Question: I am planning to invest in an off-plan property in Dubai. How are my investments protected by law?
Answer: Pursuant to your queries, as you are planning to invest in an off-plan property located at Dubai, the provisions of the UAE Civil Transaction law, the Dubai local law and executive regulations are applicable.
In Dubai, Article 3 (1) of the Law No. 13 of 2008 regulating the Interim Real Property Register in the Emirate of Dubai provides that:
“Any disposition that occurs in respect of any real property unit sold off-plan will be entered in the Interim Property Register, and any sale or any other legal disposition that transfers or restricts ownership or any ancillary rights will be void unless entered in that register.”
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In reference to the above, Oqood is a digital platform for registering off-plan property initial sale agreements in compliance with applicable real estate regulations managed by the Real Estate Regulatory Agency (RERA), the Dubai Land Department (DLD). Under the process, the developer first registers the project and obtains the necessary approvals, following which the buyer’s details and sale agreement are recorded with DLD. Upon completion of the registration, an Oqood certificate is issued as evidence of the purchaser’s rights in the off-plan property, while RERA oversees the process to ensure regulatory compliance and prevent fraudulent activities.
Further, a purchaser and a developer (seller) enter into a Sale Purchase Agreement (the ‘SPA’) pertaining to the property which is sold on off plan basis. The SPA will include clauses pertaining to purchase price, completion date, compensation for breaches, force majeure terms etc., and therefore, the relationship between the purchaser and a developer (seller) is governed in accordance with the agreed terms and conditions of SPA. The SPA will be implemented in accordance with the clauses mentioned in it with good faith.
This is in accordance with Article 246 (1) of the Federal Law No. (5) of 1985 On the Civil Transactions Law of the United Arab Emirates (the ‘UAE Civil Transactions Law’), which states, “1. The contract shall be implemented, according to the provisions contained therein and, in a manner, consistent with the requirements of good faith.”
Furthermore, in the event of breach of any of the clauses of the SPA, an aggrieved party(s) may be entitled for compensation as mentioned in the SPA or as decided by a court which has jurisdiction in Dubai. This is in accordance with Article 295 of the UAE Civil Transactions Law, which states, “Damages will consist of a money payment. Upon request of the victim, however, the judge may, in accordance with the circumstances, order that the damage be made good by restoring the parties to their original status, or by performing, in compensation, a specific matter connected with the prejudicial act.”
Additionally, if there is any dispute with a seller (developer), a purchaser may approach the DLD to settle the matter amicably. This is in accordance with Article 14 of the Executive Council Resolution No. 6 of 2010 Approving the Implementing Bylaw of Law No., 13 of 2008 Regulating the Interim Real Property Register in the Emirate of Dubai (the ‘Executive Council Resolution No. 6 of 2010’), which states:
“Where any dispute between a developer and a purchase, the DLD may undertake conciliatory efforts to preserve their contractual relationship and may propose any solutions it deems appropriate to achieve this objective. Where the developer and the purchaser reach an amicable settlement, that settlement shall be documented in a written agreement executed by the developer and the purchaser or their respective representatives. Upon approval of that agreement by the DLD, it shall become binding on both parties.”
Further, based on the complaint made by a purchaser if the DLD is satisfied that the developer (seller) has committed breaches of the SPA it may report the same to competent authorities for further actions or decisions. This is in accordance with Article 13 of the Law No. 13 of 2008 regulating the Interim Real Property Register in the Emirate of Dubai, which states:
“Where it is established to the satisfaction of the DLD that the developer or broker has committed any act or omission in violation of the provisions of this law, or any other legislation in force, the Director General of the DLD must prepare a report on the same and refer the case to the competent entities for investigation.”
Based on the aforementioned provisions of law, if there is a delay by your developer (seller) in handing over the apartment to you as agreed by developer (seller), you may initially approach the DLD and file a complaint against the developer (seller) before approaching a court. Alternatively, you may directly approach a court which has jurisdiction in Dubai to file a civil case against the developer (seller) seeking compensation for the delay in handover of the apartment to you. The court shall decide whether you are entitled to compensation based on the provisions of the SPA.
Disclaimer: The information provided above is intended for general guidance and does not constitute legal advice. It is recommended to seek formal legal counsel.
Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.
