What happens if an investor has paid more than the completion rate for a project that hasn’t started, is under cancellation, or has already been cancelled?
In Dubai's real estate market, investor protection is paramount, especially concerning off-plan properties—those sold before construction is completed. The Real Estate Regulatory Agency (RERA) enforces regulations to ensure that payments align with the actual progress of development.
Understanding Payment Structures in Off-Plan Projects
Typically, off-plan property purchases involve installment payments tied to specific construction milestones. This structure ensures that the funds provided by investors are utilized appropriately and that payments correspond with the project's advancement.
Scenarios Involving Overpayment Relative to Project Progress
Project Not Started or Under Cancellation:
If a project hasn't commenced or is in the process of being canceled, and an investor has paid amounts exceeding the completion rate, the following applies:
Investor-Initiated Contract Termination: The Dubai Land Department (DLD) does not have the authority to terminate contracts at the investor's request. Investors seeking contract termination must approach the real estate court. The DLD can facilitate amicable settlements but cannot enforce contract termination.
Developer-Initiated Cancellation: If the developer cancels the project, they are obligated to refund the amounts paid by investors. The DLD oversees this process to ensure compliance.
Project Officially Canceled:
When RERA officially cancels a project, the following steps are taken:
Transfer to Liquidation Department: The project's account is moved to the Real Estate Projects Liquidation Section.
Refund Process: The developer is required to return the amounts paid to investors within 60 days from the cancellation decision. If delays occur, the matter is referred to the court to safeguard investors' rights.
Legal Framework and Investor Rights
Dubai's legal framework, including Decree No. (33) of 2020, establishes a special tribunal for the liquidation of canceled real estate projects and the settlement of related rights. This tribunal:
Jurisdiction: Handles disputes and grievances related to unfinished or canceled projects, ensuring a streamlined resolution process.
Investor Compensation: Defines investors' rights and oversees the liquidation of assets to compensate affected parties.
It's important to note that cases under this tribunal's jurisdiction cannot be filed in other Dubai courts, including the DIFC Courts.
Steps for Investors Facing Overpayment Issues
Consult Legal Counsel: Seek advice from legal professionals specializing in Dubai real estate to understand your rights and options.
Engage with Authorities: Contact RERA or the DLD for guidance on the project's status and the appropriate course of action.
Pursue Legal Action if Necessary: If amicable resolutions fail, consider filing a case with the relevant judicial body to reclaim funds or address grievances.
By adhering to these steps and understanding the legal protections in place, investors can navigate the complexities associated with overpayments in stalled or canceled real estate projects in Dubai.
