Dubai’s real estate laws prioritize buyer protection, ensuring clear refund processes and safeguarding funds in guarantee accounts. These regulations aim to protect investors in case of delays or cancellations of off-plan property projects.
What Does ‘Cancelled’ or ‘Under Cancellation’ Mean?
In Dubai’s real estate market, the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (Rera) define the terms as follows:
- Cancelled Projects: A project is officially cancelled when Rera issues a final decision to terminate it. This typically happens due to significant delays, insolvency, or failure to meet legal standards. A Special Tribunal for Liquidation of Cancelled Real Property Projects oversees the process of liquidation and refunds.
- Under Cancellation: This status means the project is being assessed by Rera for potential cancellation. Factors like project progress, financial stability of the developer, and regulatory compliance are reviewed. The final decision can lead to cancellation or continuation.
Key Laws Governing Refunds
The refund process for cancelled projects is governed by these key regulations:
- Decree No. (33) of 2020:
- Establishes the Special Tribunal to manage liquidation of cancelled projects and settle related rights.
- Dubai Law No. 13 of 2008 (amended by Law No. 19 of 2020):
- Specifies refund procedures for buyers if Rera cancels the project.
- Law No. (8) of 2007:
- Governs Guarantee Accounts in real estate projects. Developers must refund all amounts paid by buyers in case of project cancellation.
Refund Scenarios for Off-Plan Projects
The refund process depends on the progress of the project:
1. Completion Between 60% and 80%
- The developer may cancel the contract and deduct up to 40% of the unit’s value.
- The remaining balance is refunded within:
- One year from the cancellation date, or
- 60 days after reselling the unit, whichever comes first.
2. Completion Less Than 60%
- The developer may cancel the contract and deduct up to 25% of the unit’s value.
- The balance must be refunded within:
- One year from the cancellation date, or
- 60 days after reselling the unit.
3. No Work Started or Project Cancelled
- If no construction has started, or the project is officially cancelled by Rera, the developer must refund 100% of the amount paid by the buyer.
- Refunds are processed from the Guarantee Account, supervised by the DLD and managed by a trustee bank to ensure compliance and buyer protection.
Steps to Get a Refund for Cancelled Projects
To claim a refund, buyers need to follow these steps:
- File a Grievance:
- Submit a complaint to the Special Tribunal for Liquidation of Cancelled Real Estate Projects.
- Judicial Review:
- The tribunal reviews the grievance and receives a detailed report from Rera about the project’s status.
- Decision Issued:
- The tribunal makes a final decision regarding refunds or settlements.
- Implementation:
- If a refund is ordered, amounts are returned through the escrow account trustee or the developer.
- Decisions are final and cannot be appealed.
Buyer Protection: Clear Processes and Accountability
Dubai’s legal framework, including Law No. 8 of 2007 and Law No. 13 of 2008, ensures:
- Transparency in refund processes.
- Protection of funds in guarantee accounts.
- Fair resolution through the Special Tribunal.
Although delays can occur, buyers have a clear legal path to reclaim their investments. They can also take legal action by filing grievances with the tribunal to protect their rights.
Conclusion
Dubai’s off-plan property laws offer strong legal safeguards for buyers, ensuring refunds are managed transparently if projects are cancelled. Investors are protected under a robust legal system designed to prioritize their rights and ensure accountability from developers.
By understanding these processes, buyers can invest in Dubai’s real estate market with greater confidence and security.
