On 1 June 2026, the UAE enacted its most significant overhaul of private law since 1985. Federal Decree-Law No. 25 of 2025 — the new Civil Transactions Law — replaced the 41-year-old 1985 Civil Code with a comprehensively rewritten framework. For Dubai property buyers and tenants, the most important changes are: a mandatory, non-excludable duty on sellers and developers to disclose all material information before contracts are signed; extension of the latent defect warranty period from 6 months to 1 year; expanded court powers to modify construction and property contracts disrupted by unforeseen circumstances (hardship); mandatory registration of usufruct construction rights; and new protections for expatriate estate planning. Pre-June 2026 contracts remain governed by the old law, with one critical exception — limitation periods already running on 1 June 2026 are subject to the new, and in some cases shorter, timeframes immediately.
Why This Law Matters More Than Any Other Legal Update in 2026
Most legal updates affecting Dubai real estate are emirate-level amendments — changes to RERA regulations, DLD fee structures, or landlord-tenant rules specific to Dubai. This one is different.
Federal Decree-Law No. 25 of 2025 is a federal law. It applies across all seven UAE emirates, across all onshore civil transactions, and it does not merely amend the old framework — it replaces it entirely. The 1985 Civil Code that governed every property sale, every lease, every construction contract, and every reservation agreement in the UAE for 41 years is now repealed.
The new law's reach is broad: it governs how pre-sale negotiations must be conducted, what must be disclosed before you sign an MOU, how long you have to claim for hidden defects in a property you purchased, what happens if unforeseen circumstances make a construction project uneconomic, and what happens to your UAE assets if you die without a registered will.
For buyers, sellers, landlords, tenants, developers, and anyone with a contractual relationship in UAE real estate, this is the legal foundation that all of those relationships now sit on.
Background: Why the 1985 Civil Code Was Replaced
Federal Law No. 5 of 1985 had governed UAE civil and contractual relations for over four decades. Piecemeal amendments in 1987 and 2020 tried to keep pace with the UAE's development — but the framework had accumulated inconsistencies, overlaps with newer specialist laws (the Companies Law, Bankruptcy Law, and sector-specific regulations), and areas where principles had been developed through judicial interpretation rather than clear statutory text.
Federal Decree-Law No. 25 of 2025 replaces the entire framework with a modern, codified structure that:
- Eliminates duplication with specialised legislation
- Codifies judicial principles into clear statutory rules
- Modernises legal capacity, contract formation, liability, and property rights
- Aligns UAE civil law with comparable reforms across the Gulf region (Kuwait, Qatar, Saudi Arabia)
The law was issued on 1 October 2025, signed by President Mohamed bin Zayed Al Nahyan, and took effect on 1 June 2026.
The Seven Changes That Directly Affect Property Buyers and Tenants
Change 1: Mandatory Pre-Contractual Disclosure (Articles 121–123)
This is the most significant change for property buyers in the new law — and the least understood.
Under the old 1985 Civil Code, good faith was recognised in principle during negotiations but was not expressly regulated. Sellers, developers, and landlords could conduct pre-contractual negotiations with considerable freedom regarding what they chose to share. Information asymmetry in property negotiations — the seller knowing things the buyer doesn't — was structurally tolerated by the old framework.
The new law changes this fundamentally.
Article 122 imposes a positive, mandatory duty on every party to a negotiation to disclose information of decisive importance to the other party's consent. This duty:
- Applies to both parties — seller and buyer, developer and purchaser, landlord and tenant
- Cannot be limited, reduced, or excluded by any contract clause — any such clause is void as a matter of law
- Covers information relating to the negotiations, the contract, the practical circumstances, and the facts of the transaction
- Applies even where ignorance of the information is presumed or where trust has been placed in the other party
Deliberate withholding of material information constitutes bad faith. An aggrieved party who did not receive required disclosure may request annulment of the contract.
Article 121 reinforces this by requiring good faith conduct throughout the entire negotiation — not just at signing. Breaking off negotiations abruptly or without justification can create liability for actual loss caused to the other party, even where no contract was ever concluded.
Article 123 adds statutory confidentiality protection in the pre-contractual phase — any party who uses or discloses confidential information obtained during negotiations without permission is liable for resulting losses. This provides a legal baseline that previously required bespoke non-disclosure agreements to achieve.
