Dubai: What are the property buyer’s rights in case of delayed off-plan project handover?

Question: I plan to invest in an off-plan property in Dubai. If the developer fails to deliver the project as per the stipulated timeline, what legal options do I have?

Answer: In Dubai, a purchaser and a developer (seller) enter into a Sale Purchase Agreement (SPA) pertaining to the property which is sold on an off-plan basis.

The SPA will include clauses, including—but not limited to—purchase price, completion date, compensation for breaches, force majeure terms (beyond the control of the parties to the agreement), etc., and therefore, the relationship between the purchaser and a developer is governed in accordance with the agreed terms and conditions of the SPA.

The SPA will be implemented in good faith, in accordance with the clauses mentioned in it. This is in accordance with Article 246 (1) of the Federal Law No. (5) of 1985 On the Civil Transactions Law of the United Arab Emirates, which states, “1. The contract shall be implemented according to the provisions contained therein and in a manner consistent with the requirements of good faith.”

Furthermore, in the event of a breach of any of the clauses in the SPA, one of the parties may be entitled to compensation as mentioned in the SPA or as decided by a judge in a court which has jurisdiction in Dubai. This is in accordance with Article 295 of the UAE Civil Transactions Law, which states, “Damages will consist of a money payment. Upon request of the victim, however, the judge may, in accordance with the circumstances, order that the damage be made good by restoring the parties to their original status, or by performing, in compensation, a specific matter connected with the prejudicial act.”

Additionally, if there is a dispute with a seller (developer), a purchaser may immediately approach the Dubai Land Department (DLD) to settle the matter. This is in accordance with Article 14 of the Executive Council Resolution No. 6 of 2010 Approving the Implementing Bylaw of Law No., 13 of 2008 Regulating the Interim Real Property Register in the Emirate of Dubai, which states, “Where any dispute between a developer and a purchase, the DLD may undertake conciliatory efforts to preserve their contractual relationship and may propose any solutions it deems appropriate to achieve this objective. Where the developer and the purchaser reach an amicable settlement, that settlement shall be documented in a written agreement executed by the developer, purchaser, or their respective representatives. Upon approval of that agreement by the DLD, it shall become binding on both parties.”

Moreover, based on a purchaser’s complaint, if the DLD is satisfied that the developer (seller) has committed breaches of the SPA, it may refer the matter to competent authorities for further action or decisions.

This is in accordance with Article 13 of Law No. 13 of 2008 regulating the Interim Real Property Register in the Emirate of Dubai, which states, “Where it is established to the satisfaction of the DLD that the developer or broker has committed any act or omission in violation of the provisions of this law, or any other legislation in force, the Director General of the DLD must prepare a report on the same and refer the case to the competent entities for investigation.”

However, a developer (seller) may have the right to state before a competent authority or a court that it was not able to fulfil obligations mentioned in the SPA related to the handover of property due to force majeure (reasons beyond the developer’s control). This is under Article 21 of Executive Council Resolution No. 6 of 2010.

Based on the aforementioned provisions of law, if your developer delays handing over the apartment to you as agreed, you may initially approach the DLD and file a complaint against the developer before approaching court. Alternatively, you may directly approach a court which has jurisdiction in Dubai to file a civil case against the developer seeking compensation for the delay in the handover of the apartment to you. The court may decide whether you are entitled to compensation based on the provisions of the SPA.