Important information you need to know regarding Dubai property laws 13 and 14

 In point 4, you say the developer MUST refund you at least 70%.

But in the law itself, it says the developer MAY cancel the contract and repay the purchaser his money less a deduction that does not exceed  30% of the monies paid by the purchaser. 

Can someone confirm whether this means the same, or will it now be a case of the developer not cancelling the contracts and just charging you penaltys each month or something to that effect?

That's an excellent question.  As the law states, "may not exceed 30%" it would be assumed that this would include all penalties  For example:

• You pay Dhs 1,000,000 towards an apartment.
• You stop paying for the apartment and miss several payment dates
• You incur Dhs 500,000 of penalties in late fees etc.
• The law states the developer has to deduct no more than 30%, so you would get at least Dhs 700,000 back even though the accrued penalties are more than that.

In this way it would be in a developer's best interest to quickly dispose of a non-paying client as quickly as possible as accrued penalties could not be deducted. 

On a seperate note it has just been announced that full implementation of the law has been delayed until the end of the year.

It's good to know that at least investor/purchaser can come out by taking a knock of 30% on amount injected BUT will the developers honor the payment "even though it is by law" when monies are claimed???

That's down to the courts and the Govt, Mohammed.  Only they can enforce the rules.  However it'll be interesting to see what happens when the first cases start appearing.  As usual there will probably be some confusion all around until implementation of the law is understood by all.

We'll be monitoring these cases to see what happens.

After contacting several lawyers about Article 11 of Law 13 I can say that nobody seems to know if the law also applies to purchases before the law was published (Aug-0.  I was asked to contact RERA which told me to contact a Lawyer!

I bought a property in Jun-08 (I don't have a signed contract yet, only the booking form) and I'd like to know if there is a way to get some of my money back with this Law. The developer says that because the deal was done beofre the law was issue there is nothing I can do.

Does anybody know the answer?

The newspapers woke up to this issue this morning, with the Gulf News reporting here: http://www.gulfnews.com/business/Real_Estate_Property/10259241.html

This does not address the issue of property purchased before the implementation of the law, however it does re-state what's in the law.  As discsused on the phone (thanks for calling!) we do agree wih the cause of action you're pursuing which is getting your lawyer to talk direct to RERA.

Paul.

 Thanks for the wonderful article. May I ask if there is a 60 day registration requirement from the day the law took effect? Per your article that would be 10/30/08 plus 60 days.

Does this apply to transaction involving a booking form for transaction entered before 10/08 such as 3/08.

Does the buyer need to register or the developer need to register? Do you have any referrals as to lawyers who can handle this on our behalf?

What is the qualifications for lawyers to handle this with RERA, can we have US and UK lawyers to inquire with RERA? Do you have RERA contact info since we are not in Dubai?

Thanks in advance for your assistance.

Thank you very much, Linda.

Both laws were supposed to have come into effect 60 days from the date of announcement, at that time al properties were to have been registered on the interim register (Law 13).  However implementation of the law has since been put back to the end of the year, so everyone has a longer grace period.

Law 13 is retrospective, i.e. it applies to transactions before the date of implementation.  So, yes, it would apply to a transaction from a booking prior to the law being implemented.

The developer needs to register.  I'm afraid I can't recommend any lawyers, however Emirates Advocates are well known as are Trench Law.  Please ensure you do due diligence before engaging any law firm.

To contact RERA please visit their website here: www.RERA.ae.  Their phone number is: +971-4-2222253.  I have to be honest in that I'm not familiar with the legal requirements to have a lawyer talk to RERA on your behalf, I'd recommend talking to a local law firm, or RERA themselves, to establish this.

As a general piece of advice, please remember that things have been thrown a little out of kilter by the decision to delay this law - many people (developers, owners, brokers, RERA themselves) can be unsure on where they stand.  Juan's experience noted in an earlier comment is a great testament to this.  RERA also is a large organisation, finding the right person, with the right knowledge, can be tough at times.

Good luck!

Paul.

Interesting reading. I, like many others, find myself in a situation, where I may not be able to pay the next installments on my apartments. So I am also eager to know what Law 13 says about that. The law itself is written clearly, and that is all fine, but it is the later so called 'interpretations' by the Land Department of this law that confuses me. I also read the article in Gulf News on November 12, but also read a similar article in Business 24-7 the same day. Difference is, this article told an opposite story.

http://www.business24-7.ae/Articles/2008/11/Pages/11132008_2181bac283064cb797378a0ff24e1cd8.aspx

It says the developer would get to keep 30% of the total unit cost, not 30% of the so far invested money! It also says that the law will only be implemented for cases, where property has been bought after it came into effect November 1 (or November 12, as article states). So any prior agreements would still follow those agreements between developer and buyer.

The article clearly states that this new interpretation is a move towards protecting the developers, and the investors will be badly affected. The master developers in Dubai are largely government owned, so obviously there has been pressure on the Land Department to change its interpretation of this (so clear) law.