What this means practically for property buyers:
Every MOU, reservation agreement, and heads of terms entered into from 1 June 2026 onwards must be read in the context of these mandatory duties. Any clause in a pre-contract document that states the seller "makes no representations" or that the buyer "relies only on their own enquiries and not on any information provided by the seller" is now void as a matter of UAE law to the extent it attempts to exclude the statutory disclosure duty.
This does not mean sellers must disclose every conceivable fact. The duty applies to information "of decisive importance to the other party's consent" — a legal test that will be developed by UAE courts in coming years. But the structural shift is clear: the obligation to disclose material information is now a non-waivable legal baseline, not something a well-drafted contract could previously exclude.
For off-plan buyers specifically: the show flat specification, floor plan dimensions, amenity list, and community infrastructure representations that developers make during the pre-sale phase now sit against this statutory backdrop. Representations that prove materially inaccurate may now attract stronger legal remedies than were available under the old framework.
Change 2: Latent Defect Warranty Period Extended (6 Months → 1 Year)
Under the 1985 Civil Code, buyers who discovered hidden defects in a purchased property had six months from the date of delivery to raise a defect claim. Six months is a short window — particularly for defects that only become apparent after the property has been occupied through different seasons (a winter water leak that doesn't appear in a summer handover inspection, for example).
The new law doubles this period. Buyers now have one year from delivery to identify and claim for latent defects — defects that were not visible or discoverable at handover — unless the SPA agrees a longer period, which remains permitted.
This change applies to sale contracts concluded from 1 June 2026. For properties handed over under pre-June 2026 contracts, the old six-month period applies.
Practical steps every buyer should take at handover: A professional snagging inspection immediately before accepting handover remains essential — and now has a longer claim window to operate within. However, do not rely on the extended period as a substitute for thorough inspection at handover. The one-year period is for latent defects genuinely not discoverable at handover, not a grace period for conducting the inspection late. Raise all defects in writing before signing the handover acceptance form.
Change 3: Hardship Provisions for Real Estate and Construction Contracts (Article 224)
The new law introduces codified hardship protection for long-term contracts — including real estate development agreements and construction contracts — that is mandatory and cannot be contracted out of.
Where unforeseen, exceptional circumstances arise after a contract is concluded that make performance excessively onerous — circumstances that could not reasonably have been anticipated at signing — courts may now:
- Reduce or adjust the obligations of the affected party
- Extend performance timelines
- Modify contract prices or terms
- Order rescission of the contract
This provision explicitly applies to long-term real estate and construction agreements (Article 829 cross-reference). It was introduced in direct response to lessons from the COVID-19 period and subsequent inflationary pressures on construction costs.
The important investor and developer implication: existing force majeure and hardship clauses in construction contracts and development agreements entered into from 1 June 2026 must now interact correctly with this mandatory statutory framework. The statutory hardship provision provides a floor — courts can intervene even in contracts that attempt to exclude this protection, and any clause purporting to waive Article 224 is void.
For off-plan buyers, this cuts both ways. A developer facing genuinely exceptional construction cost escalation has a legal basis to seek contract modification through courts — but equally, a buyer facing genuinely exceptional circumstances affecting their ability to complete instalments also has a legal basis to seek relief.
Change 4: Usufruct Construction Rights Must Now Be Registered
This is a technical but important change for investors in structures involving ground leases, development rights, and usufruct-based real estate arrangements.
Under the new law, usufructuary construction rights must be registered with the competent authority. Failure to register results in the arrangement being null and void.
For the typical freehold apartment or villa buyer in Dubai, this change does not directly apply — your purchase produces a DLD title deed and no separate usufruct registration is required.
For investors in more complex structures — leasehold developments, joint venture real estate, or arrangements where rights are held through a usufruct rather than outright ownership — registration compliance must be confirmed with a UAE-registered lawyer before committing capital. The nullity consequence of non-registration is serious: an unregistered arrangement has no legal effect.
Change 5: Expanded Court Powers for Liquidated Damages (Article 340)
Standard construction and development contracts include liquidated damages clauses that specify the compensation a developer pays for delayed handover (and sometimes that a buyer pays for late instalments). Under the old law, courts had some power to adjust these clauses — but the scope was narrow.
