Defaulting property investors in Dubai given cancellation notices

Mizin, the master developer of Remraam project in Dubailand, has served the final termination notice on 45 purchasers, who have failed to pay several of their installments.

Majority of the purchasers have not paid anywhere between four and nine installments, with some failing to pay the final installment before handover.

The notice, issued in local dailies, states: “In accordance with law number 13 of 2008 as amended and its executive regulations Dubai Land Department (DLD), hereby notifies the purchaser to rectify the default within 30 days as of the date of publication of the notice.

“If you fail to pay the amount due within the specified period, DLD shall take the necessary legal proceeding pursuant to clause no (11) of the aforesaid.”

(Pic Courtesy: DPG)

Scroll down to read: Article 11 of Law No (9) of 2009)

Mizin is now merged with Dubai Properties Group, the real estate arm of Dubai Holding.

Originally, Remraam was to be a 23.5-million square foot project, featuring studios, one-, two- and three-bedroom residences priced between Dh355,000 and Dh1.4 million. But during the global economic slowdown and rising default by investors, the project size was reduced.

In a statement mailed to Emirates 24|7 in July 2012,  DPG said Remraam comprises 1,549 units of studios, one, two and three-bedroom apartments.

Developers that Emirates 24|7 contacted said the only way to reach these defaulters, who cannot be found, is by publishing the notice in newspapers.

“Generally, we give our purchasers one, two or even three notices after which we give them the final notice through DLD.
“We don’t publish these notices in newspapers, but if we can’t reach the purchaser, we have put such adverts.

“If they don’t pay after the 30 days, the department cancels their contract,” a private developer said, asking not to be named.

Under Law No 13 of 2008 and Law No9 of 2009, developers must seek approval from DLD to cancel a sales transaction for default (non-payment).

Only the department's notices of cancellation are considered official.

Purchasers, however, have the right challenge the notice. The DLD mediation committee attempts to resolve the matter, but if the parties fail to reach any settlement, the investor can move court.

Law No (9) of 2009 amending certain provisions of Law No (13) of 2008 regulating the interim real estate register in Dubai

Article (11)

1. In the event the purchaser shall be in default of any of the terms and conditions of the contract for the sale of a real estate unit entered into with the developer, the developer must notify the department of such default. Thereupon, the Department shall give the purchaser, by hand, registered post or e-mail, a 30-day notice to fulfill his contractual obligations.

2. If at the end of the notice period stipulated in the preceding paragraph the purchaser has not fulfilled his contractual obligations, the following provisions shall apply:

a. in case the developer has completed at least 80% of the project, the developer may keep the full amounts paid and request the purchaser to settle the remaining amount of the contract price. If this was not possible, the developer may request that the property be auctioned in order to collect the remaining amounts due to it.
b. in case the developer has completed at least 60% of the project, the developer may revoke the contract and deduct up to 40% of the purchase price of the real estate unit stipulated in the contract.

c. in case of projects where construction commended but did not reach 60%, the developer may revoke the contract and deduct up to 25% of the purchase price of the real estate unit stipulated in the contract;
d. in case of projects whereat construction has not yet commenced for reasons beyond the developer’s control without any negligence or omission on its part, the developer may revoke the contract and deduct up to 30% of the total amounts paid by the purchaser.

3. For the purposes of paragraphs (c) and (d) of this clause 2, the term "construction" shall refer to cases where the site of the project is handed over to the contractor and the construction works have commenced in accordance with the designs approved by the concerned authorities.

4. For the purposes of paragraph (b), (c) and (d) of the foregoing clause, the developer shall return the amounts due to the purchaser within a period not exceeding one year from the date of revocation or within a period not exceeding sixty days from the date of resale of the real estate unit, whichever comes first.

5. Notwithstanding the provisions of clauses 1 & 2 of this Article, the agency may, following a grounded report, decide to cancel a real estate project, in which case the developer must return to the purchasers all the amounts paid by them in accordance with the provisions of Law No (8) of 2007 concerning Escrow Accounts of real estate developments in the emirate of Dubai.

6. The provisions contained in this Article shall not be applicable to contracts of sale of lands where sales were not made off-plan as they shall remain governed by the provisions contained in the contract entered into between the two parties thereto.

7. The provisions of this Article shall apply to all contracts entered into prior to the entry into force of this Law.

Notice of cancellations served

- Investor receives a notice of cancellation, giving him 30 days to comply.

- During that time, the investor can register his "objection" with the Legal Affairs Department of the DLD.

- In response to the objection, DLD will schedule a meeting with the developer, investor and a representative of the department in an effort to achieve a settlement.

- If the settlement is not achieved, after 30 days, the notice of cancellation expires and the cancellation becomes official.

- At this point, the DLD will send a notice of termination. If the DLD makes a ruling in favour of the investor, it will notify the developer and expect them to comply with that decision.

 

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