Calculate realty fees on amount claimed

Litigants and lawyers are unhappy with the fee structure for real estate cases in Dubai.

The establishment of special court to address pending realty issues, the formation of judicial committee to adjudicate property dispute cheques as well as the specialdecree on real estate registration should be reconsidered with respect to legal fees imposed on opening files, which is still as per Decree No1 of 1994, say lawyers and investors.

According to the decree, the fee imposed on cases of financial claims will depend on the percentage of amount claimed and should not exceed Dh30,000. But according to Law 1 of 1994, the charge on real estate litigation is 7.5 per cent if the amount claimed ranges between Dh100,000 and Dh200,000.

Meanwhile, if the amount claimed ranges between Dh200,000 and Dh300,000, the fee is calculated at six per cent of the total amount and the percentage is five per cent if the amount claimed is more than Dh300,000.

Advocates confirmed lawsuit requests by investors and buyers are related to reimbursement paybacks as down payments or premiums of booking, or termination of contracts. "The fees would be acceptable if calculated on the basis of the amount claimed, however, currently it is calculated on the value of the contract," they added.

"If the amount claimed is Dh200,000 and the contract value is Dh1m, then the fee is Dh30,000 if calculated on the contract value and not Dh15,000, according to the value of the amount claimed," advocates said.

They said because most real estate contracts are worth up to thousands of dirhams, litigation fees are always the maximum at Dh30,000.
Judge Abdul Qadir Mousa, Head of Real Estate Court, recently said that 2,656 cases were registered since the court's inception in June 2008, of which 2,566 cases had claims of more than Dh100,000, and 90 cases with claims less than Dh100,000.

Meanwhile, 784 cases were registered until September this year, of which real estate issues comprised between 15 and 20 per cent.

Similarly, lawyers complained of an increase in legal fees when investors filed more than one complaint. They said when an investor files cases comprising more than one contract, the fees pertained to the number of cases and each contract has its own fee. This is big burden on investors as the fees are always high.

This has been preventing some investors from claiming their rights, which in turn is having a negative impact on the real estate market.

Meanwhile, Dr Ahmed bin Hazim, Director-General of Dubai Courts, said: "The affected people, be they investors, litigants or lawyers, must raise the issue with the concerned legislative body."

Atef Awad, lawyer, said Dubai Government's measures to minimise the effects of the global crisis on the realty market is indeed commendable, however, more needs to be done to address problems faced by investors.

Calculation of fees on the basis ofthe contract value is exaggerated, it should be instead calculated on the value of the claim."

"As several projects have been stopped, investors fear they will lose the down payment. But they are reluctant to file lawsuits considering the exorbitant fee of up to Dh30,000 in addition to attorney's fees," he added.

Giving an example, Awad said that one of his clients stopped short of opening a file as he had 11 units in one project and he had to pay fees for each unit.

Another problem is most developers refuse to work towards an amicable solution with investors. So investors are forced to move the judiciary, he added.

Juma Al Bawardi, advocate, urged authorities to consider the situation of the real estate market as an exceptional one to gurantee the rights of all involved as provided for in Article 41 of the Constitution.

Obaid Ali Obaid, lawyer, stressed the need to review fees and said it is unreasonable to expect the buyer to bear the burden of litigation fees and attorneys' fees.

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