Photo: KT file
Ask: I am thinking of investing in an off-plan property in Dubai. What are my rights as an investor if the property is not delivered to me on time?
Answer: It would be advisable for you to first perform basic due diligence before signing an off-plan unit purchase and sale agreement. Buyers should visit the Dubai Land Department (DLD) and Real Estate Regulatory Agency (Rera) or visit the DLD website to verify and obtain the following information about the off-plan unit.
Yo. If the real estate project (where the unit is located) is registered with Rera.
ii. If there is an escrow account for the project and accordingly get the details of the escrow account.
III. The percentage of progress of the project and the expected completion date?
IV. If the developer is registered with Rera, and if the developer is the owner of the developable land or if there is an urban planning agreement between the owner and the developer.
v. Whether the developer has the required permissions and approvals from DLD and Rera to sell off-plan units in the relevant project.
By obtaining satisfactory details about the unit off plan, you can be sure that you are investing in a bona fide project.
With regard to your rights as an investor in terms of timely delivery of the off-plan unit, reference may be made to the provisions of Law No (8) of 2007 on Escrow Accounts for the Development of Real Estate Properties in the Emirate from Dubai. The Escrow Account Law requires 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 Account Law, which read as follows:
“A developer wishing to sell off-plan units must submit an application to DLD to open an escrow account…”
“1. An Escrow Account will be opened in the name of each real estate project and will be dedicated exclusively to the execution of said project. No embargoes may be imposed on the amounts deposited in this account in favor of the promoter’s creditors.
2. In case the developer implements multiple projects, each project must have a separate escrow account.”
Furthermore, according to the provisions of the Escrow Account Law, all payments made by investors/buyers must be deposited in the escrow account dedicated to the real estate project. This follows article (7) of the Escrow Account Law, which reads as follows:
“An Escrow Account will be opened pursuant to a written agreement between the developer and the Escrow Agent whereby payments made by purchasers of off-plan units, or by project financiers, will be deposited into a special account with the Escrow Agent on behalf of the Real Estate Development project.”
Escrow account records are also required to be available to depositors (including buyers/investors) or their representatives. This follows article (12) of the Escrow Escrow Account Law, which reads as follows:
“Depositors, or their representatives, may have access to their accounting records and request copies of these records. Representatives of official authorities may also have access to these records and obtain copies of them.”
Finally, in the unfortunate event that a project is not completed, then under the provisions of the Escrow Accounts Law, the escrow agent concerned must, after consultation with the DLD, take all necessary measures to preserve the rights of the various depositors ensuring that the project is completed and the payments made by the various depositors are returned. This follows article (15) of the Escrow Escrow Account Law which reads as follows:
“In the event of any emergency resulting in the non-completion of a real estate project, the Custodial Agent of that project must, after consultation with the DLD, take the necessary measures to preserve the rights of the depositors by ensuring the completion of the project and the refund. payments made by depositors.
In line with the above, you can note that your investments in a genuine off-plan unit in Dubai will be safe with the escrow agent, in case the developer is unable to deliver the unit to you on time. In such circumstances, you may contact DLD for further guidance.
It is also important to consider that the terms of the ‘purchase agreement’ for the off-plan unit are of great importance.
Therefore, before entering into the contract, it would be prudent on your part to ensure yourself about the terms governing project completion and time extensions, among other issues. It would also be advisable on your part to consult with a lawyer in Dubai who will be able to provide you with the necessary advice and assistance in this regard.
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