Before Signing: What the New UAE Civil Transactions Law Means for Real Estate Transactions.

30 October 2026

Part of ADG Legal’s What’s The Impact series

Real estate transactions often take shape well before the final agreement is signed. Buyers and sellers may exchange heads of terms, due diligence materials, development information, technical reports and commercially sensitive documents while both sides are still deciding whether the transaction will proceed.

The new UAE Civil Transactions Law (Federal Decree-Law No. 25 of 2025), which took effect on 1 June 2026, now gives that stage an express legal framework. For transactions governed by the federal Civil Transactions Law, Articles 121 to 123 address good faith in negotiations, disclosure of information important to a party’s consent and the handling of confidential information.

Four months into the new framework, one of the clearest practical pressure points for real estate transactions is the relationship between buyer due diligence and the information the other side may need to disclose. The transaction record also carries greater weight where questions later arise about what was known, what was communicated and how negotiations developed.

The Civil Transactions Law does not replace the detailed real estate regimes operating at Emirate level. Ownership, registration, off-plan development, leasing, mortgages and other property matters remain subject to the relevant local legislation. The Civil Transactions Law also does not govern transactions in the DIFC or ADGM, which have their own contract law frameworks. Its significance here lies in how the period before the definitive agreement is signed is managed.

Buyer due diligence is no longer the whole disclosure story

Real estate due diligence has traditionally placed considerable emphasis on the buyer investigating the asset, reviewing documents and asking the questions needed to understand the risks.

For sellers and developers, the practical consequence of Article 122 is that the disclosure exercise cannot begin and end with the buyer’s questions.

Where a party knows information of decisive importance to the other party’s consent, Article 122 requires disclosure in the circumstances identified by the Law, including where the other party can be presumed not to know that information or has placed trust in its counterparty.

The obligation applies to both parties. It also cannot be excluded or limited by agreement, so general disclaimers, non-reliance wording or “as is” provisions will not, on their own, displace it. In a real estate transaction, however, it creates a particular tension between buyer due diligence and information already known to a seller, developer or investor.

The consequences can be significant. Where a contract is concluded without disclosure of information that was of decisive importance to the other party’s consent, that party may seek to annul the contract. Article 121 also treats the deliberate withholding of material information affecting the validity of the contract as an act of bad faith.

Information concerning the property, approvals, restrictions, development status or other matters affecting the proposed transaction should therefore be considered against the requirements of Article 122 where that information may be sufficiently important to affect the other party’s consent.

That does not create a general requirement to volunteer every fact connected with a property, nor does it remove the need for proper buyer due diligence. Buyers still need to ask questions, review documents and test assumptions. The practical change is that disclosure cannot be treated purely as a response to whatever the buyer happens to ask.

What needs to be surfaced before signing?

The Law does not provide a real estate-specific checklist of information that will always fall within the disclosure requirements of Article 122. The answer will depend on the transaction and the importance of the information to the other party’s consent. The Law does, however, indicate that information is decisive where it has a direct and necessary connection with the content of the contract or the position of the parties.

For sellers, developers and investors, this means looking beyond the due diligence questionnaire itself. Information held by development, technical, leasing, finance or asset-management teams may need to be considered collectively where it could materially affect the other party’s decision to proceed.

The practical issue is therefore not simply whether a question was asked, but whether relevant information held elsewhere in the business has been identified and brought into the transaction process.

By way of example, a seller of a development plot may know from correspondence with the master developer that the plot’s permitted gross floor area is to be reduced under an updated master plan, or that an application to change its permitted use has been refused, while the title deed, affection plan and data room documents do not yet reflect that position. If the buyer is acquiring the plot for a scheme that depends on the original development parameters, that information is likely to be decisive to its consent, and the seller is unlikely to be able to rely on the fact that the buyer did not ask. The same analysis may apply to a seller’s knowledge of an outstanding completion certificate, an unregistered restriction affecting the property, or a delayed construction milestone on an off-plan project.

The transaction file now carries more weight

Disclosure is not only about whether information was provided. The record of that disclosure matters as well.

Article 122 places the burden on a party alleging non-disclosure to prove that the information should have been disclosed to it, while the other party bears the burden of proving that the relevant information was disclosed.

That has a practical consequence for property transactions, where information may pass through data rooms, written Q&A, technical reports, emails, meetings and different advisers working on the deal.

If a dispute later arises, the question may therefore be not only whether something was disclosed, but whether the transaction record can show when and how that disclosure took place.

Material disclosures should be capable of being traced through the transaction file rather than left in informal discussions or scattered correspondence. Buyers should take the same care with matters that are particularly important to their decision to proceed.

Preliminary documents deserve closer attention

Heads of terms, reservation documents and other preliminary agreements often appear early in a real estate transaction, sometimes before due diligence has been completed.

The new Civil Transactions Law does not make every preliminary document binding. Those documents do, however, form part of the wider negotiation process and should be clear about what the parties intend at that stage.

Particular attention should be given to which provisions are intended to take effect immediately and which matters remain subject to contract, especially where preliminary documents deal with confidentiality, exclusivity, deposits, access to information or transaction costs. Preliminary documents also cannot be used to exclude or limit the Article 122 disclosure obligation.

The label given to a document is less important than clarity over what the parties intend it to do.

If the transaction falls away

A real estate transaction can still end before signing. Article 121 confirms that entering into negotiations does not oblige either party to conclude the contract.

That freedom sits alongside an express requirement that the initiation, conduct and termination of negotiations comply with good faith. Where negotiations are conducted or terminated in bad faith, a party may be liable for actual loss caused to the other side, subject to the limits set by the Law.

Where a property transaction falls away after significant diligence, negotiations or professional costs, the record of how the parties reached that point may therefore matter more. Changes in commercial position and decisions to continue or end negotiations should be capable of being explained by reference to how the transaction developed and what was communicated between the parties.

Confidential information also remains protected after negotiations end. Article 123 deals separately with confidential information obtained during negotiations or in connection with a contract, and unauthorised use or disclosure may give rise to liability under the general rules.

Development plans, pricing information, valuations, financing arrangements and other commercially sensitive material do not become free to use simply because the proposed transaction did not proceed.

The practical impact

The mechanics of a real estate transaction remain familiar. The more significant change is in how the period before signing needs to be managed.

Buyers, sellers, developers and investors should be asking:

• Have matters potentially decisive to the other party’s decision been properly identified and disclosed?
• Is the disclosure exercise looking beyond the questions raised in the buyer’s due diligence process?
• Can the transaction record show what was disclosed, when and how?
• Are heads of terms, reservation documents and other preliminary agreements clear about what is binding and what remains subject to contract?
• Do disclaimers or non-reliance provisions in the transaction documents assume that the disclosure obligation can be excluded?
• Can decisions to continue or withdraw from negotiations be explained by reference to how the transaction developed?
• Are commercially sensitive materials appropriately controlled if negotiations end?

The definitive agreement remains central to a real estate transaction. Under the new framework, however, the negotiations, disclosures and records leading up to it now carry greater legal significance of their own.

This article was prepared by Debora Krasniqi.

Want to know more about shareholders’ agreements, corporate governance or business structuring? Get in touch with Debora Krasniqi or the ADG Legal team