Dubai has emerged as hub for real estate business attracting many developers, construction companies, investors, brokers and end-users in the sector. Consequently, real estate brokerage activity has become one of the highly demanded business activities in the emirate. In accordance with By-Law No. 85 of 2006 regarding the Regulation of Real Estate Brokers’ Register in the Emirate of Dubai, “brokerage” means a contract by which a broker undertakes to another person to look for a second party to enter into a certain contract through mediation in the contracting negotiations in consideration of a fee. Real estate brokerage in Dubai is divided into two different groups:
(1) Real Estate Leasing Brokerage,
(2) Real Estate Buying & Selling Brokerage.
Real Estate Leasing Brokerage means “the firms which work as a connection link between landlords and tenants regarding property lease against remuneration. Their role will end when an agreement is reached on the properties in subject”. Real Estate Buying & Selling Brokerage means “the firms that act as brokers in buying and selling of real estate property between the owners and buyers”. One firm can have a business license to carry out one or both of the above activities.
Legal Structure of Real Estate Brokerage
There are two types of legal structures that can be registered to carry out real estate brokerage activity:
- Sole Establishment where there is only one partner, and
- Limited Liability Company (LLC)where minimum two and maximum fifty partners can be shareholders
Sole Establishment is formed only by one natural person . The sole proprietor (i.e. owner) is personally liable to the full extent of his assets for the liabilities of the business.
Unlike Sole Establishments, the liability of the shareholders of LLC shall be limited to the extent of their share in the capital of the company according to Art.218 of the Law No.8 of 1984 on Commercial Companies. According to UAE legislation, real estate brokerage company can be formed only under the full ownership of a UAE national(s) or a company wholly owned by a UAE national(s).
Procedure of Registration
Reserve a Trade Name
Trade name can be reserved by filling an online application on Department of Economic Development (DED) website or at one of the typing centers in the emirate.
Initial Approval Request
The next step is to obtain the Initial Approval request receipt by submitting necessary application form and supportive documents such as the application form (BR-1 form), passport copies of all shareholders ad a manager and attested high school or university degree certificates of the partners and a manager.
Approval from Real Estate Regulatory Agency (RERA)
In order to obtain RERA approval, the applicant should pass RERA courses specialized in the real estate field which can be for 2 days or 15 days depending on the educational background of the applicant.
In case of a Sole Establishment, only office tenancy contract shall be signed between the concerned parties. If a company is being formed as LLC, then Memorandum of Association (MOA) between shareholders should be signed in front of the notary public.
License from DED
At this stage all documents such as trade name reservation certificate, RERA approval, tenancy contract and MOA along with passport copies of all shareholders and a manager can be submitted to DED to obtain the final license. After receiving complete documents, DED issues payment voucher which includes all due payments for obtaining the license. Once the payment is made, DED issues the license.
Registration with RERA
Now the company can be registered with RERA and obtain RERA Registration Certificate. Following documents shall be required by RERA: Application form, DED license copy, payment receipt for RERA courses, tenancy contract/Ejari copy, location map.
Registration with DNRD and Ministry of Labor
Like any other mainland company, Real estate brokerage company has to be registered with DNRD and Ministry of Labor (MOL) in order to hire foreign employees and sponsor their visas.
Obtaining Brokers Card
In accordance with Art.3 of the By-Law No. 85 of 2006 regarding the Regulation of Real Estate Brokers’ Register in the Emirate of Dubai, a person may not carry on the brokerage activity in Dubai unless he is licensed by and registered with RERA. A person may be registered with RERA and apply for broker’s card after being hired by the real estate brokerage company.
Note: This article is intended for general information only and should not be considered as legal advice.