Investors against interpretation of law no 13

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Ajmanprop

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Not going thru with payment

Nosstrand:

Here's the little that I know that may be of help... if you have Post Dated Cheques outstanding.

1) In order to put a stop payment on cheques, like in the developed world, in the UAE, you need a police report. In order to get a police report, you need to file a court case/dispute etc.

2) Letting a cheque bounce is considered a criminal offense. You won't get put in jail, unless the counterparty presses charges. However, if they want, the developer can be a nuisance, put a travel ban etc.

3) If you don't care to live there any longer... I guess you could walk away. What can they do.

If you are just paying by bank transfer - ie. wiring it in, I can't see any reason why you can't walk away from it.... but if post dated cheques, then you may want to consider getting some legal advice.
 
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nosstrand

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Thanks Kieran.

I would appreciate that. Just spoke to EMAAR who said that they "have chosen to not apply Law 13" (give back 70% of the paid amount)

So according to them, they can choose what laws to follow.
 
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nosstrand

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Nosstrand:

Here's the little that I know that may be of help... if you have Post Dated Cheques outstanding.

1) In order to put a stop payment on cheques, like in the developed world, in the UAE, you need a police report. In order to get a police report, you need to file a court case/dispute etc.

2) Letting a cheque bounce is considered a criminal offense. You won't get put in jail, unless the counterparty presses charges. However, if they want, the developer can be a nuisance, put a travel ban etc.

3) If you don't care to live there any longer... I guess you could walk away. What can they do.

If you are just paying by bank transfer - ie. wiring it in, I can't see any reason why you can't walk away from it.... but if post dated cheques, then you may want to consider getting some legal advice.
Thanks AjmanProp.

I don't have any post dated checks so nothing will bounce. I paid already the first installment, and no more checks are given. I went there to cancel (basically walk away with no refund) 6 weeks ago. They told me to just ignore the next installment and it would then be cancelled automatically.

However, today when I spoke to Emaar they said that they can force me to follow through the payment schedule. (and they choose to not follow Law 13)

It is very sad. I was promised 90% finance for this property when I signed the papers and paid for the unit. But wasn't given a contract after 7 days as promised so I couldn't apply for the mortgage (still no contract, after 3 months). Basically they put me in this position and they won't let me out.

All input and advise is appreciated.
 
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TommyC

New Member
Thanks AjmanProp.

I don't have any post dated checks so nothing will bounce. I paid already the first installment, and no more checks are given. I went there to cancel (basically walk away with no refund) 6 weeks ago. They told me to just ignore the next installment and it would then be cancelled automatically.

However, today when I spoke to Emaar they said that they can force me to follow through the payment schedule. (and they choose to not follow Law 13)

It is very sad. I was promised 90% finance for this property when I signed the papers and paid for the unit. But wasn't given a contract after 7 days as promised so I couldn't apply for the mortgage (still no contract, after 3 months). Basically they put me in this position and they won't let me out.

All input and advise is appreciated.
Force a customer to follow through? This is getting better by the day... I hope you have signed up for investorslaw13 at hotmail.com!
 
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Doobedoo

New Member
Thanks AjmanProp.

I don't have any post dated checks so nothing will bounce. I paid already the first installment, and no more checks are given. I went there to cancel (basically walk away with no refund) 6 weeks ago. They told me to just ignore the next installment and it would then be cancelled automatically.

However, today when I spoke to Emaar they said that they can force me to follow through the payment schedule. (and they choose to not follow Law 13)

It is very sad. I was promised 90% finance for this property when I signed the papers and paid for the unit. But wasn't given a contract after 7 days as promised so I couldn't apply for the mortgage (still no contract, after 3 months). Basically they put me in this position and they won't let me out.

All input and advise is appreciated.
Notwithstanding the fact that it would seem they believe they can make it up as they go, surely if they aren't going to apply Law 13, the contract will therefore apply so where in the contract does it say that they can make you follow through with the schedule?

