EXCLUSIVE: Investors should use force majeure to withhold payments – RERA

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(ITP Images)

(ITP Images)

Investors in construction projects in Dubai in which developers are blaming delays on force majeure (an act of God) should withhold payments for the same reason, Marwan bin Ghalaita, CEO of Dubai real estate watchdog RERA, has said.

He added Dubai’s real estate sector was a lawyers’ market.

Asked if recession could be considered a force majeure, Bin Ghalaita said: “If I am an investor I will say ‘I am not paying because of force majeure’. I am not a judge. But my answer is: if I am an investor I will not pay because of force majeure. If they can use it, so can I. And this is my answer. If a developer can use it, why can’t I?”

He added that investors in projects that had been delayed beyond delivery deadlines could seek legal redress in the courts for loss of income:

“If my construction is delayed, and it is beyond my delivery date, what should I do? You have a choice to ask for liquidity damage…. I am suffering because of the delay, because I bought this apartment to move in, and now I am paying rent. You can go to a court and ask for that, for compensation. Because this is a breach of the contract.

“Because the delivery date is there…. And people should seek proper legal advice from lawyers. It was a buying market, then a selling market, then an agents’ market, then I tell people there is a period in Dubai where it is a lawyers’ market. Where lawyers make a lot of money.”

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Please post responsibly. Commenter Rules

Posted by: Peter

REMRAAM

Banks who lend money, also have the responsibility of disseminating loans responsibly. Do not be afraid of repurcussions and hold your ground. Seek legal representation in groups and be firm with banks and DPG. They cannot punish you for no fault of yours....and ultimately will have to be fair to the investor. No court will send an investor to jail for not paying installments for property that does not exist!!! They are all afraid of bad publicity.

Posted by: A Zaheer

H Patel,

I have an apartment in the same project in Tower A. No updates as of date. I visited their offices recently and they were not supportive at all.

Posted by: Amir Aslam Raja

A A Raja. I have bought a property from Almaasa International in 2006 were supposed to be ready in 2009. We stopped paying after 50% paid around �50.000 but developer could not deliver. They are still asking for payments. How can we pay more. What is benefit of escrow account. I am sure many more people are in my boat. For solution we are making a forum, friend are welcomed to join on alraja47@hotmail.com. We are a good number of investors now joining to proceed for legal procedure in Dubai and Ajman.

Posted by: Ajman Uptown Buyer

To Ajman Uptown buyers, we (yes, I am a buyer) should consider ourselves lucky as this project is one of the very few in Ajman which is proceeding. Yes, the pace is slow, very slow and our investment is probably not worth nearly as much as we paid but at least our money is not lost. Sweet Homes maintains an active office in Dubai and has always been available for me.

Posted by: H Patel

i have purchased a villi in Erica - ajman up town and already paid 70%. Developers are demanding more instalments whilst the pictures on the website is just showing the structure and no futher built. It is doubtful if the completion would be in August 2011 as promised by developers on website as planned. Where do I stand? Sweet Homes Developer is not replying to any of my correspondence. I support group action and approach to Arra in Ajman.

Posted by: VICKY

RERA)Real Estate Regulatory Agency, why cant the so called regulatory agency intervene into the cases which are a clear cut breach of contract by the developers i.e. the developer's who have taken all the money up to 90% since 3 years and there is nothing in escrow account and there is no developments too.

Why dose the investor need to take a lawyer in such clear cases and pay the hefty fee, when the case is so clear that they the (DEVELOPERS) have no funds to build but still they have taken 90%

Posted by: qazi

This is ironic that there are about 41 investors I know who bought the villas in Ajman in instalments, paid quiet a money, the construction dead line is delayed all the time , initially was supposed to be completed in 2009 , and now say 2011 but the way things are moving ,it may be 2015 !! this is the Ajman Uptown project by sweet home developers.

Posted by: Jumeirah Village Sufferer

Force Majure, Interesting Point, Correct that it is normally used for Act of God and War Etc.... but my developer has pulled this clause using Nakheel (Who are in Delay) as Force Majure for his Delay. So for some time this clause has been used in many different ways to suit a situation. I am trying to use it to claim for additional costs on borrowing as it seems the original intent of this clause has now been widened. Problem is Mr Ghalith appears to be the only one in RERA actually doing something (or he has a good spindoctor) but you try get anything done by the lower ranks or even find anyone who knows anything in this department you will be lucky

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