Investor has right to access escrow records

Investor has right to access escrow records. (AP)

Opening of an escrow account does give the investor the right to examine the account's records, according to legal experts.

However, it is almost impossible to access as banks and developers are unwilling to disclose details.

An analysis of rules governing escrow accounts in Dubai by four property lawyers has revealed there is no public record of a developer being removed from the Land Department's registry for default on construction schedule.

The lawyers cited Article 17 (b) of the escrow law which states that a developer shall be cancelled from the register of developers (prepared by the Land Department) if a developer does not commence construction within six months of the date from which it was granted approval to sell the off-plan unit. Article 17 (b) does not apply where the developer has an "acceptable excuse".

Shahram Safai, Partner, Afridi & Angell, said: "No occasion has been published in which a developer's name was cancelled from the register of developers for not starting construction within six months. Such cancellations may not have taken place; certainly the phrase 'acceptable excuse' can be very broadly defined."

While the lawyers were in agreement that escrow does heavily protect investors rights, they said it was the responsibility of the investor to consider the "viability" of the project before investing.

The existence of an escrow account, also, does not automatically mean a project will be completed.

Ashraf Sayed, Associate, Real Estate, Hadef & Partners, said: "Dubai Law No8 for the year 2007 on the matter of escrow accounts for real estate development was issued to regulate developers to safeguard purchasers, money in respect to off-plan purchases. Unfortunately, off-plan property buyers sometimes misunderstand what this means and it does not guarantee the completion of the project. If a buyer chose to invest in a bad project that cannot be delivered due to the project's viability then it is possible the escrow law is unable to help him."

 

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.

 

Comments

Comments