A new law could be introduced in Dubai by as early as the end of June this year, and would enable property investors to obtain full refund if the developer defaults on the project.
The Investor Protection Law would mean the developer is obliged to deliver on time, and must provide all the common facilities promised by the project. Failure to do so would allow investors to cancel the contract and obtain a full refund. The law means any facilities such as gyms and swimming pools must be ready for use once the keys are handed over to the new owners.
The law has become necessary as increasing numbers of developers have failed to deliver projects on time, and haven't included the facilities mentioned in the purchase agreements or marketing material. Before the proposal of the new law buyers faced difficulty taking action, and could only hope the facilities would be completed in the near future. Its introduction means developers will be liable for fines if the projects are delivered on time, or if they don't meet the agreed specifications.
According to a proposed provision of the draft law, if a unit turns out to be 30% smaller than the net area in the contract, then the investor has the right to cancel the contract with a full refund. If sales are made off plan then the developer will have to get approvals from the Real Estate Regulatory Agency (RERA), and also units for sale will have to be registered with the Dubai Land Departments registration system. In addition the developer has to register all contracts with the RERA, including information on escrow accounts and the predicted time for the handover of the unit.
Written by Les Calvert
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