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Dubai real estate: Should you buy a timeshare?

With soaring property prices, timeshares could become an attractive affordable option for a luxury holiday home in Dubai, as such Derek Robins recently spoke with Arabian Business regarding timeshare regulations and protection for buyers. 

Key timeshare regulations to know
Only properties classified as four or five-star hotels or luxury apartments may be used as timeshares. Ownership can be purchased either through a timeshare contract or points-based contract, Derek Robins, Associate at Dubai law firm BSA, told Arabian Business.

“The key aspect here is do your homework, make sure that the timeshare unit you wish to buy is registered with RERA [the Real Estate Regulatory Agency]. Make sure that the developer is also registered with the DET and is actually allowed to carry out this activity. Make your own investigations before getting into any binding commitments,” Robins said.

Here’s a list of key obligations that buyers (termed “beneficiaries”) must follow, according to BSA:
• Comply with contractual obligations
• Pay for using unit
• Maintain good condition throughout usage
• No improvements or structures
• Use the Unit for its intended purpose
• Return the Unit in the same condition found after stay
• Do not damage the Unit or impair its value
• Comply with the all applicable laws
• Ensure that the unit being utilised has been registered with the DET
• Notify the DET of any changes to the contract

Developers on the other hand must meet stringent standards for record-keeping and transparency. They are required to maintain detailed records on all timeshare contracts and points-based agreements, keeping them accessible to the DET for prescribed periods. Developers must also provide accurate unit information to beneficiaries, respond promptly to any DET complaints, and fully cooperate with regulatory authorities. This includes granting access to employee inspection of all activity contracts and records.

They are also prohibited from taking on unauthorised brokering roles. Instead, they must appoint experienced managers and comply with security, public health, environmental, and contractual obligations.

Additional responsibilities involve conducting regular maintenance, ensuring comprehensive insurance coverage, properly registering agreements, and outlining all applicable financial considerations – including fees, taxes, and additional costs – to beneficiaries transparently. Developers cannot impose extra charges not stipulated in contracts.

They are also expected to service units adequately by providing electricity, water, and internet access without charging beneficiaries. Warranties for defects must also be honoured. Maintaining thorough activity records, respecting beneficiary data privacy, submitting periodic DET reports, investigating complaints, and documenting the complaint handling process in accordance with regulatory standards are further key duties timeshare operators must fulfill under the law.

Protections for buyers
Buyers benefit from a 10-day cooling off period and right to carry over usage dates up to two years. If developers disturb usage or fail registration duties, beneficiaries can pursue legal remedies like termination, according to BSA.

The DET imposes rigorous licensing conditions on developers, setting baseline quality, financial security, and customer service standards. This acts as an assurance to beneficiaries that their units will be properly managed.

If developers are found disturbing a beneficiary’s peaceful enjoyment of their timeshare or failing to meet registration responsibilities, beneficiaries have legal recourse options like pursuing termination of the contract. This protects owners from any substandard treatment during their stays.

Beneficiaries are also entitled to request a 45-day carryover of their usage interval up to two years in advance from the developer if they are unable to travel as planned. This flexibility helps ensure the timeshare continues meeting owners’ needs in the long run.
Rights can also be unilaterally terminated within the first year of conclusion under specific circumstances like the lack of a required operating permit. In such cases, beneficiaries must be appropriately compensated for any financial considerations already provided under the agreement.

Importantly, any party – whether buyer or seller – can submit a formal grievance through the proper legal channels if they wish to dispute a decision or action taken according to Dubai’s timeshare regulations. This protects the rights of all stakeholders in the growing vacation ownership sector.

Prospective owners can also verify developers via RERA registration and the DET’s publicly available register of authorised operators.

The full article, as published in Arabian Business can be read here: Dubai real estate: Should you buy a timeshare? Expert weigh in. 

This article was written by corporate lawyer Derek Robins. 

BSA is a regional Law Firm in the Middle East with offices in the UAE, Oman and Saudi Arabia. As a full-service law firm our practice areas include litigation, arbitration and corporate services, including M&A, banking & finance, Intellectual Property, TMT, Fintech, employment and insurance.

Published on 18 January, 2024.

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