If this is the way the law will be implemented, it will be devastating for many investors, and can have a much deeper impact on the markets than the earlier interpretation, that was originally made to protect the investors. They say they want to remove the speculators fro mthe markets. Well, they will. But a lot of the speculators are also end users, who this way had planned to gather the needed money for that villa or apartment to move in to.

When talking to Rera and other lawyers, I still hear two sides to the story, so obviously there is still confusion on the market. I am sorry to bring this gloomy piece of news to you. Let's hope the Land Department will understand the implications of this latest interpretation, and correct it to the way it was.

Good luck!

Mikael

An Administrative Circular to Law 13 has been released to clarify several of the points in the Law, especially concerning Article 11.  However the Amendment has caused quite a lot of commotion as it seems to substantially change Article 11.

Gulf News has posted up a couple of good articles on this.  You may want to read these:

http://archive.gulfnews.com/articles/08/11/24/10262231.html

http://archive.gulfnews.com/articles/08/11/24/10262054.html

The second one in particluar makes for extremely interesting reading.

Right now we're waiting for some clarity to emerge before we're really able to comment.  We're advising our own clients to read up on these laws, and if they do affect them to seek guidance from the Land Department or RERA.  If you want to join our newsletter list so you get the same advice we give our clients please feel free to signup on our website: www.EREDubai.com.  I think we're scheduling to send out a newsletter next week.

Paul.

I heard from the Land Dept that there was a meeting for the public re: Law No 13 on 11/27/08 Thur. Does anyone know what happened at that meeting? Did anyone attend that meeting?

what would you do if there is an offer that would only give you 20% on a dollar? would you wait to see how Law No.13 would be interpreted even Circular 13 is not favorable to the exisiting buyer and let the property stayed in default? what is the chance to salvage the defaulted property later if the offer is gone?

Is there room to renegotiate the deal with the developer and come up with a new installment schedule with credit of payment already paid to be applied in a new deal on the same piece of off plan property?

There's one scenario which has not yet been explained by any law or article clearly. That is:

I have purchased a 1-BR apartment in Jumeirah Village in Aug'08 for 1.1 million. I signed the reservation agreement/ booking form and paid a down-payment of 25%. However I didn't receive the unit sale/purchase agreement until about 1 month ago. Since I do not want to continue with this deal due to my present financial condition, I have not yet signed the contract and don't intend to sign either. The developer has not yet asked for the agreement to be signed and I am skeptical about it too.

What if I decide to cancel my reservation now? Can I claim the money (25%) that I have paid so far? RERA/ Land department/ Property Courts only administer & give rulings based on contract which does not exist for me so far. A clause on the reservation form mentions that "If the buyer does not sign the Sale purchase agreement within 25 days of it's issue, the seller has the right to retain 10% of the property value". Does that mean I can get back the 15% I have paid so far? Is there any way I can ask for the entire 25% as the Sale/Purchase contract was issued only after 4-5 months of the reservation and still does not bear the seller's signatures?

I purchased a Studio Flat in Ajman in 29-Jun-2008 for 290000 AED .

I signed the reservation form and paid 56000 in 3 installments until now .

In interpretation of Article 11 by Sultan Butti Bin Mijrin, Director General of the Land department in Dubai this clause is mentioned that :

The article no (11) will be effective immediately; contracts executed prior to the Law shall be subject to the terms of the contract entered by the developer and the purchaser, whereas the contracts executed after the enactment of the Law shall be subject to the rules of the Law.

I want to know that what means the execution of contract ? is it meaning the same time of signing reservation form or denotes to the date of starting constraction and etc .

And also my developer is saying that our contract is under the regulations of Dubai despite the property is in Ajman and I don’t know any thing about Ajman rules for cancellation .

Please , guide me .

I purchased a property in July 2008 from Rufi Park View from the second market for AED 1,2 Million.(original price AED 900,000.00) The property is financed by the UBL bank. At that time, the Bank has evaluated the property for AED 1,5 Million. Substantial completion is never mentioned in the contract, only installment plane without stats and completion date. The propjet has recently started and has about 5-10 % progress achieved.

The first buyer has paid 20 % to the developer at the time of transfer the property to me . After I have signed the contract with the developer and the bank, the bank has released further 2 due payments to the developer as per provide installment plan at that time + the premium to the seller. Although I have given notices to the Bank and developer to stop further payments, they have released further 1 installment. Up to date 50 % has been released to the developer from the bank with only 5-10 % achieved progress.

As I do not have Islamic mortgage, I pay the interest to the bank for the money released to the developer, which is really unfair to be responsible for the Bank and developer mistake.

Up to date the bank and developer did not response to my letters, that they will undertake to follow RERA regulation to tide the installments with achieved progress.

Is it possible to get out from the contract without damages?

I believe that Banks and developers should be inspected by authorities to ensure that they are following the law and not squeezing the investors to get benefit from their mistakes!!