforcement Rights of Grantees

If the Grantor fails to register the Reservation Agreement:

  1. The Grantee may apply directly to the Registrar for registration. The costs incurred may be deducted from the consideration payable under the agreement.

Expiry or Termination of Reservation Agreements

If a Reservation Agreement expires or is terminated, the Grantor must apply for deregistration within 30 days. Deregistration may also occur when:

  1. The transfer of title to the property has been completed
  2. A court order terminating the agreement has been issued
  3. A party becomes insolvent or enters liquidation

Contraventions and Penalties

Failure to comply with the obligations under the Regulations may result in penalties, including fines and other enforcement measures.

Conclusion

These Regulations strengthen regulatory oversight of future real estate interests within ADGM by making registration mandatory, improving transparency in off-plan property transactions, protecting buyers’ rights, and introducing enforcement mechanisms and penalties for non-compliance.

We at Ayesha Aldhaheri Advocates and Legal Consultants, we assist clients with a wide range of property and real estate matters, including transactions and regulatory compliance within the Abu Dhabi Global Market.