“Timeshare” Regulation in Dubai: An analytical view considering the principles of cassation (Part 1).

By: Mostafa Sobhy Draz – Senior Legal Consultant.

By: Mostafa Sobhy Draz – Senior Legal Consultant.

I. Introduction:

I. Introduction:

With being one of the most important real estate markets in the world, attractive tourist and investment destinations, and economic development, it is natural for the timeshare system to become one of the popular tourism models in the Emirate of Dubai.With the prosperity of hotel and semi-hotel establishments such as holiday homes, it was also natural for disputes to occur between parties to timeshare contracts and others due to breaches that might occur from one of them.One of our clients bought a timeshare from a famous vacation homes company which provides timeshares in a famous hotel. Later, he found that the hotel units were sold to different persons who were not obligated by the timeshare contract rules.Our team of expert lawyers handled his case against both, the vacation homes company, and the hotel. The claim was the termination of the timeshare company with a full refund. The case moved on in front of Dubai Courts till the cassation, and the Dubai Court of Cassation set many principles that shall bring good attention to who is involved in the timeshare industry in Dubai as well as the buyers.In this article, we will review the main points of the timeshare regulation in Dubai and the related principles of the Dubai Court of Cassation.
With being one of the most important real estate markets in the world, attractive tourist and investment destinations, and economic development, it is natural for the timeshare system to become one of the popular tourism models in the Emirate of Dubai.

With the prosperity of hotel and semi-hotel establishments such as holiday homes, it was also natural for disputes to occur between parties to timeshare contracts and others due to breaches that might occur from one of them.

One of our clients bought a timeshare from a famous vacation homes company which provides timeshares in a famous hotel. Later, he found that the hotel units were sold to different persons who were not obligated by the timeshare contract rules.

We handled his case against both, the vacation homes company, and the hotel. The claim was the termination of the timeshare company with a full refund. The case moved on in front of Dubai Courts till the cassation, and the Dubai Court of Cassation set many principles that shall bring good attention to who is involved in the timeshare industry in Dubai as well as the buyers.

In this article, we will review the main points of the timeshare legislation system in Dubai and the related principles of the Dubai Court of Cassation.

II. Timeshare Regulation in Dubai:

II. Timeshare Regulation in Dubai:

1- On 24/11/2020, H.H. Sheikh Mohammed bin Rashid Al Maktoum issued the law no. (14) of 2020 concerning Timeshare Schemes in the Emirate of Dubai.

2- On 16/02/2023 H.H. Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, Chairman of the Executive Council issued the Executive Council Resolution No. (6) of 2023 Approving the Fees and Fines Prescribed for Timeshare Schemes.

3- On 31/08/2023 the Director General of the Department of Economy and Tourism issued the Implementing Bylaw of Law No. (14) of 2020 Concerning Timeshare Schemes in the Emirate of Dubai.

1- On 24/11/2020, H.H. Sheikh Mohammed bin Rashid Al Maktoum issued the law no. (14) of 2020 concerning Timeshare Schemes in the Emirate of Dubai.

2- On 16/02/2023 H.H. Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, Chairman of the Executive Council issued the Executive Council Resolution No. (6) of 2023 Approving the Fees and Fines Prescribed for Timeshare Schemes.

3- On 31/08/2023 the Director General of the Department of Economy and Tourism issued the Implementing Bylaw of Law No. (14) of 2020 Concerning Timeshare Schemes in the Emirate of Dubai.

III. What is the timeshare?

III. What is the timeshare?

Timeshare is a collective model of vacation real estate in which multiple buyers own or lease allotments of usage, typically in one-week increments, for the same property. The timeshare model is used for many different properties, with units offered in vacation resorts, condominiums, apartments, and campgrounds.

A timeshare contract definition, according to the applicable law in Dubai, is a contract under which a Timeshare interval is sold for a specific financial consideration and under which an establishment is obliged to enable a beneficiary to use the accommodation unit specified in that contract throughout the Timeshare interval.