In my experience of the typical Emaar / Nakheel contracts, there is no clause to this effect.

Cheers
 
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nosstrand

New Member
Notwithstanding the fact that it would seem they believe they can make it up as they go, surely if they aren't going to apply Law 13, the contract will therefore apply so where in the contract does it say that they can make you follow through with the schedule?

In my experience of the typical Emaar / Nakheel contracts, there is no clause to this effect.

Cheers
Well, I wouldn't know what the contract says since they still haven't provided me with one (which is why I am in this position right now since I couldn't get a mortgage).
The only thing that the paper I have says is that the downpayment is non refundable. I am OK with this, I know that there is a risk dealing with properties and I know that Emaar is suffering big time from the credit crunch. But I am very surprised how they have the nerve to talk about legal stuff when they actually never delivered what they promised at the launch day.
 
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Ajmanprop

New Member
Nosstrand:
I'm no expert by any means, but not having any Post Dated Cheques, not having signed a contract - means that you have almost nothing to worry about when walking away. Moreover, you can tie it into not being able to secure financing etc. Of course, you can expect Emaar to bark without bite.

The standard operating procedure with all / most developer's seems to be,
1) Get the booking deposit or 1st installment in.
2) Stall long enough, and deliver the contract 3-4 months down the road, by when you'd have paid a couple more installments.
3) By the time you finally get a contract, you are into the 3rd installment, and the developer has a take it or leave it attitude... to the terms and conditions.

Consider yourself fortunate to not have issued the post dated cheques.
 
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Ajmanprop

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Mod: If reposting is not permitted, pls delete. I cannot post the URL, so did a cut and paste.


This is an interesting piece - from Wadi online - Story #6842.
(news - wadionline - com)

Disparate circulars add to confusion
Publish Date: 2008-11-24 02:00:05 Story Code: 6842

This article, the latest in a series of articles we have published regarding aspects of Dubai's legal regime, aims to answer some questions created in the wake of certain recent real estate legislation in Dubai. This legislation was issued in order to organise Dubai's real estate legal regime, but has instead opened the door to disparate circulars designed to clarify, modify or amend existing legislation, thereby exacerbating the confusion and deepening the chaos.

The latest contribution to the recent real estate legislation was the Administrative Circular issued on November 10, 2008 explaining inter-alia Article 11 of Law No. 13 in relation to the Organisation of the Preliminary Land Register in the Emirate of Dubai for the year 2008.

Article 11 provides that:

"1 - In case the Buyer violates any of the terms and conditions of the real estate unit sale agreement entered into with the Developer, the latter should notify the Department of the same. Then the Department shall give the Buyer, whether in his presence, by registered mail or by e-mail, a deadline of (30) days to fulfil his contractual obligations.

2- In case the deadline indicated in Paragraph (1) hereof expires without fulfilment by the Buyer of his contractual obligations, the Developer may revoke the agreement and return the amounts received from the Buyer after deducting maximum 30 per cent of the amounts paid by him."

Clarification needed

Article 11 contravenes the UAE Civil Transactions Law, which provides that monetary compensation for damages should be in direct relation to damages incurred. Therefore, according to Article 389 of the UAE Civil Transactions Law, it is left to the discretion of a judge to assess monetary damages. Article 11 mandates liquidated damages in favour of developers, limiting the judge's discretion in assessing the damages, in direct violation of the UAE Civil Transactions Code. This situation begs legislative clarification. However, instead of waiting for such clarification, the Land Department issued the Administrative Circular.

For the sake of argument the second clause of the Administrative Circular provides that "in case the contract is cancelled, the developer may retain 30 per cent of the contract's value, and the rule of (30 per cent-70 per cent of the money paid) shall be applied on amounts exceeding 30 per cent". Article 11 is clear when it states that if the buyer does not fulfil its obligation under the agreement, then the developer has the right to cancel the agreement and "return the amounts received from the Buyer after deducting maximum 30 per cent of the amounts paid by him".

