Dubai real-estate sector is significantly the most regulated and planned sectors in the country considering the huge amount of investment by multiple foreign investors. The laws in relation to governing the real-estate sector in Dubai are mandatory for the buyers and sellers to follow and failure of adherence will lead to legal complications. Property Lawyers of Dubai will discuss about one pertinent aspect of real-estate sector of Dubai that is the requirement of the property developers to establish an escrow account for all investments in the property. It is vital for all the buyers to be aware their rights and obligations under the sale and purchase agreement.
In the light of foregoing, the Dubai Law number 8 of the year 2007 obliges the seller to set up an escrow account for a particular project and shall also appoint an escrow agent (who shall be a bank or any financial institution approved by the Dubai Land Department). The Law of 2007 mandates the developer to deposit all the funds obtained from the selling the off-plan units and the credit obtained by the developer for funding the project. It is important for the readers to note that the amount in the escrow account is to be specifically used for the project construction or to pay-off the investor in case the project is cancelled by the government or in any other circumstances.
It is apparent that the law mandates the developer to set-up an escrow account, however, there still might be a possibility that an investor is facing a fraudulent property developer who has not set up an escrow account, the primary step for every investor is to register a complaint before Real Estate Regulatory Authority. The Authority is responsible for managing the real estate projects in the relevant Emirate and has the obligation to ensure the proper implementation of the real estate laws in the country. Upon registering the complaint, the Authority will conduct necessary investigation against the developer.
In furtherance, the investor has the right to either initiate or register the case before Dubai Courts or Dubai Arbitration Institutes as what is mentioned in the Sale and Purchase Agreement. In usual circumstances, the sale and purchase agreements suggest for arbitration in case of dispute. On the other hand, cases can be registered before the courts of Dubai, if the contract suggest to resolve disputes before Dubai Courts. It is always advised to appoint real estate lawyers who can legally represent you before the courts of Dubai as plaintiff shall meet the court requirements with all due respect such as submitting memorandums and all relevant documents in Arabic Language. As more and more properties are being developed in the country, we are witnessing increment in foreign investments in real estate sector, thus, it is always recommended to be aware of the rules and regulations issued by the government of Dubai to protect the interest of purchasers and sellers of off-plan properties in the Emirate.