Timeshare is a collective model of vacation real estate in which multiple buyers own or
lease allotments of usage, typically in one-week increments, for the same property. The
timeshare model is used for many different properties, with units offered in vacation
resorts, condominiums, apartments, and campgrounds.
<br/><br/>
A timeshare contract definition, according to the applicable law in Dubai, is a contract
under which a Timeshare interval is sold for a specific financial consideration and under
which an establishment is obliged to enable a beneficiary to use the accommodation
unit specified in that contract throughout the Timeshare interval.

IV. What is the Subject and nature of the Timeshare contract?

IV. What is the Subject and nature of the Timeshare contract?

There has been a legal debate among Jurists about the nature of the subject of timeshare
contracts ever since they emerged. Also, according to many comparative studies, the
laws of various countries of the world have differed greatly regarding determining the
nature and the subject of the Timeshare contract.

Some legislation views this contract as a sales contract that includes the transfer of
ownership to multiple parties while regulating how each buyer uses his rights. Some
other legislations show this contract as a lease agreement. However, some jurists’
opinion is that it is a new type of contract that is between sell, and lease.

The dispute also extended to the nature of the subject of this contract. Some argued that
the subject of the contract is time as an abstract element, some say that the subject is the
real estate unit, while others saw that the subject is a composite of time and the real
estate unit together where neither of them can be neglected.

Following the Dubai timeshare contract, and Timeshare scheme definitions, we can recognize
that the Dubai legislation ensured to mention both the time and the property with a focus
on the usufruct. The law considers that a Dubai timeshare contract is selling a part of the
usufruct, not selling, or leasing the ownership itself.

There has been a legal debate among Jurists about the nature of the subject of timeshare contracts ever since they emerged. Also, according to many comparative studies, the laws of various countries of the world have differed greatly regarding determining the nature and the subject of the Timeshare contract.

Some legislation views this contract as a sales contract that includes the transfer of ownership to multiple parties while regulating how each buyer uses his rights. Some other legislations show this contract as a lease agreement. However, some jurists’ opinion is that it is a new type of contract that is between sell, and lease.

The dispute also extended to the nature of the subject of this contract. Some argued that the subject of the contract is time as an abstract element, some say that the subject is the real estate unit, while others saw that the subject is a composite of time and the real estate unit together where neither of them can be neglected.

Following the Timeshare contract, and Timeshare scheme definitions, we can recognize that the Dubai legislation ensured to mention both the time and the property with a focus on the usufruct. The law considers that a timeshare contract is selling a part of the usufruct, not selling, or leasing the ownership itself.

V. More into the regulation:

V. More into the regulation:

The law no. (14) of 2020 concerning Timeshare Schemes in the Emirate of Dubai stipulates two types of contracts subject to its provisions: Timeshare, and Points contract. Timeshare was previously defined as per the said law.

A points contract is a contract under which a beneficiary buys points for a specific financial consideration and under which an establishment is obliged to enable that Beneficiary to use an accommodation Unit for the period specified in the contract or to use any other alternative accommodation Unit existing within or outside of the Emirate.

A timeshare scheme is a scheme under which a beneficiary is entitled to use an accommodation unit throughout a timeshare interval per the terms agreed upon in a Timeshare contract or to use his Points or exchange them for the right to use an accommodation unit throughout the period specified in a Points-based Contract.

The law restricted the scope of the timeshare contract to the usufruct. Also, it mentioned that the rights arising from the contract and all other rights in the Timeshare Interval about the relevant accommodation unit must be registered in the Real Property Register upon the lapse of the withdrawal period (10 days for the beneficiary only).

The Administrative Resolution No. (74) of 2023 also mentioned that an establishment must apply, through the electronic portal, for registration of the Timeshare Contract in the real property register and issuance of a contract registration certificate in the name of the beneficiary by the DLD or the DIFC.

The law itself stipulates a very important provision, which is that any disposition transferring or restricting the ownership of a Timeshare interval will be null and void unless it is registered in the real property register. Also, any agreement or provision, in a Timeshare contract or a Points-based contract, that would prejudice the beneficiary’s rights under the law and the resolutions issued in pursuance hereof, or that would exempt the establishment from its obligations under the contract, will be null and void.

