UAE Inheritance Laws & Creative Succession Planning - Submitted to The International Academy of Trust and Estate Law (TIAETL), 2012

INTRODUCTION

A recent census puts the population of the United Arab Emirates (UAE) at approximately 8 million, 10% of whom are UAE nationals, the majority of those being Sunni Muslims.  A small minority are Shia Muslims.  90% of the population are expatriates, coming from over 190 different countries.

In the UAE, the source of law is Sharia.  Rules of inheritance find their source in the Quran and the Sunna (the Prophet’s own decisions and rulings), and are to a large extent codified.

The principal statutes governing inheritance laws in the UAE are the Civil Code (Federal Law No. 5 of 1985, as amended), and the Personal Status Law (Federal Law No. 28 of 2005).

1.GENERAL RULES OF INHERITANCE IN THE UAE

The general principles of Sharia inheritance are as follows:

  • The Sharia rules apply to determine succession to the estate of a Muslim regardless of where he may be domiciled or habitually resident in the world;

  • The mandatory shares of a male under Sharia are twice that of an equivalent female heir; for example, if a husband dies leaving children, his surviving wife (or wives jointly) inherit(s) one-eighth of his estate.  If a wife dies leaving children, her surviving husband inherits one-quarter of her estate.  There is, however, no equivalent restriction to lifetime gifts or dispositions into a Waqf (a type of lifetime trust);

  • Fathers and mothers, if still living, are recognized as natural heirs.  This derives from the Sharia principles of protection of the weak and reverence for parents;

  • Non-Muslims do not inherit from Muslims and vice versa.  A reference to "heirs" in the context of Sharia inheritance principles is to the Muslim relatives of a deceased Muslim who are entitled to share in the estate under those principles.   Thus, a Christian wife does not inherit from her Muslim husband unless she converts before his death;

  • Adopted and illegitimate children are not a recognized class of heirs;

  • There is no distinction made for the purposes of Sharia law succession between real estate and movable assets;

  • Co-ownership of property does not carry any automatic right of survivorship;

  • There is no requirement for a will unless a testator or testatrix wishes to dispose of part of his or her estate in a specific manner that deviates from (not contravenes) the Sharia rules.  A testator/testatrix can bequeath up to a maximum of one-third of his or her estate to a person (or organization, eg. a charity) other than his or her natural heirs.  Where there are natural heirs, however, under the majority Sunni view (repeated in Article 243 of the Personal Status Law[i], a testamentary gift to a natural heir is invalid unless and to the extent that the other natural heirs agree to it;

  • Sharia does not have a general principle of "clawback", present in other forced heirship systems, which invalidates or brings into account lifetime gifts made in favour of those who have forced heirship rights.  The exception to this is in relation to gifts and other transactions made in the last twelve months of the deceased's life if they were made under the apprehension of death from a terminal illness.  This is known as the "death illness" rule or "Marad al-Maut".[ii]

A couple of examples of how the applicable inheritance rules work in different situations, are shown as follows:

If a Muslim man dies, and the following survive him:

  • A wife and children:

1/8 of the estate passes to his wife

7/8 of the estates passes to the children collectively:

If only boys, the 7/8 is divided equally;

If boys and girls, the boys receive double the share of the girls;

If only girls, the girls receive collectively ½ of the 7/8 and the brothers of the deceased receive the other ½.

 

  • A wife and no children:

1/8 of the estate passes to the wife;

7/8 of the estate passes as follows:

If the deceased's mother, brothers and sisters survive him:

1/3 to the mother;

2/3 to the siblings (boys receive double the girls' share).

 

If mother survives, but there are no siblings:

½ to the mother;

½ to the other children of the deceased's father.

 

If the mother is deceased but brothers and sisters survive, 100% is divided between siblings of the same mother as the deceased (boys receiving double the share of girls).

2.UAE RULES IN RELATION TO THE SUCCESSION OF PROPERTY OWNED BY NON-MUSLIM EXPATRIATES

The laws of the UAE take into account the fact that not all the residents of the UAE are Muslims.

Article 17 of the Civil Code provides that:

(1)  Inheritance shall be governed by the law of the legator at the time of his death.

(2)  Property rights located in the territory of the State which belong to an alien having no heir shall become vested in the State.

