Sales and Purchase Agreements in Dubai: A Simple Guide

In Dubai real estate, the Sales and Purchase Agreement (SPA) sits at the centre of every transaction. It defines how capital is deployed, how risk is managed, and how ownership is ultimately secured. For investors operating in a design-led, regulation-driven market, the SPA is not a formality but a strategic document that shapes both short-term commitments and long-term returns.

What Is a Sales and Purchase Agreement (SPA)?

A Sales and Purchase Agreement is a legally binding contract between the buyer and the seller or developer, detailing the full commercial and legal framework of a property transaction.

In plain terms, the SPA confirms:

● Who is buying and selling

● What is being purchased

● At what price

● On what timeline

● Under which conditions

It is important to distinguish the SPA from earlier-stage documents:

● Reservation forms secure a unit temporarily and are usually non-binding.

● Offer letters or Memorandum of Understanding (MoUs) outline agreed commercial terms but do not replace a full contract.

● The SPA is the final, enforceable agreement that comes into effect once signed by all parties.

When Is an SPA Used in Dubai Property Transactions?

Off-Plan Purchases (Developer-Issued SPA) For off-plan properties, the SPA is issued directly by the developer. It governs:

● The construction timeline

● Stage-based payment schedules

● Handover conditions

● Warranty and defect liability periods

These SPAs are typically more standardised, reflecting regulatory requirements and project-wide consistency.

Ready Property Purchases (SPA Registered Through DLD)

For completed homes, the SPA is part of a resale transaction and is registered through the Dubai Land Department (DLD).

Here, the SPA operates alongside transfer documentation and title deed registration. Commercial terms often allow greater flexibility, reflecting negotiated agreements between buyer and seller..

Off-plan SPAs are structured for uniformity, while resale SPAs introduce scope for negotiation and tailored positioning..

Key Clauses to Understand Before Signing

Purchase Price and Payment Schedule

This section details the total price, instalment structure, and payment milestones. Careful attention should be provided to:

● Due dates

● Consequences of late payments

● Alignment with the personal cash flow

Handover Date and Completion Timeline

Rather than only focusing only on the dates, investors should also assess:

● Conditions for practical completion

● Grace periods

● Remedies if delays occur

Penalties, Delays and Force Majeure

SPAs usually define scenarios beyond a developer’s control. Understand:

● The scope of qualifying events

● Whether delay penalties apply

● How compensation, if any, is calculated

Service Charges and Ongoing Costs

Long-term ownership costs matter. Review:

● Estimated service charges

● Community management responsibilities

● Adjustment mechanisms over time

Defects Liability and Warranty Periods

Most SPAs include:

● A defects liability period after handover

● Structural warranties for major components

These clauses protect the buyer against construction-related issues post-handover.

Termination and Exit Clauses

Know the exit options:

● When termination is permitted

● Refund structures

● Developer rights versus buyer protections

Buyer Rights and Obligations

Dubai’s regulatory framework is designed to protect buyers, particularly in off-plan transactions. Key safeguards include:

● Escrow accounts ensuring buyer funds are used solely for construction

● Construction milestone oversight

● Title registration protocols

● Defined developer responsibilities.

Oversight from the Real Estate Regulatory Agency (RERA) adds another layer of reassurance for local and international investors alike.

Common Mistakes Buyers Make With SPAs

● Skimming clauses instead of reviewing key sections

● Misaligning payment schedules with real cash flow

● Assuming all SPAs are standard across projects

● Overlooking long-term service charge implications

Should the Buyer Get Legal Advice Before Signing?

Legal review is not about distrust; it is about clarity.

● Essential when purchasing high-value assets, complex structures, or multiple units

● Advisable even for standard transactions, especially for first-time buyers

● A property lawyer typically checks timelines, termination clauses, penalties, and registration compliance

How SPAs Differ Across Master-Planned Communities

Not all SPAs are created equal. Differences may reflect:

● Levels of standardisation versus flexibility

● Construction quality commitments

● Community management and service standards

Well-established master developers tend to prioritise clarity, consistency, and long-term community value — all of which are reflected in their SPAs.

Clarity Creates Confidence

The SPA defines how an investment performs from commitment through to completion. When reviewed with intent and clarity, it allows investors to align contractual terms with financial strategy, reducing uncertainty and strengthening long-term positioning.

In a market where regulation, design, and global demand intersect, disciplined engagement with the SPA supports informed decision-making and sustained investment confidence. Invest with Meraas today!

FAQs

1.Is an SPA legally binding in Dubai?

Yes. Once signed by all parties, an SPA is fully enforceable under UAE law.

2.Can SPA terms be negotiated?

For ready properties, often yes. For off-plan purchases, terms are usually standardised, with limited flexibility.

3.What happens if a developer delays handover?

The SPA outlines remedies, including grace periods and potential compensation, depending on circumstances.

4.Do international buyers need special approvals to sign an SPA?

No special approval is required, but understanding local regulations is essential.

5.Is the SPA registered immediately?

For ready properties, registration occurs at transfer. For off-plan purchases, registration is linked to project status and regulatory milestones.