We suggest you consider one of the most pressing issues for investors in Dubai off-plan housing: can you recover the invested funds if the developer fails to meet the completion terms? The question is answered by Mario Volpi, an expert with more than 35 years of experience in real estate.
One of the main issues that erase most often concerns in real estate off-plan buyers in Dubai is how to protect their deposits, and whether it is possible to withhold the invested money, in case the developer has delayed the delivery of the project? Let us assure you at once: yes, they can. Let’s consider this aspect by studying a specific example.
Suppose you bought an apartment in Dubai directly from the developer in April 2017. Since then, you have made six installments, which add up to 30% of the value of the purchased housing. Let’s assume, you’ve also paid a 4 per cent registration fee to the Dubai Land Department. And according to your sales and purchase agreement (SPA), the estimated completion date was no later than Q2 2018, that is, June 2018. But the developer has delayed the handover, and said that the new date of delivery is the third quarter of the current year, that is, July 2019.
In this case, your contract may indicate that the developer has the right to extend the completion date for up to 12 months. Thus, your question will be: upon the expected completion date, the delay of the project’s delivery would be more than 12 months. Based on this, do you have a reason to cancel the purchase and recover the amount paid, including the DLD registration fee?
The question is answered by Mario Volpi, an expert on Dubai real estate with more than 35 years of experience:
“If you’ve paid 30 per cent of the property value, then your payment plan is supposed to be 30/70 with 70 per cent due to be paid upon completion. As a rule, the developer may delay the planned (and specified in the SPA) date of completion of the project for 12 months. And it is indicated in your SPA.
Whether you will be able to withhold the money invested so far, including the DLD registration fee, is determined by a competent judge, if you file a lawsuit against the developer. In the past, Dubai's courts were inclined to give preference to developers, but recently there has been a tendency in favor of a greater support given to investors.
The amount already paid influences the outcome of the case, and the more you had already paid, the more chances you have to cancel the purchase and recover the costs. However, if we are talking about a delay of 13 months (provided that the developer completes the project in July 2019), this additional month will not be a significant reason for canceling the purchase and giving your money back.”
However, real estate investors in Dubai are protected through Escrow accounts, which accumulate all the money invested by them until the developer reaches a certain stage in construction and only then gets full access to those funds.
In general, projects delivery delays are quite rare in Dubai, and usually for a very limited time specified in a contract, so you don’t have to worry about the project’s "freezing".
If you want to be 100 per cent sure that everything will go smoothly, without any delays from the developer’s side, when you buy an off-plan housing in Dubai, then you should do your homework and choose a reliable developer with a smooth payment plan. And IMEX Real Estate will help you find such a developer. We will also answer all the legal questions you are interested in and provide a wide range of various offers of properties to choose from. Feel free to contact us at:
Tel. in Dubai, UAE: +971(50)2528188 (Whatsapp, Viber, Telegram)
IMEX REAL ESTATE BROKER LLC
Office 2502, Marina Plaza, Dubai Marina, Dubai, UAE
Email: pm@IMEXre.com
Skype: resident69