Tuesday, 7 April 2009

New regulation likely for termination of off-plan contracts in Dubai

The Dubai Land Department has amended the Article 11 of Law No.13 regulating the Interim Real Estate Register, and this will be released in 15 days time. Once, released the new regulation is hoped to introduce provision for cancellation of contracts, and is hoped to benefit the market.

The department had already issued an internal circular during November 2008, wherein the circular stated that in case of termination of an off-plan contract, the developer can retain 30 percent of the contract value (30 to 70 percent of the amount paid), and that this would be applicable to amounts exceeding 30 percent.

However, in case of termination of contract, the developer of the property will retain the amounts paid by the buyer, until the real estate is sold.

The Director-General of Dubai Land Department, Sultan Butti bin Mejren, has said that the revised article would establish new grades for properties and developers, and would be more than the 30-70 rule, currently applicable.

The Law No.13, Article 11, which is currently applicable states that a developer is required to keep the Land Department informed, if a buyer breaches a sales contract. Thereafter the department would notify the purchaser personally or by registered mail or email, giving him one month time to fulfill the contractual obligations. At the end of the term, the developer can cancel the contract and refund the sum paid by the buyer, after deducting an amount not more than 30 percent of the total value of the unit.