(3)  The substantive provisions governing wills and other dispositions taking effect after death shall be governed by the law of the state of which the person making such dispositions is a national at the time of his death.

(4)  The form of wills and other dispositions taking effect after death shall be governed by the law of the state of which the person making such disposition is a national at the time the disposition is made, or the law of the state in which the disposition is made.

(5)  Provided that the law of the United Arab Emirates shall apply to wills made by aliens disposing of their real property located in the State.

Non-Muslim expatriates who draft a will have the option to determine the laws that will govern that will. They may elect either (i) Sharia or (ii) the laws of their country (determined by citizenship as opposed to residency or domicile) to govern the succession of their estates in the UAE apart from real property which shall be governed by the law of the UAE.

Non-Muslim expatriates who die ab intestate are deemed to have opted for Sharia rules of inheritance. In this case, the inheritance rules that apply to Muslims will apply to non-Muslims.

Dealing with real estate and the joint ownership of assets, however, may sometimes be challenging.

3.RULES APPLICABLE TO UAE REAL ESTATE OWNED BY NON-MUSLIM EXPATRIATES

There are conflicting views as to the rules applicable to real estate located in the UAE. It is only relatively recently that foreigners have been able to own UAE real estate.  In 2002, H. H. General Sheikh Mohammed bin Rashid (prime Minister of the UAE and Ruler of Dubai, announced that 100% freehold ownership of certain properties in Dubai would be available to all nationalities.  However, no law specifically dealing with the inheritance of real estate in these circumstances has been passed as yet. 

In the meantime, the position is governed by the Civil Code and Personal Status Law.  While the provisions of section 17(4) of the Civil Code provide for the application of Sharia, some argue that the provisions of the Personal Status Law are more liberal and allow for the application of the law of the deceased's nationality to apply if he or she has so elected in his or her Will.   However, the Personal Status Law does not make specific reference to immoveable property/real estate in foreign ownership as the Civil Code does, which leaves a potential conflict between the two laws.  Legal opinion in the UAE is divided on this issue, but the Dubai land department has adopted the view expressed in the Personal Status Law, and applies the law of the will when dealing with the estate of non-Muslim expatriates once the will has been confirmed by the Dubai courts.

As a result, if the testator opts for his or her national law to govern his or her will, the law of the country of the testator will apply to the real estate owned by the testator and located in the UAE.

Nevertheless, to avoid the need to consider the potential conflicts of law in this area, and, practically, to avoid delays in the transfer of ownership of real estate which may arise whilst administration of the estate is finalized, non-Muslims are generally advised to hold UAE real estate through a foreign corporate vehicle.  In this way, on the death of a shareholder in a foreign company holding UAE real estate, it is the shares which pass, under the law of the shareholder's home jurisdiction, rather than the land itself.

Often, the shares in the foreign holding company are held in an offshore trust for the benefit of the persons intended to be beneficially interested in the underlying land. This takes both the underlying land and the company shares out of the deceased's estate, obviating the need for a local grant of representation, and avoiding the potential delay inherent in the application of the UAE administration rules.

The offshore holding structure is generally regarded as preferable to the disposition of UAE property by will creating testamentary trusts over that property.  Although a statute governing the creation of private family wealth trusts has recently been introduced in the Dubai International Financial Centre (DIFC), as also in Bahrain and Qatar, these are still very new concepts in the UAE and the GCC generally.  Sharia law and the federal codes of the UAE still do not specifically recognize the common law trust.  Although trust concepts are gaining ground in the region, the Dubai Land Registration Law (Law No. 7 of 2006) does not make provision for the registration of title on the basis of ownership in trust rather than absolute ownership of the title holder.  Although there are moves to change this and introduce such rules, for the time being, ideally, the potential complication of attempting to register title to land on the basis of ownership in trust should be avoided.

4.JOINT OWNERSHIP OF ASSETS

Although there are provisions in the Civil Code (Articles 1152 – 1159)[iii] dealing with the ownership, management and administration of jointly owned property, it is still the case that the joint ownership of assets is a delicate issue, in the sense that, as with Sharia law, the laws of the UAE do not provide for any general principles of survivorship corresponding to the common law joint tenancy principle. 

