Considering buying an off-plan property in the UAE?
The initial price might be attractive, but construction delays are a common concern. Luckily, UAE law offers protections for buyers in these situations. This guide will break down your rights and the steps you can take to protect yourself.
The Sale and Purchase Agreement (SPA) you sign is crucial:
It outlines important details regarding completion timelines and your rights in case of delays. The contract typically outlines a projected completion date with an allowed extension, usually 6-12 months, for specific reasons listed in the agreement. If the property isn’t finished after the extended deadline, you may be able to cancel the SPA and recover your invested funds. It’s important to remember that while these clauses are standard inclusions in most SPAs, regulations regarding off-plan property purchases can vary by emirate.
The terms applicable to you in case of delays may also depend on how far along the project is in its completion stages. If the project is significantly complete (over 80%), the developer may enforce the contract and require you to finalize the purchase. Alternatively, they may allow you to terminate the agreement but retain up to 40% of the purchase price while returning the rest within a specified timeframe. If the project is halted for reasons entirely beyond the developer’s control, the developer can cancel the contract, withhold a maximum of 30% of the paid amount to cover their expenses, and refund the remaining amount to you within 60 days of reselling the property.
Dubai offers a well-defined legal framework specifically for off-plan property purchases, providing additional buyer protections:
Dubai has a strong legal framework for real estate transactions, including Law No. 8 of 2007 (Escrow Accounts), Law No. 13 of 2008 (Interim Real Property Register), and Executive Council Resolution No. 6 of 2010. These laws and regulations are overseen by the Real Estate Regulatory Agency (RERA). Mandatory for all off-plan projects in Dubai, escrow accounts hold buyer payments until the property is finished and handed over. This ensures your funds are secure and cannot be used by the developer for other purposes until they fulfill their obligations. Off-plan sales must be registered with the Dubai Land Department (DLD) for buyer security. RERA ensures developers comply with regulations and protects buyer interests. If there’s a delay or non-delivery of the property, you can seek solutions through the DLD. The DLD can mediate disputes and help find an amicable resolution. If necessary, you can also file a lawsuit to enforce your rights under the SPA.
Before you commit to buying an off-plan property, it’s crucial to take some precautions to protect yourself:
Thoroughly research the developer’s reputation and track record for completing projects on time. Investigate the project details, including the planned amenities and surrounding area. Confirm that the project is registered with RERA and that an escrow account exists for the project. Don’t sign the SPA without a thorough review. Get legal advice to understand the contract, especially compensation clauses for delays or non-delivery. Consider using a lawyer specializing in real estate law. They can assist you with drafting, negotiating the SPA, and performing due diligence on the project and developer.
Remember, you have the right to negotiate compensation for delays in the SPA. If necessary, you can also potentially terminate the contract if the developer fails to meet their obligations. With legal backing, you can file a lawsuit or approach the DLD for assistance if the developer breaches the terms of the agreement. By understanding your rights and taking precautions before buying, you can minimize the risks associated with off-plan property purchases in the UAE.