The new law significantly expands court intervention powers. Courts may now:
- Reduce agreed compensation if the developer proves it was excessive or that partial performance was delivered
- Reduce or prohibit agreed compensation if the party claiming it caused or contributed to the breach
- Increase agreed compensation where actual loss exceeds the agreed amount, if this was contemplated by the parties
For buyers assessing delay penalty clauses in SPAs: any SPA signed from 1 June 2026 now has courts behind the delay penalty clause with wider power to calibrate the outcome against actual loss. This does not make the delay penalty clause less important to include — but it means the clause is not the final word in every scenario. A developer who can demonstrate that actual buyer loss was lower than the agreed daily rate may seek court adjustment downward.
Change 6: Age of Majority Reduced to 18 (from 21 Lunar Years)
The new law reduces the age at which a person has full civil legal capacity from 21 lunar years to 18 Gregorian years. This aligns UAE civil law with most comparative legal systems and with other UAE legislation.
Practical property implications:
- Contracts signed by 18–20-year-olds from 1 June 2026 are fully enforceable — previously, contracts with persons aged 18–20 carried capacity uncertainty
- Property registered in the name of an 18-year-old from 1 June 2026 is registered in the name of a full legal capacity person
- The DLD and RERA registration processes already accept title deeds in the name of individuals aged 18+ — this change aligns civil law capacity with administrative practice
Change 7: Expatriate Estates Without Heirs — Charitable Waqf Designation
This is the most important estate planning implication of the new law for foreign property owners in the UAE.
Under the old framework, the treatment of a foreign national's UAE assets where they died without a will and without identifiable heirs was legally uncertain and varied by circumstance. The new law provides a clear answer: financial assets in the UAE belonging to a foreign national who dies without a will and without legal heirs are designated as a charitable Islamic endowment (waqf), administered under court supervision after debts are settled.
This is not a confiscation — the assets go to charitable administration, not the UAE government. But it means your property does not automatically pass to your chosen beneficiary if you die without a UAE-registered will and without qualifying heirs.
The fix is simple and inexpensive relative to the asset at stake: register a will with the DIFC Wills Service Centre or the Dubai Courts. A DIFC will can be registered for approximately AED 1,500–2,500 in fees (plus legal preparation costs if using a lawyer) and covers UAE property distribution to beneficiaries of your choice under common law-style rules without requiring court intervention.
If you own Dubai property and do not have a UAE-registered will, addressing this is the single highest-priority legal action the new Civil Transactions Law creates for you.
The Transitional Rules: Which Contracts Are Affected?
The transitional framework is straightforward in principle but has one critical exception:
General rule: Contracts concluded before 1 June 2026 are governed by the 1985 Civil Code for matters of contract formation, performance, and liability. Contracts concluded from 1 June 2026 onwards are governed by the new law.
The critical exception — limitation periods: Limitation periods that were already running on 1 June 2026 are subject to the new, and in some cases shorter, periods from that date — not from when the original period began. For anyone with a potential claim that was approaching the end of its limitation window under the old law, the urgency of filing was immediately increased by the new law's commencement.
What "governed by the old law" means in practice: If your reservation agreement, SPA, or tenancy contract was signed before 1 June 2026, the contractual terms and the legal framework that governed when you signed continue to apply to that contract's performance and liability. The new pre-contractual disclosure duties, hardship provisions, and expanded liquidated damages powers apply to contracts signed from 1 June 2026 — not retroactively to existing agreements.
Long-term contracts spanning the transition: Contracts signed before 1 June 2026 that continue to have performance obligations after that date — a 3-year construction payment plan, a 2-year lease renewable after 1 June 2026, a multi-phase development agreement — deserve specific legal attention. The general rule is that the 1985 law governs, but renewals and amendments concluded after 1 June 2026 may bring the new framework into play for those new elements.
What the New Law Does NOT Change for Dubai Property Buyers
The scope of the new Civil Transactions Law is important to understand correctly. It is federal law that applies to civil transactions generally. It does not replace or override Dubai's emirate-level real estate regulations:
- RERA regulations — the framework governing developer licensing, escrow accounts, and off-plan sales remain in full force
- DLD registration requirements — the 4% transfer fee, Oqood registration, and title deed system are unaffected
- Dubai's Landlord-Tenant Law (Law No. 26 of 2007 and RERA rent increase rules) — these emirate-level laws continue to govern tenancy agreements in Dubai. The new Civil Code operates alongside them — filling gaps where Dubai-specific laws are silent, but not replacing them
- Golden Visa property rules — unchanged
- Freehold zone designations — unchanged
Think of the new Civil Code as the underlying legal foundation that applies where specialist legislation is silent or incomplete. Dubai's property-specific laws remain the primary framework for most day-to-day real estate transactions — the new Civil Code addresses gaps, governs pre-contractual conduct, and provides the baseline protections and remedies that underpin those interactions.
