The Dubai Broker Whose Client Buys Through an Unregistered Off-Plan Agent
Rania is a licensed broker with Dubai Brokerage LLC. A buyer, Mr. Hashim, signs a Form A with her and asks her to find a two-bedroom off-plan unit at a project in Dubai South. Hashim then says a friend, 'Kareem', who runs an Instagram property page, can get him a 4% discount from the developer because Kareem 'moves volume'. Kareem is not registered with RERA and holds no broker card. Hashim wants Rania to prepare the Form F and take her 2% commission from the developer while Kareem 'handles the developer relationship'. Rania's BRN is active and her firm's trade licence covers brokerage. The developer's project is registered with RERA and units are in escrow. Rania's manager tells her to 'just process it, the developer pays us anyway'.
1. Identify the regulatory problems with Rania processing this transaction as described, and state what she must do before any Form F is issued.
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Three issues arise. First, Kareem is performing brokerage activity (sourcing a buyer and negotiating a discount) without RERA registration; a broker may not share commission with, or facilitate, an unlicensed intermediary. Second, Rania cannot pay or split commission to Kareem directly or indirectly - commission sharing is restricted to licensed brokers. Third, the Form F must reflect the actual parties and the actual commission arrangement; misstating it to route value to an unlicensed person is a false declaration. Rania must decline the arrangement, inform Hashim in writing that Kareem cannot act as a broker or receive commission, and offer to negotiate the discount herself directly with the developer. She should document the refusal and escalate her manager's instruction internally. If the developer insists on involving Kareem, she should withdraw rather than sign an inaccurate Form F.
2. The developer offers to pay Rania's 2% commission only after handover, 30 months away, and asks her to accept a post-dated cheque. Advise Rania on the risk and the compliant alternative.
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A post-dated cheque from a developer is a credit risk, not a guarantee; if the developer's account is unfunded at presentation, Rania has an unsecured claim and possible bounced-cheque exposure. The compliant approach is a written commission agreement specifying amount, trigger event, and payment method, ideally paid from the developer's own funds (not buyer escrow) at the point the SPA is signed and the unit is registered. Rania should require payment on SPA execution or a bank guarantee, and should not accept commission paid out of the project escrow account, which is restricted to construction. She should also confirm the commission arrangement is disclosed in the Form F so the buyer knows who pays whom.