Dubai issues escrow account law for property sector

Would the Escrow Account Law No.8 change your mind on Investing in Dubai Property ?

  • Yes

    Votes: 13 81.3%
  • No

    Votes: 2 12.5%
  • I don't Care

    Votes: 1 6.3%

  • Total voters
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New Member
Mentioned all ready on the Dubai Property Forum here The subject is important enough to make a sticky for a while.

Newspaper link here

Link to Law 8 Concerning Guarantee Accounts of Real Estate Development in the Emirate of Dubai in PDF format here


Real Estate Property
Dubai issues escrow account law for property sector

By Robert Ditcham, Staff Reporter
Published: July 25, 2007, 16:44

Dubai: Payments towards ‘off plan’ property purchases in Dubai will be protected in specially managed accounts after a law was issued this week by Dubai Government.

Click here to see the full text of the law (pdf)

The eagerly-awaited ‘Law No. 8 concerning Guarantee Accounts of Real Estate Development in the Emirate of Dubai’ has now come into effect after being published in the Official Gazette.

The law applies to any company or individual receiving ‘off plan’ payments for property that is not yet completed. However, at this early stage only properties that are launched from this week onwards will be subject to the law, according to Dubai Land Department.

Developers launching new residential or commercial multi-storey buildings and compounds will now have to apply to Dubai Land Department to open a guarantee account, which are known more commonly as trust or escrow accounts.

To do this they must submit certain documents, including the title deed of the plot being developed, approved architectural designs and layouts, a letter of approval from a master developer and a trade license.

If these papers are in order, the trust account will be opened according to a written agreement between a developer and the Land Department.

Money paid by buyers or financiers towards properties will then be deposited in a special account opened under the name of the property development in an approved bank.

Dubai Islamic Bank (DIB) on Wednesday acted swiftly to launch the Al Islami Escrow Account, the first such service in the region designed specifically for real estate developers.

After setting up the account, the issue of how they are managed and when money is released becomes crucial.

The law states that developers must apply to the trust account manager to release money from the account. The developer must first produce a certificate from a consultant working on the property that an agreed stage of construction has been reached.

The trust account manager then must inform the Land Department about the sums being released to the developer.

Even when a project is complete the developer will still not be given access to all the payments. The Land Department will keep 10 per cent of the project value for one year after completion until all units are registered in the names of buyers and title deeds are issued in their names.

Fines of no less than Dh200,000 will be handed out if certain requirements within the law are not kept.


LAW NO. (8)


We, Mohammad Bin Rashid Al Maktoum - Ruler of Emirate of Dubai

After perusal of:

- United Arab Emirates Federal Law no. (5) of 1985, as amended concerning Civil Transactions,

- Law no. (7) of 2006 concerning Real Estate Registration in the Emirate of Dubai,

- Rule no. (3) of 2006 concerning allocation of areas where foreigners can own properties in the Emirate of Dubai,

Do hereby promulgate the following law:

Chapter 1
Definitions & General Provisions

Article (1)

This Law may be cited as (Law no. ( ) of 2006 concerning Guarantee Accounts of Real Estate Developments in the Emirate of Dubai.


Article (2)

In implementation of the provisions of this Law, the following terms and phrases shall have the meanings appearing parallel thereto, unless otherwise provided by the context.

Emirate : Emirate of Dubai

Department: Department of Lands

President: President of the Department

Director: Director General of the Department

Register: Register prepared by the Department for registration of developers.

Guarantee Account: Guarantee account of a property development in which sums paid by buyers of units on the plan or by financiers of developments are deposited.

Concerned Authorities: concerned government or semi-government licensing authorities.

Developer: A natural or corporate person licensed to carry on property development business in the Emirate, including a main or minor developer.

Property Development: Projects involving construction of multi-storeyed buildings or compounds for residential or commercial purposes.

Property: Everything that is permanently fixed in its space and cannot be shifted without destruction or alteration in appearance.

Unit: A partitioned part of a property which a developer sells to third parties.

Article (3)

Provisions of this Law shall be applicable to a who sells units on the plan of the Emirate’s property developments that are not yet completed, whether under or in the process of construction, and who receives payments from buyers or financiers against such units before completion of the developments.

Article (4)

A special register known as (Register of Developers) shall be prepared at the Department to register names of developers licensed to carry on property development business in the Emirate. No developer may carry on such business in the Emirate unless being registered in the Register.

Article (5)

A developer shall not advertise in local or foreign media, or participate in local or foreigner exhibitions, for promotion of sale of units or properties on the plan or in the process of construction in the Emirate, until having obtained a written permit from the Department. The Director shall issue the necessary decisions to regulate the terms and conditions of advertising in media and participation in exhibitions.

