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A fundamental and legitimate question to any Developer

Discussion in 'Dubai property' started by Datum1m, Dec 3, 2008.

  1. Datum1m

    Datum1m New Member

    A fundamental and legitimate question to any Developer, before you make your next payment should be is my money safe?

    Are you willing to give me an on demand Bank guarantee that my money will be paid back to me in full with 10% interest if you fail to deliver my unit within 6 months of a date stated in our contract?

    I feel in these times of uncertainty the Developers have got to give us some form of security for the money we have paid them and are still paying them. We need them to be showing us they actually have their own money tied up in these Developments, not just our money.

    How can they expect anyone to continue making payments when the Land Department are stating payment defaults are over 40%. It is not rocket science for any purchaser to work out that the Development is not feasible if only 60% of the payments are being made, so unless the Developer takes out finance for the remaining 40% how can our invested money be safe.
     
  2. Roshan

    Roshan New Member


    Escrow is the best bank guarantee any developer can give. You can insist on paying only to Escrow accounts even if the developer should ask payments directly. He would not cancel the contracts as he himself is defaulting on the law. Any cancellation should be reported and the developer be brought to task.

    Regards

    Roshan
     
  3. Datum1m

    Datum1m New Member


    Roshan,

    You are wrong in saying the Escrow account is the best guarantee a Developer can give, because is does not 100% protect our invested money. How can it possible protect the purchases money in full when a Developer can legally draw our funds out of an Escrow account to cover the following costs, 1) Marketing & Advertising 2) Administration 3) Land Acquisition, without even starting on site construction.

    Law 13 now gives the Developer the right to take any defaulting purchaser to court if they have not paid up to 30% of the value of their sales contract, therefore anybody only paying 10% can be sued by the Developer for a further 20%. The law as it is written gives the Developer the right to do this even though he may not have started on site construction.

    So when the Land Department are stating there are 40% payment defaults by purchasers, how can the remaining 60% of purchasers money be 100% safe when as I have already explained in paragraph one above, the Developer will have already legally spent up to 30% of this money without even starting on site. With 40% defaults in payments how can the Development by viable, it should be clear for everyone to see if the Developer cannot get additional sales or finance to bridge the gap caused by the 40% payment defaults then technically he is insolvent. However the remaining 60% of purchasers are still contractually bound to carry on paying an insolvent Developer, you as insufficient funds within the Escrow account to pay them their money back in full should he not be able to deliver the purchasers Unit under the terms of the sales contract.

    So I ask you Roshan, why shouldn’t any purchaser be entitled to ask any Developer if their money if 100% safe?
     
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