New UAE Civil Code: What Real Estate Stakeholders Need to Know

Federal Decree-Law No. 25 of 2025 (the New Civil Code) came into force on 1 June 2026, replacing the 1985 Civil Code. While much attention has focused on the reforms relating to contractual consent and pre-contractual conduct, the New Civil Code also introduces a number of changes with practical implications for the real estate sector.

These changes should be considered within the UAE's federal-emirate legislative framework. While the New Civil Code provides the federal foundation and overarching principles governing matters such as contract formation, consent, disclosure and remedies, Emirate-level real estate laws continue to govern ownership, possession, registration and other real rights relating to immovable property within the relevant Emirate, including off-plan sales, mortgages, leases and related matters. The New Civil Code therefore operates alongside, and complements, the more detailed real estate frameworks in Emirates such as Dubai and Abu Dhabi.

1. Greater Focus on the Pre-Contract Stage

One of the most significant changes is the increased importance of the negotiation and contract formation stage. The New Civil Code expressly introduces:

• a duty to negotiate in good faith;
• an obligation to disclose information of decisive importance to the counterparty's consent; and
• liability for misuse of confidential information during negotiations.

For developers, sellers and investors, this has particular relevance to reservation agreements, heads of terms, memoranda of understanding and other preliminary transaction documents. Courts may increasingly examine what information was disclosed, what assumptions were made and whether any undisclosed matter was decisive to a party's decision to contract.

2. Standard Form Contracts Under Greater Scrutiny

The New Civil Code expressly distinguishes between negotiated contracts and standard form (adhesion) contracts. While standard form contracts remain valid, the distinction is likely to:

• increase scrutiny of non-negotiated terms;
• strengthen arguments around interpretation against the drafting party; and
• increase focus on transparency and fairness.

Developers and institutional landlords should therefore review template documentation carefully.

3. Key Lease Law Changes

The New Civil Code introduces several important lease-related changes, particularly where Emirate-level landlord and tenant laws do not address the issue.

Notable reforms include:

• statutory priority rules where the same property is leased to more than one tenant;
• confirmation that holding over generally creates a new lease rather than an extension of the existing lease;
• statutory landlord security rights over certain tenant movables; and
• a requirement to compensate tenants for approved improvements in certain circumstances.

The New Civil Code also expressly provides remedies where leased premises are unsuitable for their agreed use, including potential rescission, rent reduction and compensation.

4. Sale of Business and Lease Continuity

A new provision allows courts to order continuation of a lease where a tenant sells a factory or shop and continuation is necessary, provided adequate security is offered and the landlord suffers no actual harm. This is likely to support business sales as going concerns.

5. Ownership, Registration and Third-Party Protection

The New Civil Code reinforces the importance of registration and clarifies the interaction between ownership rights, contractual restrictions and third parties. In particular:

• certain restrictions on disposition are only enforceable against third parties if they were known or registered;
• registration plays a decisive role in third-party enforceability; and
• statutory rights of way and access easements are clarified and strengthened.

Proper registration and diligence on title conditions will remain critical.

6. Co-Ownership Reforms

The New Civil Code introduces a federal framework for co-ownership that is primarily relevant where Emirate-specific legislation does not apply or is silent. Changes include:

• express majority thresholds for management decisions;
• expanded powers for majority co-owners in certain circumstances; and
• limits on agreements preventing partition.

These provisions may be particularly relevant to joint ventures, inherited properties and developments with fragmented ownership structures.

7. Musataha (now termed “Right of Superficies”)

The musataha regime has been significantly refined. Key changes include:

• removal of the former 50-year statutory cap;
• express registration requirements for validity;
• codification of the musataha holder's obligations; and
• clearer rules governing termination and the treatment of buildings and third-party rights.

While the reforms increase flexibility, Emirate-level restrictions and approval requirements may still apply.

8. Remedies and Liquidated Damages

The New Civil Code introduces a more structured framework for judicial intervention in agreed damages provisions. Where no mandatory statutory regime applies, courts are now expressly guided in assessing whether agreed damages should be adjusted, including by reference to actual loss, partial performance and creditor contribution.

This is likely to provide greater predictability for well-drafted liquidated damages provisions.

Key Takeaways

• Negotiations, reservation agreements and heads of terms may carry greater legal significance.
• Disclosure failures and unmanaged assumptions may create risk before a transaction reaches registration stage.
• Standard form contracts are likely to attract increased judicial scrutiny.
• Lease management practices should be reviewed in light of the new holding over, tenant improvement and landlord security provisions.
• Registration remains central to protecting rights against third parties.
• The New Civil Code provides a more structured framework for remedies and liquidated damages.

The New Civil Code represents an important development in the UAE's legal framework, placing greater emphasis on transparency, disclosure and certainty in real estate transactions. Market participants should consider reviewing their documentation, disclosure practices and transaction processes.

If you would like to discuss these changes in greater detail, please contact Sarit Thomas.

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