Mohammed bin Rashid amends law on Interim Property Registration in Dubai

In his capacity as Ruler of Dubai, the UAE's Vice President and Prime Minister, His Highness Sheikh Mohammed bin Rashid Al Maktoum, has issued Law No. (19) of 2017 partially amending Law No. (13) of 2008 on Interim Property Registration in Dubai. The amendments aim to protect real estate investors and developers.

The new Law amends Article (11) of Law No. (13) of 2008, which specifies policies and procedures that will be applied in cases of breaches of sale contracts by the buyer. The Law specifies that in such an event, the developer must notify the Dubai Land Department (DLD). Once the notification is received, the Department 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. If the buyer fails to fulfil contractual obligations or accept an amicable settlement, the Department may issue an official document stating that the developer has fulfilled his legal obligations, specifying the percentage of completion of the property.

After the developer receives this document from the Department, the developer is free to take any of the following actions: If the percentage of completion is over 80%, 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 Department 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 upto 40% 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% and 80%, the developer may void the sale contract solely, retain not more than 40% 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%, the developer may void the sale contract solely, retain up to 25% 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% 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.

According to the new Law, if the project is cancelled by a resolution from RERA, the developer must refund all payments made by the buyer, pursuant to Law No. (8) of 2007 concerning Escrow Accounts for Real Estate Development in Dubai.

Pursuant to the new Law, the procedures prescribed in Article (11) of Law No. (13) of 2008 are not applicable to land sale contracts. Such a sale remains subject to provisions stated in the sale contract.

This Law annuls any other legislation that contradicts or challenges its articles and is valid from the date of its publication in the Official Gazette.