This can give rise to particular problems for expatriates who may not realize that there is no such principle.  For example, UAE administration rules can often result in a UAE bank account, whether in the deceased's sole name or owned jointly with a spouse or family member, being frozen on the death of the account holder, or one of them, until a grant of representation to the estate is made.  Re-activation of such accounts may take several months whilst the bank waits for probate to complete, and for a court order determining the outcome of the account.  This may become a major nuisance for the family of the deceased who are prevented from using any of the funds in the account until a court judgment is given.

To avoid such problems, it is advisable for family members (i) to hold individual bank accounts with cross-powers of attorney to allow them to access and operate the bank accounts of other family members, and/or (ii) to hold bank accounts overseas that would give the surviving members of the family access to sufficient funds to manage their affairs whilst probate goes through.

5.BUSINESS INTERESTS – IS THIS JOINT OWNERSHIP?

Joint ownership is particularly relevant in relation to business interests in the UAE and throughout the Muslim Arab region where family businesses tend to be jointly owned as a result of the impact of the rules of inheritance.  Such inheritance laws cannot be considered in isolation from their historical, social and family business context.

People often tend to forget that life in the GCC precedes the introduction of Sharia, and that before the Quran was introduced life was governed by a certain code of governance.

Over the years, tribal structures have evolved, and so did the social fabric and the manner in which wealth is passed from one generation to the other.

The Sharia rules of inheritance are immutable: a Muslim cannot opt out of them. They come into force upon the death of the de cujus and apply to his/her entire estate.

As they stand, the Sharia rules of inheritance tend to fragment the ownership of assets among the heirs, which is a matter that frustrates business families and disrupts their preference for the continuity and the sustainability of their businesses in the hands of future generations.  Given that a Muslim man may have more than one wife, each of whom may have a number of children, it is not unusual for a Muslim family to contain different factions whose interests and values are not necessarily aligned.  As the "Patriarch" gets older, there may be a generation or even two between his older and younger children, creating a wide disparity in their position in the family and of their views on and understanding of the family business and their role, or possible future role, within it.

The private sector is mostly family run, and business families represent the major employer in the country.  In an attempt to protect family legacies and avoid the fragmentation of estates following the death of a patriarch, potentially leading to the eventual destruction of businesses, the legislator in the UAE has introduced a number of provisions that open the door for some creative structuring.  For example, Article 1248 of the Civil Code[iv] and Article 304 of the Personal Status Law[v] provide that where an estate includes an agricultural, industrial or commercial business, and the heirs cannot agree on its future, then the business should be appropriated to the heir who requests it if he is also most capable of running it.  This is on the condition that the business is valued and this value is offset against the recipient's share of the estate.  If all the heirs are equally capable of managing the business, it is to be allocated to the highest bidder provided that their bid is not less than a "fair price" for such an enterprise.

Moreover, separate provisions in the Civil Code (Articles 1183 – 1186)[vi] deal specifically with business families and establish a regime for the ownership and management of a joint family business, providing for how and in what circumstances co-owners may realise their investment and setting out the requirements for and restrictions on a sale of a share in a business to a third party.

6.CREATIVE SOLUTIONS TO STRUCTURE JOINTLY OWNED FAMILY PROPERTY

The statutory provisions outlined above, although helpful, are not sufficient in themselves to solve the potential problems inherent in the family structures, whether specifically in relation to a family business or the wealth of the family more generally.

To do this, an holistic approach is required focusing on three areas of family structuring – succession planning, governance (both family and corporate) and wealth preservation and regeneration.  Structuring solutions which are commonly used and successful in the West are not necessarily workable amongst UAE or other Middle Eastern families, as their specific cultural and religious values may not be accommodated by such solutions.

Particular scenarios which are common in Middle Eastern family businesses include a founder and patriarch who remains at the head of the business and family into his late years, not uncommonly, into his 90s.  He will have started his life in a very different environment and is likely to have built his business from virtually nothing either single-handedly or with the assistance of a small number of faithful employees.  As a result, the management of the business is likely to be highly centralized. 

Although he may be keen to hand over the reins, it is often the case that patriarchs are concerned that their children are not ready to take over from them.  Partly, this may be because they recognize that their children have not experienced the same hardships and testing circumstances they themselves endured.  In addition, their children are likely to have been educated in the West and the patriarch will often be concerned that they do not share his values.  On their side, the children may be frustrated that they are not being given a level of responsibility in the business commensurate with their abilities and ambitions.

