By Andy Sambidge
More protection to be given to investors who fall victim to failing developers - report.
New real estate laws being considered for Dubai will give investors grounds to cancel their contracts if they fall victim to failing developers, it was reported on Monday.
The real estate investor protection law, which is being looked at by the Land Department of Dubai, will detail grounds upon which a property buyer may demand cancellation of a contract, Emirates Business reported, citing a newsletter from legal firm Al Tamimi and Co.
Grounds for cancellation would include a developer's refusal to link payments to construction milestones, or if he makes material changes to specifications, it said.
It will also deal with refund or replacement issues in the event of a material defect and financial penalties for delay in delivery, the paper added.
Emad Eldin Farouq, senior legal adviser, Land Department, was quoted in the newsletter as saying: "There are lessons to be learned from the crisis and we are emerging with a new legal regime. Loopholes in laws are being dealt with and things will become more organised in 2010.”
Until now, there is no recourse for investors seeking cancellation of a contract even in cases where construction has not commenced even after years.
The move is designed to restore confidence to Dubai's real estate market which has been badly hit by the impact of the global economic crisis. House prices in some areas of the city have fallen by 50 percent during the downturn.
In May 2009, the Land Department set up a committee to decide on cancellation of "unviable" projects but no official announcement has been made of any cancellation.
This appears to be a classic case of too little too late !
Nice to know, clauses are being thought about...but not put into action as of now, so maybe another few years for investors to remain silent on unstarted projects - deyaar park, the classic example!!!
Its great the way that new laws are announced via a newsletter reporting on a conversation between a lawyer at the land department and a lawyer at one of the law firms in Dubai - no detail, no timescale, no transparency. The problem is complicated but dealt with in an overly simplistic way. Linking to milestones only helps those who are being asked to pay now - for the projects that are standing still it just means that money is tied up for longer. As for changes to specifications - anyone having looked at the specfications of a dubai contract will see that the contract provides for ceramic tiles and plaster walls and not more detail than that. Defects are already covered in the existing law. The elephant in the corner is the projects that have not commenced, have taken thousands in deposits and used it to make land payments leaving no money to build, no chance of a refund and a blight on the landscape for years to come. None of the article gives any confidence that this will be addressed. We're still expecting the strata regulations to give certainty on service charges which were imminent in 2008.
I have bought 2 plots in dubai land majan two years ago to develop. there is no sense that i start sell it now on crashed market. is there any law i can cancel the plot and refund my 10m
you bought land to develop. are you a regitered developer? are you experienced in development? Either way - you bought to make money and now that you can't you shouldn't be given the right to walk away with no loss (win some lose som - that's business)...unless of course you cannot build due to a failure of the master developer to put in promised infrastructure.
Will master developers come under the ambit of the new law? Will the likes of EMAAR be called upon to justify holding funds from investors who bought off-plan (and continued to pay installments) in Burj Park V, a project where ground has not been broken 2 years after it was sold out?
It is good to know that the Land dept. is looking into this issue, however, how soon investors will be able to redeem their dead investments remains to be seen. A developer that announced office towers in JVS and was due to start construction two years ago (much before the economic slowdown) has todate not even broken ground. It is clear that the project will not go ahead as the plots have been returned to the Land dept. According to the developer RERA is also looking into this , however, there is still no sign of when the funds will be returned. An option of transferring the investment to another developer may help some of the investors that are still interested and, also developers sitting on huge inventories and eager to reduce their liabilities.
Sorry but if the big developers have no money, as it became public by DWs announcement in November; there will be no new law for refunds. The money is gone. The problem is that all the other developers use this situation to their advantage and keep peoples money with no projects being started. They figure people will get tired and give up. Some â€œdevelopersâ€ actually brag about this method being their tactic.
I have paid 50% until date for The Matrix by the First Group in Nov'07 Until date No Signs of Construction. Delay blamed on the Authorities. They insist on continuing payments or I will be in default. I keep getting reminders for payments which I have refused, but they keep reminding and threatening to cancel the Contract. The Apartment was to be handed over in Dec'09.
How are you dealing with this issue as your date of delivery has been overdue. Did you seek any legal advice?