New Law on Organizing Real Estate Contributions in Ajman

On 18 March 2025, the Ruler of Ajman enacted a new law regulating real estate contributions in the Emirate of Ajman. This law, titled “Law on Organizing Real Estate Contributions in Ajman,” aims to provide a structured and transparent framework for real estate investment projects, ensuring the protection of investors and the sustainable development of the real estate sector. The law aims to protect the rights of investors, ensuring that their contributions are managed responsibly and that they receive their fair share of profits. The law also supports the sustainable development of the real estate sector in Ajman, aligning with the government’s broader economic goals. This marks the first law of its kind in the United Arab Emirates and may pave the way for similar regulations to be adopted in other jurisdictions. Unlike other regions where Real Estate Investment Trusts (REITs) are managed independently of government land departments, this new regulation uniquely empowers the Ajman Land Department to oversee and manage these investments. This integrated approach enhances oversight, ensures stricter compliance, and upholds robust regulatory standards.

Key Features of the Law

The law includes several key features designed to regulate and facilitate real estate contributions:

• Real Estate Contribution Register: A register is established to record details of real estate contribution projects, including the names of contributors, their shares, and the properties involved. This register can be maintained in both paper and electronic formats.
• Types of Contributions: The law distinguishes between public and private real estate contributions. Public contributions involve offering shares to the general public, while private contributions involve agreements between property owners and a limited number of investors. These options will allow more options for investors thereby increasing the region’s investment potential and subsequent popularity.
• Conditions for Registration: To register a real estate contribution, several conditions must be met, including obtaining the property owner’s consent, appointing a licensed contribution manager, and opening an escrow account for the project.
• Escrow Account Management: The law mandates the use of escrow accounts to manage the financial contributions of investors. These accounts are overseen by licensed financial institutions and are subject to strict regulations to ensure the proper use of funds.
• Contributor Rights and Obligations: Contributors have the right to access information about the project and to transfer their shares under certain conditions. They are also required to disclose the source of their funds and to pay their contributions in full.
• Contribution Manager Responsibilities: The contribution manager is responsible for overseeing the project, managing the escrow account, and ensuring compliance with all legal requirements. They must also retain a minimum share in the project until its completion.
• Project Execution and Liquidation: The law sets a maximum duration for project execution and outlines the procedures for liquidating the project and distributing profits to contributors.
• Penalties and Dispute Resolution: The law includes provisions for penalties in case of non-compliance and establishes a mechanism for resolving disputes between contributors and contribution managers.

Potential Impact of Law

The law’s emphasis on transparency and investor protection will increase confidence among potential investors, making it easier for investors to attract funding for their projects. Investors will need to ensure that their projects comply with the new regulations, including registering their contributions, managing escrow accounts, and adhering to the specified timelines. The law’s requirements for contribution managers and the use of escrow accounts will also provide an additional layer of oversight, reducing the risk of mismanagement and fraud. In case of disputes, clients will have access to a clear legal framework for resolving issues, ensuring that their rights are protected.

Conclusion

The Law on Organizing Real Estate Contributions in Ajman represents a significant step forward in regulating the real estate sector in the emirate. By providing a clear and transparent framework for real estate contributions, the law aims to attract more investments, protect investors, and support the sustainable development of the real estate market. Investors involved in real estate contributions should familiarize themselves with the new regulations and ensure that their projects comply with the law to take full advantage of the opportunities it offers.

How can we help?

For more information on this law, please contact the key contacts.