As discussed above, intra-family tensions are likely in situations where the patriarch has multiple wives and sets of children who do not necessarily share the same aims and values.  There is often a general lack of communication resulting from these divisions, but also resulting from an inherent cultural respect between family members, particularly from children to their parents, which prevents them from airing any perceived grievances or concerns.

It is common for there to be no succession plan set out by a patriarch in relation to the business and no clear career paths within the business for different members of the family.

This lack of direction tends to lead to different members of the family using the business and its resources for their own enterprises without considering the need for central communication.  When this extends to personal guarantees being given by family members using the business as collateral, it creates potential vulnerability for the business.  Ad hoc incorporation of companies  for different business ventures also makes it very difficult to keep track of what is owned by the business and where.

Family offices

In trying to resolve these issues, the establishment of a family office is an increasingly popular method of creating a structure to manage family and business issues.  Before doing so, however, it is important to recognize that financial wealth plays only one part (albeit an important one) in the wealth of a family as a whole.

A good starting point for assessing the full scope of "family wealth" is the definition set out by Jay Hughes, which includes the following four aspects:

  • Social Wealth

  • Human Wealth

  • Intellectual Wealth and

  • Financial Wealth

 

Social Wealth can be broken down into two categories. The first is social responsibility fostered by the family which includes philanthropic, religious and cultural stewardship.  It is supported by shared family values and a dedication to serving and giving to those in need.  The second aspect is the value attached socially to the family name, which is particularly important in the Gulf as a result of its tribal roots.  A comparison could be drawn with the Western concept of "brand image" and the harder a family works to build on the strength of their name and its status in their society, the longer its legacy will survive.

Human Wealth arises from the individuals who make up a family.  Traditions and stories passed down generations add to the sense of identity and direction of a family and this shared awareness of the history of a family provides it with a strength and resilience in more difficult times.

Intellectual Wealth can be defined as the collective experience, education, knowledge and wisdom acquired by the family over time which can provide guidance and inspiration to rising generations.  It enables a family to lead, take decisions, resolve conflict and evolve out of difficult times.

Financial Wealth is essentially the moveable and immovable property owned by the family.  It can be both the key to and lead to the demise of the other aspects of family wealth.  The family business may be the largest component of the family's financial wealth and, for this reason, may be considered by the family to be the area which requires most protection from adverse factors.

Having established that family wealth is much more than just the family business revenue stream, this needs to be factored into the design of a family office.  The analysis of the components of family wealth makes it clear that the family business should not be at the top level controlling the family office structure but, instead should be placed at a lower level contributing to the maintenance of the family office together with other sources of revenue, such as private equity and investment banking profits.

In its place, at the top level of the structure, must be a system of family governance.  Such systems may vary depending upon the individual needs of the family, but should incorporate policies ensuring the fair treatment of all family members and include a process for decision-making involving group participation and consensus-building.  Buy-in from all involved ensures the success of the process.

A mechanism for managing and resolving conflicts is also an essential part of any family governance system.

Modern family offices are increasingly becoming wealth –generating centres in their own right and, as such, require specialized professionals to manage them.  One of their roles is likely to be the training and nurturing of future generations enabling them to take over the reins of the family business, where appropriate, and to manage their share of the family wealth in all senses.

The family office provides a recourse to family members to assist them in carrying out their own endeavours, both business and personal, without the confusion and potential risk inherent in this being carried out on an ad hoc basis via the family business.  As the younger generations mature and develop, they will often branch out and may establish their own family office structures to assist them with this.  However, the original family office will continue to act as a support for the entire extended family as and when necessary.

The formalization of a family governance system through a family office structure enables every family member regardless of their generation and abilities to reap the benefits of this wealth in all its forms.  A structure is in place which enables them to achieve their ideas and ambitions without the need to access the family business for funds and assistance.  At the same time, that same structure also provides protection and rejuvenation for all aspects of family wealth, not least for the reputation and financial strength of the underlying family business.

Trusts

Once the overriding family office/family governance structure is in place, other property-holding vehicles and structures may be established to assist with the holding and transition of wealth in line with the patriarch's plans for the family's future. 

In Western common-law jurisdictions, the trust has long been a primary vehicle of choice for dynastic planning structures, enabling wealth to be accumulated and then distributed when, in the eyes of the settlor and/or the trustees, the potential beneficiaries are mature enough to manage it successfully.

