Amendments to Interim Property Registration Law in Dubai

Amendments to the law on interim property registration have been introduced by Sheikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.

The amendments to the interim property registration law aim to protect real estate investors and developers, by specifying policies and procedures that will be applied in cases of breaches of sale contracts by the buyer.

The new interim property registration law specifies that in such an event, the developer must notify the Dubai Land Department (DLD). Once the notification is received, the DLD must give a 30-day notice to the purchaser.

The notice must be dated and given in writing, and delivered to the purchaser directly by registered mail, electronic mail or any other method specified by the Department.

If the developer and buyer reach an amicable settlement, it must be added to the sale contract and signed by both parties. However, if the buyer fails to fulfil contractual obligations or accept an amicable settlement, the DLD may issue an official document stating that the developer has fulfilled his legal obligations, specifying the percentage of completion of the property.

Once the developer has received this document from the DLD, the developer is free to take any of the following actions:

If the percentage of completion is over 80 per cent, the developer can ask the purchaser to abide by the terms of the sale contract, confiscate the paid amounts and obligate the buyer to make the remainder of the payment specified in the contract or otherwise request the DLD to auction the property to collect the remaining amount.

The buyer is also obligated to pay any expenses arising from the auction. The developer may also void the sale contract solely, retain up to 40 per cent of the sale contract’s value and return the remaining amount to the buyer within a year of the date of contract cancellation or within 60 days of the date of re-selling the property, whichever is earlier.

If the percentage of completion is between 60 per cent and 80 per cent, the developer may void the sale contract solely, retain not more than 40 per cent of the sale contract’s value and return the remaining amount to the purchaser within a year of the date of contract cancellation or within 60 days of the date of re-selling the property, whichever is earlier.

If the percentage of completion is less than 60 per cent, the developer may void the sale contract solely, retain up to 25 per cent of the sale contract’s value and return the remaining amount to the buyer within one year of the date of contract cancellation or within 60 days of the date of re-selling the property, whichever is earlier.

If the developer did not initiate the work in the property for reasons beyond his control and without negligence, the developer may void the sale contract solely, deduct not more than 30 per cent of the paid money and return the remaining amount to the purchaser within 60 days of the date of re-selling the property, whichever is earlier.

The new law also states that if the project is cancelled by a resolution from Real Estate Regulatory Authority, the developer must refund all payments made by the buyer, pursuant to the law concerning Escrow Accounts for Real Estate Development in Dubai.

The procedures prescribed in the new law are not applicable to land sale contracts, which remain subject to provisions stated in the sale contract.

This new law annuls any other legislation that contradicts or challenges its articles and is valid from the date of its publication in the official gazette.

Overseas property investors purchasing real estate in Dubai should be aware of the law changes made.