The law also mentioned that a new register called “Activity Register” will be created in the DTCM in which the establishments authorised to conduct the activity; the accommodation units designated for use under Timeshare schemes; and the establishments authorised to market, publicise, and advertise Timeshare schemes will be recorded. The establishment that practices the activity of selling Timeshare intervals; or selling points, must be licensed, and authorized to practice the activity.

The law is keen to achieve the well-being of the beneficiaries as it stipulates that an establishment may not disturb the beneficiary’s enjoyment of the accommodation unit in any manner that limits the use of the same during his Timeshare interval and may not make any change to the accommodation unit that may preclude the beneficiary from using it or prejudice the use of the same for its intended purposes. This obligation of the establishment is not limited to its acts and the acts of its subordinates only, it extends to include any disturbance or damage caused by any person who receives any right related to the accommodation unit from the establishment.

Where such disturbance of enjoyment results in preventing the beneficiary from using the accommodation unit during his Timeshare interval per the Timeshare contract, the beneficiary may apply to the competent court for termination of the Timeshare contract or reduction of the financial consideration for the Timeshare interval, and compensation. Any agreement providing for the mitigation of, or exemption from, the non-disturbance obligation stipulated in this Article will be null and void where the establishment has fraudulently concealed the grounds for that obligation.
The law no. (14) of 2020 concerning Timeshare Schemes in the Emirate of Dubai stipulates two types of contracts subject to its provisions: Timeshare, and Points contract. Timeshare was previously defined as per the said law.

A points contract is a contract under which a beneficiary buys points for a specific financial consideration and under which an establishment is obliged to enable that Beneficiary to use an accommodation Unit for the period specified in the contract or to use any other alternative accommodation Unit existing within or outside of the Emirate.

A timeshare scheme is a scheme under which a beneficiary is entitled to use an accommodation unit throughout a timeshare interval per the terms agreed upon in a Timeshare contract or to use his Points or exchange them for the right to use an accommodation unit throughout the period specified in a Points-based Contract.

The law restricted the scope of the timeshare contract to the usufruct. Also, it mentioned that the rights arising from the contract and all other rights in the Timeshare Interval about the relevant accommodation unit must be registered in the Real Property Register upon the lapse of the withdrawal period (10 days for the beneficiary only).

The Administrative Resolution No. (74) of 2023 also mentioned that an establishment must apply, through the electronic portal, for registration of the Timeshare Contract in the real property register and issuance of a contract registration certificate in the name of the beneficiary by the DLD or the DIFC.

The law itself stipulates a very important provision, which is that any disposition transferring or restricting the ownership of a Timeshare interval will be null and void unless it is registered in the real property register. Also, any agreement or provision, in a Timeshare contract or a Points-based contract, that would prejudice the beneficiary’s rights under the law and the resolutions issued in pursuance hereof, or that would exempt the establishment from its obligations under the contract, will be null and void.

The law also mentioned that a new register called “Activity Register” will be created in the DTCM in which the establishments authorised to conduct the activity; the accommodation units designated for use under Timeshare schemes; and the establishments authorised to market, publicise, and advertise Timeshare schemes will be recorded. The establishment that practices the activity of selling Timeshare intervals; or selling points, must be licensed, and authorized to practice the activity.

The law is keen to achieve the well-being of the beneficiaries as it stipulates that an establishment may not disturb the beneficiary’s enjoyment of the accommodation unit in any manner that limits the use of the same during his Timeshare interval and may not make any change to the accommodation unit that may preclude the beneficiary from using it or prejudice the use of the same for its intended purposes. This obligation of the establishment is not limited to its acts and the acts of its subordinates only, it extends to include any disturbance or damage caused by any person who receives any right related to the accommodation unit from the establishment.

Where such disturbance of enjoyment results in preventing the beneficiary from using the accommodation unit during his Timeshare interval per the Timeshare contract, the beneficiary may apply to the competent court for termination of the Timeshare contract or reduction of the financial consideration for the Timeshare interval, and compensation. Any agreement providing for the mitigation of, or exemption from, the non-disturbance obligation stipulated in this Article will be null and void where the establishment has fraudulently concealed the grounds for that obligation.


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