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Sheikh Mohammad Bin Rashid Al Maktoum, Vice president and Prime Minister of the UAE and the ruler of Dubai has passed a new Escrow Account Law ^[2] in 2007 that is set to gain control of the apparent developer mess that affects funds and delays.

The new legislation states that developers have to guarantee the correct use of funds for new project launches. With the late lack of confidence of investors in the market and the projected rise of UAE mortgage rates ^[3] toward the end of 2006, the real estate regulatory body (RERA) has taken a big interest in watching the action closely to protect the integrity of new developments.

With the new rule, Escrow accounts must be managed by banking or financial institutions who are approved by the DLD (also referred to as Escrow agents).

Escrow accounts can only be opened with the approval of architectural drawings and funding by the DLD. This protects project funds to ensure that the project won’t be forced for close down due to bad management.

Investors can be assured that what they are buying is in fact real and that there won’t be any nasty surprises as a result.

Another bonus is that each project will be handled from its own account. This guarantees safety for investors and only attracts developers of the highest integrity. The whole process is also recorded via written contracts to ensure compliance with the Escrow Account Law.

This law has already affected the new level of trust investors have in the UAE and has resulted in a near triple growth in the UAE real estate market ^[4] from the year before.

While the general news has been taken with a grain of salt by most real estate developers, officials urge buyers and investors to take responsibility to make sure that law has indeed been adhered to. They are advised to research both the developer as well as the development to give them peace of mind.