A new law recently released by the Dubai government claims that the improved process will safeguard both the developer and the customer. The 2017 law deals with off-plan property sales in Dubai and, in particular, a new procedure that must be followed when an investor or developer violates a sales agreement.

The Dubai government has lately issued a new law that suggests t the revised procedure will protect both developer and buyer. The law of 2017 relates to off-plan property sales in Dubai and particularly deals with a new procedure following the breach of a sales agreement by an investor and developer.

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Investors that have off-plan problems choose arbitration in the following cases:


  1. Liquidated damages claims.
  2. Contract cancellation due to a delay in transferring the property.
  3. Starting a project slowly

Even if the parties have an arbitration agreement, the courts nevertheless have jurisdiction over disputes involving public property and cannot be directed to arbitration in such cases.

Termination of contracts for off-plan sales

Developer’s Cancellation

Investor Breach

According to the legislation, the developer was required to inform the Dubai Land Department of any breaches by the buyer.

Any agreement struck by the developer and the buyer must be outlined in the purchase agreement and signed by both parties.

The Department may provide an official document confirming that the developer has satisfied legal obligations, including the percentage of completion of the property, if the buyer is unable to fulfil contractual commitments or a settlement cannot be achieved.


If a developer doesn’t start building within six months of the date it was given permission to sell off-plan flats, they risk having their name deleted from the development registry.

Alternatives for Terminating the Contract

Depending on the percentage of the work that has been completed as reported by the Real Estate Regulatory Authority, the developer has a variety of options to cancel the contracts and seek remedies.

The developer has the option to keep all payments made by the investor, ask for the balance, and move forward with the project’s development.

To recoup any unpaid debt, a developer may ask the Dubai Land Department to put the property up for auction.

According to the law, the developer may keep a certain portion of the off-plan selling agreement price and reimburse the investor for any excess.

If the developer did not begin his job, he or she may only void the sale contract and deduct the sum allowed by law.

Cancellation by Investor/Developer's breach

To preserve investors’ interests and prevent delays in legal processes, the law also lays out precise criteria for the Dubai Municipal Authority to adhere to when dealing with developers when project deadlines are missed.

The investor may end the off-plan sale deal if the developer has broken the terms of the agreement. The law outlines the penalties for starting a project’s construction late or for starting it but not finishing it.

The Dubai Municipal Authority may have the right to cancel the project in certain circumstances and distribute the funds remaining in the escrow account by legal priorities.

Project cancelled by Rera

By the new Law No. 19 of 2017, the project will be abandoned if Rera decides to do so. All payments made by the buyer for the Escrow Accounts for Real Estate Development in Dubai must be refunded by the developer.