https://mp.weixin.qq.com/s/Vjr4QUcx0ESnTFvpZFkE5w

Investment and property risk

However, the delivery date of off-plan properties is affected by the progress of construction works, which may make investors or owner-occupiers become a protracted wait in the process of investing in real estate, or even go to defend their rights, and at the same time face potential investment risks.

When buying off-plan properties in the U.A.E., buyers must be aware of several key terms in the Sale and Purchase Agreement (SPA), which are as follows:

01

Delays in the handover of off-plan properties result in the rights of home buyers

A

One of the key terms is the "Completion and Risk Transfer Clause", which outlines the developer's expected completion date and allows for an extension of the period, usually 6 to 12 months, depending on the specific reasons outlined in the agreement".

"If the property remains unfinished and delivered after the extended delivery period, the SPA may be cancelled.

Additionally, if the developer fails to meet its obligations (such as failing to deliver the property by the agreed date), the cancellation of the SPA clause will give the homebuyer the power to terminate the agreement.

Typically, SPAs allow for an extension of 12 months after the expected completion date. If the property is not completed after the extension, the buyer can cancel the SPA.

02

Off-plan project completion stages and terms

Key Clause 2: "If off-plan projects reach different stages of completion, SPAs will often contain specific terms". For example, if a project is more than 80% complete, the developer may require the buyer to comply with the terms of the sales contract or keep 40% of the purchase contract value and refund the remaining amount within a specified timeframe. If the project fails to proceed for reasons beyond the developer's control, the real estate developer "may disregard the contract of sale at all, deduct the payment of not more than 30%, and refund the remaining amount to the buyer within 60 days of the resale of the property."

03

Specific provisions on the delay in the handover of off-plan properties

The Real Estate Regulatory Authority (RERA) is responsible for regulating the real estate industry, ensuring transparency and accountability by regulating developers, brokers, and projects.

B

The real estate developer must open an escrow account for each project, deposit all homebuyer payments into the account, and allow homebuyers to view the account records.

If the project is not completed, the escrow agent must protect the homebuyer's rights, including project completion or refunds.

Law No. 13 of 2008 stipulates that for the safety of home buyers, off-plan sales must be registered with the Dubai Land Department (DLD).

Administrative Council Resolution No. 6 of 2010 requires the developer to deliver the property by the agreed date, subject to the buyer's financial obligations. In the event of a delay or non-delivery, the homebuyer can seek an amicable resolution through the DLD, or take legal action to court.

Article 11 of Law No. 13 of 2018 deals with breaches of the contract of sale by home buyers, detailing the DLD notification process and the possible outcomes based on the percentage of completion of the project.

Also, if the project is cancelled due to RERA's resolution, the developer must refund all payments made by the homebuyer.

04

Buyers must do their due diligence before buying an off-plan property

Before purchasing an off-plan project, the client should verify the registration of the project with RERA online or through other channels and confirm the existence and details of the escrow account.

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