Trusts have been gaining a foothold amongst Middle Eastern families in recent years, often for the purposes of holding their foreign wealth, whilst these families have been content for (or resigned to) their property in their home countries continuing to pass under Sharia law.

However, the increasing wealth and sophistication of these families and the concerns which the patriarch often has with regard to the readiness of his children and/or grandchildren to manage great wealth devolving to them on his death, have altered their views with regard to the need for additional planning structures.  Even if a patriarch is broadly happy with the principles of Sharia inheritance and the shares it allots to family members, he may nevertheless wish to retain control over the time at which his heirs receive those shares. 

Thus, in many ways, the introduction of common law trusts by the DIFC and other Middle Eastern jurisdictions, which also encompass Islamic Trust concepts, address the concerns of such patriarchs perfectly.  The new laws and regulations in the DIFC co-exist with traditional civil law and Waqf concepts of the UAE and create a hybrid legal system under the jurisdiction of the DIFC. 

The challenges which such a system faces, however, are inherently cultural and are the same as those which have for years been faced by those proposing offshore trusts to UAE and other Middle Eastern patriarchs.  There are many different aspects of those challenges but they can be reduced to one overriding issue – a reluctance to cede ownership and control over wealth to a third party other than on a temporary basis.

This reluctance is not unique to Middle Eastern patriarchs and is shared by most wealthy individuals from civil-law based jurisdictions where the severing of legal and beneficial ownership of assets is not a familiar concept.  Even for individuals from jurisdictions where such property-ownership structures are common, there is often a struggle over the idea of losing control and ownership of assets built up over many years, particularly where this is in favour of third party professionals.  It is this last point which has fuelled the growing popularity of the private trust company or PTC and is the reason why laws have been enacted in the DIFC to enable PTCs to be established so that the patriarch and his family and trusted advisors can between them continue to manage the family's wealth even after the assets have been settled in trust. 

Whether the new laws and trusts will be successful, however, will depend on a number of factors, not least concerns about the reliability and stability of the jurisdiction itself and its laws.  The legal systems of many GCC countries including the UAE are developing at a rapid pace, but a much more informal, traditional and discretionary system is still well within living memory for many older patriarchs.  Whilst many of the new laws being introduced, particularly trust laws, remain largely untested in the UAE courts, there is a reluctance to place assets in such structures until their resilience has been proved.  For this reason, offshore trusts based in traditional trust jurisdictions are unlikely to be superseded by local trusts as the structure of choice for the wealth of UAE and other Middle Eastern families, at least for the foreseeable future.

7.PRACTICAL STEPS FOLLOWING A DEATH IN THE UAE

Hopefully, during the lifetime of the patriarch appropriate structures will be established to ensure the smooth transmission of wealth down the generations following his death.  Nevertheless, following his death there will still be practical steps to take with regard to the registration of his death, burial and the administration of the deceased's personal estate. 

Registration of a death and burial

A death in the UAE must be registered with the nearest police station to the deceased's last place of residence.  If he died in hospital, the hospital will provide a death notification which can be taken to the police station.  If not, the police will provide a forensic report with regard to the cause of death within 3 to 7 days.  A death certificate must then be obtained attested by the Ministry of Health, the ministry of Foreign Affairs and the Department of Naturalisation and Residency.  If the deceased is an expatriate, the Embassy of his home country must be informed of the death to register it, provide a No Objection letter and cancel his passport.  There is often a charge for this.   If the body is to be transported to a non-Arab country, the death certificate will also need to be translated into English. 

The death certificate must be taken to the police station for the police to issue three letters for releasing the body from the mortuary, embalming the body and transporting it to the airport (in the case of a repatriation). 

At this stage there are three options.  The body may be cremated, which, in Dubai is only possible if the deceased had a valid Dubai visa.  A cremation permit must also be obtained from the municipality and a fee for the cremation ground will also be required.  Alternatively, the body may be buried.  In Dubai, the cemetery at which such a burial will take place will depend upon the religion and the nationality of the deceased.  Finally, the body may be repatriated to the country of the deceased.  In certain circumstances, the body may be embalmed in advance of repatriation but if the deceased had a contagious disease, embalming prior to repatriation is not possible.

Administration of an estate

In the UAE, administration of an estate is governed by Book 5, Articles 275 – 312 of the Personal Status Law and Articles 1219 – 1261 of the Civil Code.  These are very similar in their terms.

