Off-Plan Contracts In Dubai Will Have New Rule

Off-Plan Contracts In Dubai Will Have New Rule

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dubai-strip A new amended Article 11 of Law No13 will be released by the Dubai Land Department. The new rule will regulate the Interim Real Estate Register in Dubai within the next two weeks. It will introduce new provisions for cancellation of contracts.

Last year in November the department issued an internal administrative circular. In the memo it gave the interpretation of the meaning and practical application of Article 11. The circular states that in case of a termination of an off-plan contract, the developer may retain 30 per cent of the contract value with the rule (30 to 70 per cent of the amounts paid) and shall be applicable to the amounts exceeding 30 per cent.

Further to this, if a contract termination is imminent, the property developer is entitled to retain the amounts paid by the buyer until the property is sold.

If the sales contract is breached by a buyer, he or she will be contacted by the department in person, either by email or mail and given 30 days to fulfill his obligations.

If he/she fails to oblige, then the developer has the right to cancel the contract and refund the sum paid by the buyer after deducting an amount not exceeding 30 per cent of the total value of the unit.

The new amendment is supposed to look out for the interests of all parties involved in regards to property development. Legal consultant for Fichte & Co,
Axel Jacob, said: “It’s no surprise that the government is now preparing an amendment to Law No13, which assumingly will bring the law closer to Real Estate Regulatory Agency’s position as expressed in its circular.

Hopefully the amendment will not only take developer’s interests into account, but also the interests of investors, whose confidence is what requires a boost in order to help the real estate market to pick up again.

The amendment has been tipped to be more sophisticated than the circular, and it would be helpful if it took into account different stages of construction progress and possible defaults on behalf of the developer in evaluating the applicable penalty amount.”

Source: Zawya