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Wed 10 Mar 2010 10:42 AM

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New property law extends protection for home buyers

Decree also increases Land Department's role as mediator in real estate disputes.

New property law extends protection for home buyers
DUBAI DECREE: New law also increases the Land Departments role in property disputes. (Getty Images)

A new decree by Dubai Executive Council will provide more protection to home buyers as well as increasing the Land Department's (DLD) role as mediator in property disputes.

Law firm Hadef & Partners, which has reviewed a copy of the decree, released a brief summary of the regulations awaiting formal publication in the Official Gazette.

According to the statement, a buyer can request the courts to cancel a contract if the developer "significantly changes" the agreed specifications, or refuses to deliver the unit without any "justifiable reason".

Home buyers can also seek legal action if developers do not bind payments to construction-based milestones approved by the DLD, or the unit is proved unstable due to “major structural defects”.

“The regulations whilst providing some much needed clarity over many issues also throws up some interesting characteristics such as reinforcing the wide degree of power and discretion the DLD holds in respect of projects,” Hadef & Partners said in a statement.

Under the regulations, which govern off-plan property sales in Dubai, the DLD is able to cancel a project if the developer does not begin construction without “justifiable cause” or because of “gross negligence”.

If the developer is “not serious” about the project or declares itself bankrupt the DLD can also cancel the project.

The regulations also prevent developers from selling off-plan units before taking possession, which includes actual control of the land.

“It is also still not clear how the DLD will approach situations where a purported termination of a purchaser is met with resistance and/or whether the DLD will remove an interest in the interim register without a court order where a legitimate dispute has arisen,” the statement said.

“Further clarity may also be needed where a bankruptcy event occurs as to how exactly the interim registered interests will be treated as far as priority is concerned in the bankruptcy situation.”

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Tome de Souza 10 years ago

There are still some uncleared aspects in the regulation those need clarity only than may be we can say that there is a protection to the buyer.

JH 10 years ago

Great news if it's truly enforced. However, on an international scale, Dubai's reputation with regard to property investment was damaged a long time ago. The speculators will never return in the same numbers as before & the cost of living is still far too high for the majority of residents to make a long term commitment to buy rather than rent.

Punky Brewster 10 years ago

Another Decree, few MORE reasons to be CONFUSED. Clarity is what the govt is not giving to the people who have invested already, or for the confidence boost in the Real Estate Market!! Accountability is of the PRIME importance, when it comes to developers, which is absent in the UAE. If the Investor is behind in payments, the Developer can forfeit the property, but if the Developer is late or dragging their feet on the property development, there is no recourse, not even from the courts. Expatriates living here would prob invest in properties, had the tables turned with this new Decree. I know I would certainly think about it. But I guess I'll be on the sidelines for some more time...

Ahmad 10 years ago

Great news Dubai has to come up with fair determination, in current situation buyer don’t have right to take his money back from developer nor developer want to construct his property, while developer is holding whole money of the investors as well as property whatever status

Ananympous 10 years ago

There is a risk factor in any investment. I just think that the risk in Dubai real estate is still much higher then the prospective return (if there is such thing as return).

Graham 10 years ago

UAE developers still seem to continue to deliver 2+ years late and are free to do whatever they choose, they don't communicate with their customers re delivery and there seems to be no obligation to compensate for missing contractual delivery dates, this is a major issue that the government still fails to address, which makes the real estate market very unattractive unless you are buying a finished property

His Excellency Dr Paul 10 years ago

Ananympous has it spot on. Even with decrees like this, the safety of any investment in Dubai is still in the hands of the DLD. And don't forget that laws and rules can be changed overnight without warning or consultation. So there is no law that could not be undone tomorrow. That's like relying on a seat belt that could snap at any moment. This creates a unique risk profile when compared with more established markets with well established property rights, including for foreigners. I am not saying one should not invest; only that you should accurately assess the risks before you do so and ensure that any price you pay builds this in. I personally don't believe Dubai property is anywhere close to a fair value that builds in the lack of rights you'll have as an owner. You're not even guaranteed the right to live in the country!

tg 10 years ago

This is in no way positive to the investor - it still protects the developer in every possible way. What happens if the construction has begun but after 2 years it still isn't completed and they go on to another project and start that, dig a few holes there within the 2 year period but no completion to the first one and a start has begun on the second - so is that somehow considered as "justifiable cause" for the delay? Or is it just plain and simple "gross negligence" on their part. Come on someone is playing games here and we have the media joining in on this as well. Where are the pictures of all the uncompleted projects and why doesn't the media actually do a story exposing it all. Hadef and Partners well another law firm making claims of how they interpret the decree - like who cares what they think, it's about time that they thought about those who have been affected and not the rich developer who continues on going on about their business while withholding monies from investors and not delivering on completion dates - so it's okay is it - where's the interest that is due to the investor if the project isn't delivered on time about time Hadef and Partners had a good look at the contracts instead of making loud noises like an empty vessel. Nothing is ever clear is it in Dubai - it's a guessing game until you get caught up in it then you know it's been a scam - anyone ever thought of it all as being a Ponzi scheme??? How is it that Hadef and Partners can see a copy of the decree before it's release in the "official gazette"...how about showing the public what it says!! I'll be very surprised if this actually makes the comments... Isn't it time that something was done to protect the investor don't you think Hadef and Partners???? How about offering your services that would be a start now wouldn't it?

dubaipropertyvictim6534 10 years ago

This way of another "Let them go practice" will not work. It will not bring any confidence back to Dubai. Those buyers ( not flip-flop investors) who have to bear since years the "tactic" of developers, those investors will not agree to this new fantastic laws. A contract is a contract - an obligation is an obligation. If a developer is not able to fullfill this obligation - he has to stand for it. Just refund without "full" compensation - after 2,3 or in many cases 5 years - working with the money of those buyers - by promising them them again and again ...everything is fine.... or not resonding... but playing during all this years the flip flop game with other developers and more.......... all this developers should stand liable for what they did. The money was not sleeping all the time - they called themselve shooting stars - lived a comfortable life...... now it`s very simple : They are bankrupt. Thats it. A fair justice should decide: a fraudulent bankrupt or not ! Stay to your obligations, pay your debts - the way the contracts have been signed , was not to let you go without to bear also the same pains you have cause those from whom you have token the money on which you thought you can built up a luyury life. It`s Time to make a clean sweep

Bernard M. A. Doff 10 years ago

"A contract is a contract - an obligation is an obligation." Only if the Rule of Law applies. Otherwise contracts can be "renegotiated" unilaterally at the Developer's whim. See this excellent article in Arabian Business: http://www.arabianbusiness.com/581879