Both laws assume that the deceased is Muslim and it is the heirs entitled under Sharia law who are involved primarily in the disposition of the estate.

The UAE court is required under Articles 277 – 278[vii] to confirm the appointment of a personal representative named by the deceased, or it will appoint one if none is named or chosen unanimously by the heirs.  The heirs will often choose one of them, or appoint a third party.

If the personal representative is authorized by the court to receive remuneration, this is payable from the estate, as are other expenses.  Any such costs take effect as a lien on estate property under Article 281[viii].

The personal representative, once confirmed, is required to take possession of and liquidate the local estate under the supervision of the court (Articles 277 – 281)[ix].  He is obliged to ascertain the debts due to and owing by the estate under Article 287[x].  Within three months of the grant of representation, he will invite the deceased debtors and creditors to submit their claims to him. He will collate all such data and submit to the court an inventory of the assets and liabilities of the estate (Article 288)[xi].

Claims on the estate are given the following order of priority (1) burial costs; (2) debts; (3) legacies; and (4) forced heirship claims.  This order is set out in Article 275[xii].

The costs of preparing the deceased for burial and, subject to the court's approval, interim maintenance pending final distribution of the estate for any heir in financial need, should be met by the personal representative from the estate.

Under Article 294.1[xiii], liabilities of the estate are to be met first by using debts payable to the estate, cash and other movable property, but if these assets are insufficient to discharge all the debts, real property may be realised.  Sale of assets should be by public auction under the supervision of the court, unless otherwise agreed by the heirs and if there is a public auction the heirs may bid for items being sold (Article 294.2)[xiv]. All claims by the deceased’s creditors are stayed until completion of this process (Article 292.2).

Article 299[xv] states that, once the expenses, debts and legacies have been satisfied, the remaining estate property devolves on the heirs in accordance with their entitlement under Sharia law.

8.CONCLUSION

The framework created by the UAE Inheritance Laws, supported by creative wealth structuring solutions along the lines of those discussed above should ensure that the wealth created by patriarchs in the UAE continues to accumulate for the benefit of their families in the future, avoiding the common scenario most feared by wealthy families of its dissipation within three generations.

 

With careful stewardship and training of the younger generations, the important cultural and family traditions associated with the region can also be maintained to ensure that the accumulation of financial wealth enhances rather than impedes the flourishing of family wealth in all its dimensions.

 

 

Walid S. Chiniara

 

 

 

 

 

 

[i] Testamentary gifts

 

Article 243:

The will is enforceable within the limit of one - third of the testator’s estate , after paying the rights thereon and is valid beyond this third , within the limits of the share of the major heir who accepted it.

[ii] Death Illness

 

Article 1260:

(1)  Any legal act done by a person in a terminal illness of which the intention1 is to make a gift shall be regarded as a disposition to take effect after the death, and the provisions governing wills shall apply thereto, by whatever name the act may have been called.

(2)  The heirsof the disponor must prove by all means that the disposition was made by their legator2 during the terminal illness. No instrument3 of disposition may be relied on as against the heirs unless the date thereof is officially proved.

(3)  If the heirs prove that the disposition was made by their legator during a terminal illness, the disposition shall be deemed to have been made by way of voluntary disposition4 unless the person to whom the disposition was made proves the contrary, or if there are special provisions to the contrary.

_________ 1 maqṣūd
2 muwarrith
3 sanad
4 tabarruʿ

[iii] Ownership

 

Article 1152:

Without prejudice to the provisions relating to shares in an inheritance, each heir shall, if two or more acquire ownership of a thing by virtue of one of the ways by which ownership may be acquired without splitting (farz) the share of each of them in it, be joint owners (sharik) and the shares of each of them shall be counted as equal in the absence of any evidence (dalil) to the contrary.

 

Article 1153:

(1)  Each of the joint owners in the property may dispose of his share as he wishes without the consent of the remaining joint owners, on condition that the rights of the other joint owners are not harmed.

(2) If the disposition is of a discrete part of jointly owned property and that part does not, at the time of the division (farz), fall to the lot of the disponor, the right of the disponee shall as from the time of the disposition be transferred to the part devolving on the disponor by way of division, and if the disponee did not know that the disponor did not own the property disposed of separately at the time of the contract, and he shall also have the right to avoid3 the disposition.

