Reservation agreements are commonly referred to as booking forms, letters of intent, or expressions of interest. They are usually signed before the sale and purchase agreement. They typically require purchasers to pay a substantial, often non-refundable, deposit and undertake to execute the developer’s standard-form SPA upon demand. The reservation form is often structured as an offer made by the purchaser.

The Requirements for Contract Formation under UAE Law

Under the UAE civil transactions law, a valid contract requires mutual consent, lawful cause and certainty if subject matter. The purchaser has not been provided with the SPA before signing the reservation form. UAE law generally requires the essential terms of the future agreement to be sufficiently certain.

Concept of Reservation Form Under Article 3 of Dubai Law No. 13 of 2008

  1. Article 3 makes it clear that registration in the Interim Real Estate Register is not optional or merely administrative. Every sale or legal disposition concerning an off-plan unit must be registered.
  2. This does not solely refer to sale agreements it also extends to any sale or any other legal disposition that affects ownership or ancillary rights.
  3. The reservation form will come under Article 3 depends on what the content inside it is rather than the title. If the form includes the following, then it falls under this article:
  • identification of the parties;
  • identification of the unit;
  • agreement on the purchase price;
  • payment terms;
  • reservation fee;
  • restrictions on withdrawal; and
  • an obligation to execute the SPA.

Article 3 expressly states that unregistered off-plan sales and dispositions are void. Article 3(2) states that the legislature placed the obligation of registration primarily on developers.

 The Purpose of Mandatory Registration

Registration serves several important objectives:

  1. protecting investors’ rights;
  2. preventing multiple sales of the same unit;
  3. ensuring transparency in the real estate market;
  4. creating certainty regarding ownership and ancillary rights;
  5. facilitating regulatory oversight by the Dubai Land Department and RERA;
  6. reducing disputes arising from off-plan transactions.

Practical Considerations for Purchasers

Purchasers should:

  1. verify whether the project is registered with RERA;
  2. carefully review the terms of the reservation form before signing;
  3. confirm whether the reservation fee is refundable;
  4. ensure that the transaction is registered in the Interim Real Estate Register;
  5. retain evidence of all payments and correspondence with the developer.

Although reservation forms are often viewed as preliminary documents, their legal effect depends on their substance and the parties’ intentions. Where they contain the essential terms of an off-plan sale, they may create enforceable rights and obligations. Article 3 of Dubai Law No. (13) of 2008 makes registration a mandatory requirement, and failure to comply with the statutory registration regime may expose the transaction to nullity and give rise to contractual and civil liability.