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.

Settling the Off-Plan Disputes Amicably

Investors and developers can settle the disputes when they face arrears or any other breach of contract amicably. The opportunity of such a settlement can give relief to some of the financial pressures by offering an extended grace period to pay the arrears while assuring the investor will still be able to purchase the property. Property lawyers in Dubai assure the best outcomes if you take their assistance in such a case.

Arbitration as a Way Out

  • Investors opt for arbitration for off-plan disputes in the matters that include:
  •  Claiming liquidated damages.
  •  Cancellation of contract for delay in handing over the property.
  •  Delay in starting a project

Public property in dispute cannot be settled by arbitration. In such a case, courts continue to have the authority, even if there is an arbitration agreement between the parties.


Also Read:Legal Options for Property Handover Delays in UAE

Termination for Off-Plan Sales Contracts

As per property lawyers in Dubai, termination for off-plan contracts can be due to many reasons. It can either occur by the developer or the investor. In either case, the guidance is given below.

Cancellation by Developer

It is quite obvious that a developer may cancel the contract when there is a breach of contract by the investor.

Breach by Investor

The law stated that in the event of breach by the buyer, the developer must notify the Dubai Land Department. If the developer and buyer reached an agreement, it must be included in the purchase contract and signed by both parties. If the buyer is not able to fullfill contractual duties or a settlement cannot be reached, the Department may issue an official document stating that the developer has fulfilled legal obligations, stating the percentage of completion of the property. A developer may be removed from the development register if it fails to commence construction within six months of the date on which it has received approval to sell off-plan units.

Multiple options for Cancellation of the Contract

Developer have different options to cancel the contracts and seek remedy depending on the percentage of work completed as listed by the Real Estate Regulatory Authority The developer can Retain all the sums paid by the investor, request the investor to pay the remaining sums, and continue with the development of the project. A developer may issue a request to the Dubai Land Department to sell the property to collect any outstanding balance. The developer can retain a certain percentage of the off-plan sale agreement price and return any excess amount to the investor that is determined in the law. The developer might lag the sale contract solely if the developer did not initiate his work and deduct the amount suggested as per law.

Cancellation by Investor

The other possibility for the disputes that occurred in the contract can be due to the breach of contract by the developer. It is usually observed by the property lawyers in Dubai that the investor cancels the contract then.

Breach by the Developer

Besides, the law clearly states guidelines for the Dubai Municipal Authority to follow in dealing with developers when there are delays in meeting project targets, which is to ensure that investors’ rights are protected and legal proceedings are not delayed. The investor can terminate the off-plan sale contract when there has been a breach of the contract by the developer. The law determines the final results or consequences of delays in starting the construction of the project or failing to complete the construction. In such a case, the Dubai Municipal Authority may be entitled to cancel the project and distribute the amount kept in the escrow account by the priorities set out in the law. Under the new law determination, developers will be prohibited from collecting registration fees from investors. And developers will be allowed to charge administrative fees. These are generally approved by the Dubai Municipal Authority.

Cancellation of Projects by RERA

According to the new Law no 19 0f 2017, if the project is canceled by a resolution from RERA, the developer must refund all payments made by the buyer. This would finally concern Escrow Accounts for Real Estate Development in Dubai.