Practical Checklist: What to Review Before Signing Any UAE Property Contract from 1 June 2026
Use this checklist for any Dubai property transaction — off-plan purchase, ready property sale, tenancy agreement, or reservation — entered into after 1 June 2026:
Pre-contract stage:
- Confirm the seller/developer has provided all material information relevant to your purchase decision in writing before you pay any deposit
- If you receive any heads of terms or reservation agreement with a clause stating the seller makes "no representations" or that you rely "solely on your own enquiries" — note that this clause is void as a matter of law to the extent it purports to exclude the statutory disclosure duty
- Document all representations made during negotiation — emails, written marketing materials, agent communications — before signing
SPA / lease agreement stage:
- Have a UAE-licensed lawyer review the SPA if the purchase is AED 500,000+ (budget AED 2,000–5,000)
- Confirm the defect warranty period in the SPA — it should be at least 1 year for latent defects; confirm whether the SPA extends this
- Review the delay penalty clause in the SPA against the new Article 340 framework — understand what courts can now do to adjust this clause upward or downward
- Confirm the hardship/force majeure clause in any construction agreement you are signing is compatible with Article 224's mandatory provisions
- If the transaction involves usufruct rights, confirm registration with the competent authority
Estate planning:
- If you are a foreign national with Dubai property and no UAE-registered will — register one. The DIFC Wills Service Centre is the most accessible option for common-law jurisdiction nationals
Key Takeaways
- Federal Decree-Law No. 25 of 2025 replaced the entire 1985 Civil Code on 1 June 2026 — the most significant UAE private law overhaul in 41 years.
- The mandatory pre-contractual disclosure duty (Articles 121–122) is the biggest practical change for buyers: sellers and developers must disclose all material information before contracts are signed. Any clause attempting to waive this duty is void as a matter of UAE law.
- The latent defect warranty period for sale contracts extended from 6 months to 1 year — giving buyers more time to identify and claim for hidden defects in properties purchased under contracts signed from 1 June 2026.
- Courts now have expanded, mandatory hardship powers to modify or rescind real estate and construction contracts where unforeseen circumstances make performance excessively onerous. This protection cannot be contracted out of.
- Usufruct construction rights must now be registered — failure to register results in the arrangement being null and void.
- Foreign nationals with UAE property and no UAE-registered will should register one immediately — the new law designates heirless foreign estates as a charitable waqf, which may not reflect the owner's wishes.
- Pre-June 2026 contracts are generally governed by the old law — but limitation periods already running on 1 June 2026 are subject to the new timeframes immediately.
Final Thoughts
The UAE Civil Transactions Law that came into force on 1 June 2026 is not a minor regulatory update — it is a wholesale reset of the legal foundation on which every property sale, lease, construction contract, and reservation agreement in the UAE sits.
For buyers, the most protective changes are immediate: the mandatory disclosure duty means you are legally entitled to material information before you sign, and any attempt to waive that right is void. The extended defect period means you have more time to identify and claim for problems not visible at handover. The hardship provisions mean that genuinely exceptional circumstances can now be addressed by courts even in contracts that didn't anticipate them.
For sellers and developers, the compliance obligations are equally immediate: pre-contractual disclosure processes must be structured to satisfy Article 122's mandatory requirements, and any standard contract language that attempts to limit information duties should be reviewed.
The law's courts are still in their early stages of interpreting the new framework — the full practical implications of provisions like the hardship doctrine and the disclosure duty will become clearer as case law develops over the next 2–3 years. For now, the most important practical step is straightforward: any property contract you sign from 1 June 2026 is governed by a materially different legal framework than what came before. Treat it as such.
Buying or selling property in Dubai and want to understand how the new Civil Transactions Law affects your specific transaction? House & Hedges works with registered UAE legal advisors across every major Dubai transaction type. Speak to our team before signing your next MOU.
