Dubai: What are investor’s rights if off-plan property is not handed over on time?

It is advisable to first conduct basic due diligence prior to signing an off-plan unit sale and purchase agreement

Question: I am planning to invest in an off-plan property in Dubai. What are my rights as an investor if the property is not handed over to me on time?

Answer: It would be advisable for you to first conduct basic due diligence prior to signing an off-plan unit sale and purchase agreement. Buyers should visit the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (Rera) or visit the DLD’s website to check and find out the following information about the off-plan unit.

ii. If there is an escrow account for the project, and accordingly obtain the escrow account details

iii. The percentage of completion of the project and the expected date of completion?

iv. If the developer is registered with the Rera, and whether the developer owns the development land or if there exists a development agreement between the owner and the developer.

v. If the developer has the required permits and approvals from DLD and Rera to sell units off-plan in the relevant project.

Upon obtaining satisfactory details about the off-plan unit, you may assure yourself that you are investing in a bona fide project.

With regard to your rights as an investor in terms of the timely handover of the off-plan unit, reference may be made to the provisions of Law No (8) of 2007 Concerning Escrow Accounts for Real Estate Property Development in the Emirate of Dubai. The Escrow Accounts Law makes it mandatory for a developer to open and maintain an escrow account for each real estate project proposed to be developed by the developer. This follows the provisions of Articles (6) and (9) of the Escrow Accounts Law, which read as follows:

“A developer who wishes to sell units off-plan must submit to the DLD a request to open an Escrow Account…”

“1. An Escrow Account shall be opened in the name of each property project and shall be exclusively dedicated for the purpose of implementing that project. No attachment may be imposed on the amounts deposited in this account in favour of the creditors of the developer.

2. In the event of multiple projects implemented by the developer, each project must have a separate Escrow Account.”