Dubai Property Market is flourishing at a fast pace and has been attracting a lot of foreign investment. The launch of numerous residential projects in Dubai, such as the most-talked about Mina Rashid by Emaar has set the city's off plan market in the right direction.
If you're also planning to buy an off plan property in Dubai, then make sure you know all the legal facts to avoid any hassles.
Keep reading on to make yourself aware of all the legal facts surrounding the city's off-plan market.
Legal Facts surrounding Dubai's off plan market:
The law regulating the Interim Real Estate Register came into effect in 2008. It is aimed at boosting the investor’s confidence and protection by making mandatory the pre-registration of off-plan sales with the Dubai Land Department (DLD). According to this new law, any off plan transaction that is not registered is regarded as invalid. A developer risks a court case if DLD discovers they failed to comply with the provisions of this law.
Investors are protected through the Escrow Accounts Law which requires developers selling off plan properties in Dubai to obtain permission from the DLD. Also, they are required to open and maintain a dedicated escrow account with several approved trustees.
The aim of the law is to enhance financial protection and supplement other regulations to support the agreement between the investor and the developer until the project is completed and handed over. This pre-registration system works alongside the normal registration system established by RERA.
Developers are not allowed to start a project or sell off-plan units before taking possession of the land on which the project is placed. They have to prove land ownership by depositing a concluded sale and purchase agreement at the Dubai Land Department.
Also, the developers should obtain all the necessary approvals from relevant authorities. On top of that, the developers or agents cannot complete contracts of off-plan projects in Dubai without getting relevant approvals. Any contract that is not approved is considered void. The provisions of this regulation are intended to ensure developers do not sell a property or enter into sale commitments until it is in the advanced stages.
After the project is completed and completion certificate issued, the developer is required to register it in the main Real Estate Register. This process involves transferring the title to their respective buyers. However, if the developer fails to do, the buyer can file a complaint with DLD to have the title transferred to their name.
On the other hand, if the buyer fails on the terms of the contract, the developer can notify the DLD. The department then issues a notice to the buyer which grants them thirty days to comply with the contract. If the buyer does not comply within the period, the developer can terminate the contract and return the amount paid by the buyer. However, the developer cannot deduct more than 30% of the money.
Published by Johanne Cosihan