Undoubtedly, some time must pass in order to understand how this or that law actually works. Do not forget that the United Arab Emirates is currently on the path to establishing its regulatory framework that could protect and secure investors and create the best conditions for developers.
Let's look into the recent past. On August 31, 2008 Law No. 13 was published, Article 11 of which was applied if the buyer, in accordance with the contract of sale of real estate, violates one of his obligations. After 30 days from the date of the buyer’s notification, the Dubai Emirate’s Land Department has the right to continue the well-known procedure for terminating the Sale and Purchase Agreement between the developer and the buyer and, according to paragraph 2, if the buyer does not find a way to protect himself under the agreement, the developer will be forced to terminate the agreement and withhold no more than 30% of the purchases already made by the buyer on the date of termination of payments. This, of course, caused numerous questions from developers, who motivated their dissatisfaction with the fact that the 30% mentioned in the law would not be enough to offset the costs incurred by them. Thus, if the buyer paid 5% or 10% as a deposit for a particular property, then in accordance with the Law, in case of termination of the contract of sale, 30% of the deposit to the developer is barely enough to cover the so-called "pocket" expenses, such as, for example, paying a certain percentage to sales agents. As a result, we have a situation in which the developer is forced to either accept the loss, which is unacceptable, or file a lawsuit against the buyer in court.
The next step was the adoption of a newsletter dated November 10, 2008, issued by the Dubai Land Department. The mentioned letter contained one single purpose - clarification of Article 11. This time, the developer was entitled to withhold 30%, but from the total value of the Real Estate Purchase and Sale Agreement plus 30% of all payments made. Thus, upon termination of the contract, the developer was entitled to withhold your investments and make final payment with the buyer only after the resale of this property.
The information letter, however, applied only to sales contracts concluded after the entry into force of Law No. 13, and in case of termination of the contract concluded before the entry into force of the law, reference is made to the terms of the contract itself.
The letter, unlike Article 11, supported the developers more, and its publication caused a mixed reaction among investors, since the letter did not have the status of an official amendment to Law No. 13, which made it possible for buyers to question the links of developers to this letter. Thus, there is an urgent need to adopt a more clear, official document supplementing Article 11, which ultimately became Law No. 9. This Law applies to all real estate purchase and sale contracts, regardless of the date of their conclusion, whether until or after the entry into force of the Law.
Thus, there is an urgent need to adopt a more clear, official document supplementing Article 11, which ultimately became Law No. 9. This Law applies to all real estate purchase and sale contracts, regardless of the date of their conclusion, whether until or after the entry into force of the Law.
Dates have remained unchanged. After 30 days from the date of notification of the buyer, the developer is entitled to terminate the contract and withhold the amount depending on the stage of construction. Thus, if the developer fulfilled his construction obligations by at least 80%, then all the money paid by the buyer will be withheld, and the developer also has the right to demand that the buyer repay the full value of the property specified in the contract. If the construction reached 60%, then 40% of the total cost of the contract will be withheld. If construction began, but did not reach 60%, then 25% is retained, and finally, if the construction of the object is not announced, the developer retains 30% of the amount already paid for the property you purchased. Compensation for the balance must be made within 1 year, in accordance with Article 11, paragraph 4.
In conclusion, I would like to note that, in general, the adoption of the law shook the balance between the rights of developers and buyers. Some people think so. Others believe that such changes will have a beneficial effect on the real estate market. How it will actually be, time will tell.
When deciding on the acquisition of real estate, the main factors are the location, layout, decoration and, of course, the cost of the selected property. As a rule, no one thinks that, first of all, you need to be able to navigate the laws that regulate sales transactions and protect your rights. Timely contacting professionals who are well-established in the real estate market will help you get complete information about projects and prices, as well as the necessary legal support, which, no doubt, will significantly speed up the purchase process, save your time and money, and save your nerves.