 

Article 1154:

A co-owner in joint ownership may not dispose of his share without the consent of the other owner if the property has mixed and integrated.

 

Article 1155:

(1)  In the absence of any agreement to the contrary the [right of] management of jointly owned property shall vest jointly in the co-owners.

(2)  If one of the co-owners undertakes the management without any objection from the remainder, he shall be deemed to be their agent.

 

Article 1156:

(1)  The wishes of the majority of the co-­owners as to the management of the property shall be binding upon them all, and a majority shall be determined by the value of the shares.

(2)  If the co-owners do not agree, they may elect a manager and may lay down rules for the management and enjoyment of the property which will apply to all of the co-owners and their successors, whether general or special, or any one of them may apply to the judge to take such steps as are necessary for the preservation of the property, and to appoint a manager over it.

 

Article 1157:

(1)  Co-owners who own at least three quarters of the co-owned property may decide, in order to enhance the benefit of that property, to make basic1 changes and to alter the purpose2 for which it was intended3 beyond the scope of ordinary management, provided that they notify the remainder of the co-owners of their decisions by official notice4, and any one of them who objects5 shall have the right to make an application to the judge within two months from the date of the notification.

(2)  The judge may, upon application being made to him, and if he agrees with the decision of that majority, make a decision accordingly and order the taking of such measures as he thinks fit, and he may in particular decide that the dissenting co-owner be given a guarantee securing payment of such compensation as may be due to him.

 

 

Article 1158:

Any co-owner shall have the right to take steps to preserve the co-owned property, even without the agreement of the remainder of the co-owners.

 

Article 1159:

The costs of management and preservation of the co-owned property, any taxes payable thereon, and all other expenses arising out of the co-ownership or which are payable on the property shall be borne by all of the co- owners in proportion to the shares of each.

 

[iv] Section dealing with the Delivery and division of the assets of the estate.

 

Article 1248:

If the assets of the estate include property which is exploited agriculturally, industrially or commercially, and is properly to be regarded as an independent economic unit, then, in the event that the heirs do not agree that it should continue to be so used and there is no third party right subsisting over such property, it must be allocated in whole to that heir who requests it if he is the person most capable of dealing with it, on condition that the value thereof is determined1 and deducted from the proportion of such heir in the estate, and if all of the heirs are equally capable of managing it, it shall be allocated to such one of them as gives the greatest value, but provided that it shall not be less than the fair price2.

1taḥdīd
2 thaman al-mithl

[v] Personal Status Law Chapter Three Delivering and Dividing the Estate Property

Article 304

If the estate property comprises an agricultural, industrial or commercial enterprise that is considered an independent entity of others and the successors fail to agree on operating it any further and with which no right of a third party is connected, such enterprise shall be appropriated in its entirety to the successor who asks for it if he the most capable of handling it provided that its value shall be determined and deducted from his share in the estate. If the successors' abilities to handle the enterprise are equal, it shall be appropriated to the successor who offers the highest price provided that it shall not be less than that of a similar enterprise.

[vi] Regime for the ownership and management of a joint family business

 

Article 1183 provides, as follows:

"Members of a single family all having a common business or interest may agree in writing to establish a family ownership, and such ownership may consist either of an estate which they have inherited and which they have agreed to place in whole or in part in family ownership, or of any other property known to them which they have agreed to bring into such ownership."

 

Article 1184:

"(1)  It shall be permissible to agree to the establishment of family ownership for a period not exceeding 15 years, but provided that each co-owner may apply to the court for leave to withdraw his share from such ownership prior to the expiration of the period1 agreed upon, if there is strong justification for that course.

(2)  If there is no fixed period laid down for the said ownership, each co-owner may withdraw his share therefrom after the expiration of six months from the day on which he gives notice to the other co-owners of his intention to withdraw his share."

 

Article 1185:

"(1)  The co-owners may not require that the property be divided up so long as the family ownership remains in existence, and no co-owner may dispose of his share to an outsider to the family save by the unanimous consent1 of the other co-owners.

(2)  If an outsider to the family acquires the ownership of the share of one of the co-owners with his consent or if that happens compulsorily, he shall not be a co-owner in the family ownership save by his consent and the consent of the remainder of the co-owners."

