Dubai Real Estate Off-Plan Rules Due for Amendments

Dubai real estate market has seen a new light with Dubai Land Department. It will propose an amended Article 11 of Law number 13 in next two weeks. The amendments proposed would introduce new provisions for contracts that are cancelled. Law No. 13 regulates Interim Real Estate Register. The practical application and the detailed explanation of Article 11 was circulated internally, by the department. According to the circular, when an off plan contract is terminated, the developer may retain 30 percent of the unit value. Also, the buyer can retain the contract value until the unit is sold. In short, if the purchaser defaults on a payment, even after a 30-day notice is served, the developer can terminate the contract and refund 70 percent of purchaser’s money.

A Government official of Dubai Land Department, Director-General Sultan Butti bin Mejren said “We will release an amendment to Article 11 in the coming two weeks. It is something good for the market as it is more comprehensive and detailed” Although Mejren declined to give details of the amendment, he said: "The revised article will set new grades for properties and developers. It will be more than 30-70 rule, which is now applicable."

Axel Jacob, a legal consultant with Fichte & Co, said: "Its no surprise that the government is now preparing an amendment to Law No13, which assumingly will bring the law closer to Real Estate Regulatory Agencys position as expressed in its circular. Hopefully the amendment will not only take developers interests into account, but also the interests of investors, whose confidence is what requires a boost in order to help the real estate market to pick up again. The amendment has been tipped to be more sophisticated than the circular, and it would be helpful if it took into account different stages of construction progress and possible defaults on behalf of the developer in evaluating the applicable penalty amount."