Property investors in Dubai can seek refund and damages

Developer’s failure to complete or handover a property within a certain timeframe from date specified in the sales contract, deliberate intention of defrauding an investor or altering the specifications of the unit without obtaining requisite permission will soon allow investors to recover all the amount by them.

The draft law regarding the protection of the real estate investor in Dubai was released on Wednesday (June 20) to get feedback, for the first time, from people involved and concerned with real estate investment in the emirate. The department will be receiving feedback until June 29.

However, it is not known when the law will be actually implemented. But in April, Sultan Bin Mejren Director General of Dubai Land Department, said the law was expected to be implemented by end of June.

Emirates 24l7 broke the news in April that property investors will be eligible for cancellation of their contracts and may seek full refunds if the real estate developer fails to deliver the unit or services within a specific timeframe.

According to Article (36) of the draft law, the following circumstances shall entitle intending investor to terminate the contract for sale and recover all amounts paid by it:

1. If the developer fails to complete the real estate unit or fails to hand over possession to the Intending Investor within [ • ] months after the date specified in the contract for sale as the estimated or agreed date for handover whether or not the contract for sale includes a provision allowing the developer to delay completion and handover in any circumstances;

2. If the real estate unit as built is materially different from the real estate unit’s specification as specified under the contract for Sale including a decrease of 30 per cent or more in the net area.

3. If the developer deliberately and with the intention of defrauding the intending investor fails to comply with the real estate unit’s specification or the specifications of the common areas and facilities under the contract for sale with the result that some are missing at the time of handover.

4. If the developer alters the specifications of the real estate unit without obtaining the required permit from the competent authority to such change in violation of the applicable rules and regulations as a result of which the intending investor is likely to suffer material loss or harm.

In any such case the intending investor shall be entitled to repayment of all amounts paid by it to the developer.

As per the proposed law, an intending investor is any person who enters into a transaction involving the sale of a real property or real estate unit or real estate right to him. This expression includes an intending tenant [under a long term lease] and any person who shall take a mortgage or provide [Islamic] finance in relation to a real property.

If Article (36) shall not apply, the draft law states that under Article (37) the following circumstances shall entitle an intending investor to payment of compensation:

1. Breach of any warranty or undertaking contained in the contract for sale by the seller and the broker.

2. Misrepresentation by the developer or investor or broker.

3. Specifications in violation of the contract for sale after obtaining an expert’s report to that effect.

4. Delay for a period more than one month and less than one year.

The intending investor, the draft law proposes, shall be entitled to recover compensation from whoever of the developer, investor or broker shall have caused the loss. If more than one is responsible every such person shall be [jointly and severally] liable for and bound by the information and data provided to the intending investor prior to the sale, whether such information was provided by means of a letter in writing, announcement or email.

Under Article (15), the proposed law puts the onus on the developer to provide to the buyer will correct information in relation to the common areas within the Jointly Owned Property.

The article states: “The developer to provide to an Intending Investor all accurate and correct information in relation to the common areas within the Jointly Owned Property and the provision of the infrastructure and utilities required to serve it and the stage of completion of each. Moreover, the developer may not without the approval of the department, after announcing a project to public, make any major changes to the infrastructure or the common areas and facilities which have been specified on the plans for the project approved by the department upon sale or in the [declaration of sale] [contract for sale] which would harm the interests of the intending investor.”

N. Naidu, an Indian, who has bought three properties in Dubai, welcomed the move by the department to seek feedback from the public.

“It is good that the land department is seeking feedback from investors. I have gone through the draft… I think it is quite a detailed one, but am certain that the department will incorporate more suggestions from investors.

“But it has to seen how well and effectively is the law, when issued, implemented and whether projects, that have never gone ahead or stalled for years, are included within the ambit of the new law,” he added.

F Harris, a British citizen, who has invested money in Sports City project, hopes the new law will allow him to get a refund from his developer.

“There was not a ray of hope left… I had given up on my investment. Now that the investor protection law is on the verge of being finalized, I hope I can recover my money which is still left in the escrow account,” he stated.


Dubai investors to get full refund if developers default on handover

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