New committee to rule on real estate sector dud cheques

PROPERTY DEALS: A new committee has been set up to settle disputes involving bounced cheques in the real estate sector. (Getty Images)

Dubai ruler Sheikh Mohammed has issued a decree to set up a judicial committee that will settle disputes over bounced cheques in the real estate sector.

The committee will settle cases related to dud cheques whether issued by the buyer to the developer or from tenants and beneficiaries of long term units, state news agency WAM reported on Thursday.

Judgments pronounced by the committee will be decisive and unchallengeable, and the committee will be granted “a set of powers in order to discharge its duties properly”, the report said.

Under UAE law bouncing a cheque is a criminal offence, which carries a prison sentence, although most instances involving small amounts are settled out of court.

A total of 544,196 cheques issued in the UAE bounced because of insufficient funds between January and May this year, according to the Ministry of Justice.

The figure is equivalent to about one in 18 of the 9.75 million cheques issued in the emirates during that time. Court records show that in Dubai almost 11,000 monetary crimes were recorded last year compared with 8,081 in 2007 and 7,550 in 2006.

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READERS' COMMENTS

BOUNCED CHEQUES
Posted by SYED QUADRI, SAFAT, KUWAIT on Sunday 8 November 2009 at 13:31 UAE time


SINCE IT IS A CRIMINAL OFFENSE TO ISSUE CHEQUES WITHOUT ADEQUATE FUNDS IN THE ACCOUNT, THEN HOW THIS COMMITTEE WILL TAKE A DECISION, FOR EXAMPLE IF SOME ONE HAS RENTED A FLAT WITH POST DATED CHEQUES AND THOSE CHEQUES BOUNCED THEN THE FLAT OWNER HAS TO GO THRU SEVERAL DIFFICULTIES TO VACATE THE TENANT BY APPOINTING A LAWYER, AND PAYING RENTAL COMMITTEE FEES AND THEN GOES ON, UNTIL THE DECISION THE TENANT STAYS IN THE FLAT FREE OF CHARGE? IN THIS CASE THE TENANT SHOULD BE PUNISHED THRU A CRIMINAL CASE ONLY NOT THRU COMMITTEES? SECONDLY, IF A CHEQUE IS ISSUED TO A DEVELOPER AND THE DEVELOPER DOES NOT HAND OVER THE PROPERTY ON TIME USING THE CONTRACT TERMS "AS DETERMINED BY SELLER" BUT KEEP ON ASKING FOR PAYMENTS WITHOUT GIVING EXACT DATE OF COMPLETION BUT USING THE FAMOUS SENTENCE "AS DETERMINED BY SELLER" THIS IS USED BY OMNIYAT AND DAMAC WHO HAS NOT DELIVERED ONE SINGLE PROPERTY ON TIME BUT TOOK OUR MONEY, LIKE OMNIYATS THE BINARY, THE GEMINI, THE PAD AND SO ON AND FOR DAMAC THE LOTUS ETC. HOW CAN THE COMMITTEE PUNISH THE CHEQUE ISSUER IF HE DOES NOT WANT TO PAY SINCE THERE ARE SO MUCH DELAYS IN HANDOVER THUS LOSING THE OPPORTUNITIES OF RENTING OR SELLING?

EVEN LAND DEPT ISSUE NOTICES TO BUYERS GIVING ONE MONTH NOTICE TO TERMINATE THE CONTRACT IF THE AMOUNTS ARE NOT PAID, WITHOUT SEEING THE DELAYS CAUSED BY DEVELOPERS THUS SUPPORTING DEVELOPERS, THIS HAS LOST THE CONFIDENCE OF BUYERS WHICH IS WHY DUBAI LOST ITS CHARM AND PRICES ARE DECLINING, HOW CAN WE INVEST MONEY WHEN THE DEVELOPERS TAKES FULL ADVANTAGE OF BUYERS, LIKE OMNIYAT FOR THE SQUARE PROJECT ARE ASKING THE BUYERS TO PAY DHS 17,000 PER YEAR FOR MAINTENANCE AND LAND CHARGES (SOMETHING NEWLY ADDED) FOR A STUDIO FLAT WHILE THE RENTAL VALUE FOR A STUDIO IS DHS 25,000 IS THIS FAIR? WHEN QUESTIONED THEY DICTATE TERMS RUDELY THREATENING TO CANCEL THE CONTRACT EVENTHOUGH WE HAVE PAID FULL AMOUNT FOR THE LEASED PERIOD? WHEN APPROACHED TO RERA THEY SAID GO TO DUBAI COURT, NOW WE HAVE TO SPEND HUGE LEGAL FEES ETC TO SORT OUT.

I SINCERELY HOPE THE GOVT OF DUBAI WITH THEIR SUCH GOOD REPUTATION START TO SUPPORT BUYERS FAIRLY OTHERWISE THE MARKET WILL NEVER BOOM AGAIN.

UNHAPPY INVESTOR

Bounced cheques
Posted by Brigitte Beck, Dubai, UAE on Sunday 8 November 2009 at 10:10 UAE time


Why do we need another committee that is 'unchallengeable', if all we need are clear laws? If the law clearly states that developers have the obligation to deliver a project exactly as outlined in the contract at the exact time and what the penalties are if they do not, then the issue of paying for something that has not been delivered would not arise. What has prevented the government from issueing such laws BEFORE the first villa /apartment was sold? It is high time for the government to stop procrastinating and protecting 'their own'. It is alarming to have committees replace the courts.

Positive step
Posted by Ahmed on Saturday 7 November 2009 at 22:28 UAE time


I believe it's a very positive move and it could help an endless amount of cases, even if it is a temporary fix and limited to real estate. Previously, creditors could, by threat of imprisonment, unduly demand payment that may no longer be legally owed.

I hope this development at least leads to settlements being negotiated in a more rational and equitable way by providing a more balanced platform. However, the competence of the committee in handling such cases remains to be seen.

Bounced Cheques
Posted by Sinead McMenamin, Dubai on Saturday 7 November 2009 at 21:48 UAE time


From what I understand, the tribunal will adjudicate in cases where a cheque issued to a developer has bounced. However it is not clear whether the tribunal will also have jurisdiction to hear cases where a purchaser has written a blank cheque to a bank to cover interest under construction etc and where that cheque bounces due to the interest in question being much higher than originally anticipated due to the property being delayed or the investor being in a dispute with the developer ?

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