 

Article 1186:

"(1)  The owners of a majority of the shares in a family ownership may appoint one or more of their number to manage the co-owned property, and the manager may effect over the family property changes in the purpose1 for which the co-owned property was intended2 in such a way as to enhance the means of enjoyment of such property, in the absence of an agreement to the contrary.

(2)  The manager may be dismissed in the same manner in which he was appointed, and the judge may likewise dismiss him on the application of any co-owner if there is a strong reason justifying such dismissal."

[vii] Administration of an estate

 

Article 277:

The procedures for liquidation of the estate are the following :

1 - In case the decedent did not appoint an administrator for his estate , any of the concerned persons may ask the judge to appoint an administrator unanimously chosen by the heirs from among them or from others and in case they fail to reach such an agreement, the judge shall chose one after hearing the heirs’ statements .

2 - Special provisions shall be complied with if there is among the heirs an unborn fetus, a fully incapacitated or a heir lacking capacity or an absentee.

 

Article 278:

Should the decedent appoint an administrator for his estate, the judge must , upon request of one of the concerned persons , ratify this appointment but the administrator may ask to be excused from such nomination.

[viii] Article 281:

 

1 - The administrator of the estate shall, after his appointment, take delivery of the estate’s assets that he shall undertake to liquidate under the supervision of the judge. He may claim a remuneration to be fixed by the judge.

 

[ix] Article 277:

The procedures for liquidation of the estate are the following :

1 - In case the decedent did not appoint an administrator for his estate , any of the concerned persons may ask the judge to appoint an administrator unanimously chosen by the heirs from among them or from others and in case they fail to reach such an agreement, the judge shall chose one after hearing the heirs’ statements.

2 - Special provisions shall be complied with if there is among the heirs an unborn fetus, a fully incapacitated or a heir lacking capacity or an absentee.

Article 278:

Should the decedent appoint an administrator for his estate , the judge must , upon request of one of the concerned persons , ratify this appointment but the administrator may ask to be excused from such nomination.

Article 279:

Upon request of one of the concerned persons or of the public prosecution or even without any request , the judge may dismiss the administrator and appoint another whenever there is a justification for this decision.

Article 280:

1 - The court shall enter in a special register the orders of appointment or of ratification of administrators , in case they are appointed by the decedent , or their dismissal or withdrawal.

2 - This entry shall produce its effect on those who deal with the heirs as concerns the real estates of the succession.

Article 281:

1 - The administrator of the estate shall, after his appointment , take delivery of the estate’s assets that he shall undertake to liquidate under the supervision of the judge . He may claim a remuneration to be fixed by the judge.

2 - The estate shall bear the liquidation expenses which shall have the priority given to judicial expenses.

[x]Article 287:

1 - The administrator of the estate shall invite its creditors and debtors to submit a statement of their rights and of the debts owed by them , within a period of two months as of the date of publishing this notice.

2 - The notice must be affixed on the bulletin board , of the court of the last domicile of the decedent as well as the court within whose jurisdiction all or most of the estate’s assets are located , and be published in a daily paper.

[xi] Article 288:

The administrator of the estate has to deposit with the court which ordered his appointment , within three months from the date of his appointment , an inventory statement of all the rights and dues of the estate as well as an assessment of the value thereof and notify the concerned persons of such deposit through registered mail with acknowledgment of receipt.

The administrator may ask the court to extend this period should he have a justification for such request.

[xii] Article 275:

Rights are attached to succession ; some have precedence over the others according to the following order

1 - Burial expenditures.

2 - Payment of the decedent’s debts due to God or to human beings.

3 - Execution of wills.

4 - Distribution of the balance of the succession on the heirs.

 

[xiii] Article 294.1

The administrator of the estate shall pay its debts from the rights collected , the cash money included , the price of the chattels comprised therein and , in case they fall short , then from the price of the real estates

[xiv] Article 294.2

 Chattels of the estate and its immovable properties shall be sold by auction and in accordance with the procedures and within the delays provided for forced sales in the Law of Civil Transactions, unless the heirs agree otherwise. In case the estate is bankrupted, the approval of all creditors should be secured on the manner agreed upon by the heirs who have , in any case , the right to participate in the auction .

[xv] Article 299:

Subsequent to the fulfilment of the estate’s obligations , the balance of its assets shall devolve to the heirs , each according to his legal share

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