Chapter 2
Establishing A Guarantee Account

Article (6)

Without prejudice to provisions of Article (3) of this Law, a developer wishing to sell units on the plan shall apply to the Department in order to open a guarantee account and shall enclose the following documents:

1- Trade license and certificate of registration of membership in Dubai Chamber of Commerce & Industry.
2 - Title deed of the plot intended for development.
3 - Letter of approval in relation to the development and issued by the main developer.
4 - Architectural designs and layouts approved by concerned authorities and the main developer.

5 - A balance sheet approved by the development’s consultant about sums payable to creditors of the development.
6 - Building permit issued by concerned authorities
7 - Copy of a sale contract between the developer and the buyer.

Article (7)

A guarantee account shall be established according to a written agreement between a developer and the Department through which sums paid by buyers of units on the plan, or paid by financiers, shall be deposited in a special account opened under the name of the property development in an approved bank in the Emirate.

The agreement shall determine the conditions of account management, the rights and obligations of contractual parties and other terms and obligations.

Chapter 3
Management of a Guarantee Account

Article (8)

The Department shall enter into a contract with an approved, experienced and qualified auditor to manage a guarantee account under its supervision. Spending from deposited sums shall be according to the conditions of contract and the provisions of this Law, and the guarantee account shall be governed by criteria of financial and accounting control that are in force in this regard.

Article (9)

Depositors or their representatives may examine their own accounting records and request copies thereof. The representative of official authorities may also examine the records as well as obtain copies thereof.

Article (10)

In the event that a developer mortgages a development to obtain a loan from financing establishments or companies he shall have to deposit the mortgage sum in the guarantee account. Disposal of a mortgage sum shall be according to provisions of this Law.

Article (11)

A developer may apply to the auditor for spending from a guarantee account after submitting a certificate issued by the consultant of a development describing completed stage and the requirement of a subsequent stage. The auditor shall have to inform the Department in writing about sums paid to the developer.

Article (12)

Without prejudice to Article (11),an auditor shall disburse payments due to a developer within 7 working days from the date of request for payment or the date of completion of required documents.

Article (13)

The Department shall keep 10% of the value of a development in the guarantee account for a period of one year after a developer has obtained a certificate of completion. The held sums shall not be spent until the units are registered in names of buyers and title deeds are issued under their names.

Chapter 4

Article (14)

Without prejudice to any penalties provided for in any other law, a penalty of incarceration and payment of a fine not less than 200,000 Dirhams, or either one of them, shall be imposed on anyone who:

1 - Carries on property development business in the Emirate without a license.

2 - Submits false documents or misstatements to concerned authorities in order to obtain a license for carrying on property development business.

3 - Offers to knowingly sell units in bogus property developments.

4 - Embezzles, uses or squanders payments delivered to him for the purposes of construction of property developments, and misappropriates such payments.

5 - Any auditor who deliberately prepares a false report about the result of an audit he conducts on a developer’s financial position, or conceals significant facts from his report.

6 - Any consultant who knowingly approves false documents about a property development.

Article (15)

If proved that a developer is unable to execute a development, the Department shall take necessary legal actions to protect rights of third parties.

Article (16)

1 - A developer shall be cancelled from the Register in any of the following events:

1 - If he declares his bankruptcy.
2 - If he cancels his license.
3 - If carries on prohibited business in the Emirate.
4 - If he repetitively violates provisions of Article (5) of this Law.

Chapter 5
Final Provisions

Article (17)

Existing developers at the time when provisions of this Law are applicable shall adjust their status in accordance with the provisions herein.

Article (18)

The Department may collect management fees against services offered in accordance with this Law.

Article (20)

This Law shall be published in the Official Gazette and shall be effective from the date of publication.

Mohammad Bin Rashid Al Maktoum
Ruler of Emirate of Dubai

Promulgated in Dubai on Tuesday 10th of October 2006, corresponding to 18th of Ramadan 1427 AH.

- The above stated amendments on the draft law was made on 12/12/2000.


New Member
After seeing this, I feel it is too late, most major projects have already been launched, & the law does not have retrospective effect. It is only applicable for new projects. So how does it help us?? Those thousands of ppl who have invested billions into dubai??


New Member

I'm just doing a bit of research on the legals of purchasing property in Dubai with a view to buying a property of my own. Could someone please advise if this law ever got passed?

The biggest fear I have is losing money I've worked hard for all my life and then having no legal recourse?

Many thanks
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