February 10, 2019

Key issues that investors need to be aware of while buying Off-Plan Real Estate projects in Dubai

This article summarizes the key legal issues an investor purchasing “off-plan” property in Dubai should consider as a part of their due diligence process.

Visit Dubai Land Department’s website (www.dubailand.gov.ae) to check the following information:

  1. Is the real estate project registered with RERA?
  2. Is there an escrow account for the project? What is the escrow account number and the name of the escrow account agent?
  3. What is the percentage of completion of the project and the expected date of completion?
  4. Is the developer registered with RERA? Does the developer own the development of land or is there a development agreement between the owner and the developer?
  5. Does the developer have the required permits and approvals from DLD and RERA to sell units off-plan in the relevant project?

 

Real Estate Disputes

 

Dubai Real Estate Court: Dubai Real Estate Court (part of Dubai Courts) is a specialized court that has jurisdiction over all disputes resulting from transactions and contracts relating to real estate in the resolution of all disputes relating to real estate (excluding rental disputes). Judgments of the Court of First Instance may be appealed before the Court of Appeal and the parties may further appeal on points of law to the Court of Cassation in Dubai.

The fees to register a case with the Dubai Real Estate Court range between AED 20,000 and AED 40,000.

Real estate cases generally take 12 - 18 months to resolve, depending on the circumstances of each case.

 

Arbitration

Real estate disputes in the UAE may also be resolved by way of arbitration, a private form of dispute resolution in which the parties ask a private individual (the arbitrator) to resolve the dispute by way of a final and binding arbitral award.

The arbitration process takes between 6 – 18 months. Parties do not need to be legally represented, but usually are since the final award is binding: there is no appeal on the merits and the award may be enforced in countries all around the world.

Private arbitral institutions exist which, for a fee, will help administer the arbitration by finding an arbitrator, agreeing the arbitrator’s fees, and helping to resolve procedural issues (which otherwise may need to be resolved by a local court at greater expense). Any institution can be used, but the two most popular institutions based in Dubai are the Dubai International Arbitration Centre, and the DIFC- LCIA (essentially a DIFC branch office of the well-established London Court of International Arbitration).

Only those disputes which can be resolved privately may be submitted to arbitration.

There are some real estate issues which cannot be resolved privately, such as issues relating to the registration of properties at DLD. Care must, therefore, be taken when bringing claims not to include such issues.