The UAE Civil Transactions Law (Federal Decree-Law No. 25 of 2025) (the new Civil Code) took effect on June 1, 2026, repealing the 1985 Civil Code that had governed contractual relationships in the UAE for the past four decades. As with the other reforms in this series, the new Civil Code does not apply within the Abu Dhabi Global Market, which continues to operate under its own common-law framework.
Read on its own, it looks like a generic contract-law update. Read against Reforms 1 to 4 we have covered, it functions as a fifth layer sitting underneath all of them: every Abu Dhabi Real Estate Centre (ADREC) diligence step, every off-plan reservation, every disclosure statement to an owners’ committee, and every lease renewed under the rent freeze is also, now, a negotiation or a contract subject to the new Civil Code’s rules on good faith, disclosure, and interpretation.
The clearest example is off-plan sales. Reform 2 described the administrative decisions that now govern escrow withdrawals, cancellation, and refunds: a regulatory layer sitting on top of the sale contract.
Articles 121 and 122 of the new Civil Code add a second, contract-law layer underneath it: a developer or agent who knows information of decisive importance to a purchaser’s decision to reserve or buy (e.g., a delayed construction milestone, a change to the escrow structure, a shortfall against the disclosed cost estimates) must disclose it, and deliberate non-disclosure of such information is expressly deemed bad faith under Article 121.
The consequences depend on whether a contract was concluded. Where negotiations break down before a contract is signed, Article 121 provides that a party who negotiated or terminated negotiations in bad faith is liable for the other party’s actual damage. However, compensation does not extend to expected profits or lost opportunities unless the parties have agreed otherwise.
Where a contract was concluded, Article 122 adds a separate and potentially more significant route: a party who fails to disclose information of decisive importance to the other’s consent exposes the contract to annulment, with the parties restored to their pre-contract position. That obligation cannot be limited or excluded by agreement; any clause attempting to do so is void.
In the off-plan context, this means a developer or agent who withholds material information before a purchaser signs faces not only a damages claim under Article 121 but the risk that the sale contract itself is unwound under Article 122. Reservation forms and off-plan sale contracts were previously reviewed mainly for compliance with the escrow and cancellation mechanics; they now also need to be checked for whether the disclosure made at reservation stage would satisfy Article 122, because a gap here creates a second route to liability that sits alongside, not instead of, the administrative decision framework.
The same logic extends to jointly owned property governance. Reform 3 already requires developers to give purchasers a detailed disclosure statement before signing, with liability for materially inaccurate or incomplete disclosures for two years from transfer.
Article 122’s disclosure duty overlaps with that statutory obligation and, unlike the administrative decision, cannot be limited or excluded by contract; any clause attempting to do so is void. This means a disclosure statement drafted only to satisfy the administrative decision’s checklist may not go far enough if it omits something a purchaser would consider decisive but which the checklist does not expressly require.
The rent freeze in Reform 4 creates its own good faith exposure. As the negotiation duty under Article 121 covers how negotiations are conducted and terminated, a landlord who initiates renewal discussions in a way designed to obscure the 0% cap, or a tenant who withholds information relevant to a proposed re-letting, risks being found to have negotiated in bad faith regardless of whether a renewal is ultimately signed. Renewal notices and broker instructions should be drafted with this in mind, not only with the ADREC compliance position described in Reform 4.
A further provision matters once a deal is signed rather than negotiated. Article 221 requires a contract to be performed in accordance with good faith, which reaches into the handover, staged payment, and completion mechanics described in Reform 2, and into the management company reporting and service charge obligations described in Reform 3; a developer or manager technically complying with a payment schedule or reporting deadline while acting in a manner inconsistent with good faith is now exposed on a second front.
As the new Civil Code is not retroactive, existing contracts remain governed by the 1985 Civil Code unless they are amended, renewed, or restructured, at which point the new regime may begin to apply to that document.
That timing point is not theoretical here: leases are being renewed en masse because of the rent freeze, and off-plan contracts are being amended because of the escrow and cancellation changes described above. A document renewed or amended this year can therefore cross into a different legal regime than the one it was signed under, without anyone deciding that it should.
What this means for your next transaction
Do not review the new Civil Code in isolation. Map it onto the deal in front of you:
- Check whether reservation and off-plan disclosures satisfy Article 122 as well as the administrative decision checklists in Reform 2.
- Check whether jointly owned property disclosure statements go beyond the Reform 3 checklist.
- Check whether rent freeze renewal conduct could be read as bad faith negotiation under Article 121.
- Check whether a lease or off-plan amendment this year pulls the document into the new Civil Code under its transitional rules.
The bottom line
What connects these five reforms is not their subject matter but their timing. Each closes a gap that only became visible once the market had already scaled past it: a real estate sector too large and fragmented to be coordinated informally, escrow rules written for a smaller off-plan market, jointly owned property governance written before towers filled up, a rental cap that assumed steady-state growth, and a Civil Code that predated modern deal structures by four decades. Abu Dhabi is not building a more cautious market; it is building the legal infrastructure that a market of this size and speed now requires.
That has a direct consequence for how transactions should be run from here. A document, checklist, or approval process built for the pre-2025 market will not fail obviously or immediately, but it will quietly assume away risks that are now allocated by statute, administrative decision, or Civil Code default rule: a disclosure duty that cannot be excluded, a registered rent that overrides a commercial agreement, an escrow condition that determines when cash is actually available. The cost of catching this after signing is materially higher than the cost of catching it before, and it lands earlier in the timetable each time a new reform layers onto the last.
Series recap
Part 1 covered ADREC’s role at the centre of the transaction ecosystem and the importance of beginning diligence with official records and verification tools. Part 2 examined off-plan escrow controls, regulated delivery, cancellation, compensation, and refunds. Part 3 turned to the governance of jointly owned property, service charges, owners’ committees and the quality of the asset after handover. Part 4 addressed the temporary 0% rent cap, the importance of the registered lease, and the effect on leasing and valuation. Part 5 added the new Civil Code’s good-faith, disclosure and performance obligations beneath each of those transactions.
The reforms allocate risk at different points in the life of a property transaction, so a gap in one area can affect funding, delivery, completion, cash flow, asset value, or the enforceability of the parties’ expectations in another.
Whether the next matter is a launch, acquisition, financing, lease renewal, or asset-management decision, the safest approach is to build the full checklist into the timetable from the outset and revisit it whenever the project, contract, or market position changes.