In contrast, the Administrative Circular interprets Article 11 as follows: "in case of cancelling the contract, the developer may retain 30 per cent of the contract's value, and the rule of (30 per cent - 70 per cent of the money paid) shall be applied on amounts exceeding 30 per cent". In examining this clause and comparing it to Article 11, it is clear that the Administrative Circular has the effect of amending and adding to Article 11.

In our view, Article 11 is very clear and the Administrative Circular contradicts Article 11's intent. Article 11 was issued by the highest authority in Dubai. By law, an administrative decision may explain the law but may not amend it or add to it. Therefore, the Administrative Circular is, in our opinion, illegal. In addition Article 15 of Law No. 13 states that "this Law shall be published in the Official Gazette and come into force from the date of its publication". On the other hand, clause 5 of the Administrative Circular stipulates that "Law number 13 shall be implemented with immediate effect, therefore the contracts executed prior to the Law shall be subject to the terms of the contract entered by the developer and the purchaser, but the contracts executed after the enactment of the Law shall be subject to the rules of the Law." The law cannot come into force with immediate effect when its basis must necessarily follow publication. The Administrative Circular cannot amend Law No. 13 and enlarge the scope of Article 15 beyond its legislative intent.

The Land Department should have waited to issue administrative circulars till the requisite Executive Orders are issued. Laws exist to further justice and not to give a party such as the developer or the buyer an advantage over the other.

If the implementation of laws and regulations grant advantages to the developers at the expense of buyers and/or investors, it would likely discourage investors and buyers, which in turn would negatively impact the economic boom that Dubai is experiencing.

- The writer is managing partner of Dubai-based Habib Al Mulla & Co law firm

© Gulf News 2008. All rights reserved.
 
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Doobedoo

New Member
Well, I wouldn't know what the contract says since they still haven't provided me with one (which is why I am in this position right now since I couldn't get a mortgage).
The only thing that the paper I have says is that the downpayment is non refundable. I am OK with this, I know that there is a risk dealing with properties and I know that Emaar is suffering big time from the credit crunch. But I am very surprised how they have the nerve to talk about legal stuff when they actually never delivered what they promised at the launch day.
Hi,

Sorry I should've read your post better - apologies - no contract = no terms!! However, it got me thinking, I'm wondering if new contracts are going to include clauses to this effect - even just as a scare tactic for the uninitiated. My advice would be for anyone signing a new contract to take a close look before signing, not that there will be much of that right now.
 
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therealdubai

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This law firm is one among the best in Dubai concerning real estate issues.
 
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nosstrand

New Member
Hi,

Sorry I should've read your post better - apologies - no contract = no terms!! However, it got me thinking, I'm wondering if new contracts are going to include clauses to this effect - even just as a scare tactic for the uninitiated. My advice would be for anyone signing a new contract to take a close look before signing, not that there will be much of that right now.
Hi. Thanks for all input. I met with them today. They assured me that they wont force me to pay any more money if I walk away. Good news :)
 
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dbxdude

New Member
Anything could happen but i don’t think anyone is going to jail for bouncing a cheque from a developer for a development that hasn’t been completed or even begun - the powers that be have worked to hard to create a great city - investors imprisoned on the headlines – is not going to happen.

The confusion comes from the fact that developers haven’t given their sales staff/customer service staff clear directives on how to address concerns regarding defaults, so they just say what they feel like - ie. we make you pay, you loose your deposit etc without actually knowing anything about your case and even less about the law. In truth the front office staff haven’t been given direction by their management since their management are still trying to work out what to do…

I have found when you request to see someone more senior and explain your position its possible to get 6 month payment holidays. I’ve done this twice now. Not as good as 70% back but non the less much better then walking away. Remember, they dont want you to walk away, they have no one else to sell your units to, so negotiate before walking away. Maybe things will be worse in 6 months, maybe better....

PS the interpretation of law posted above - totally correct and obvious to anyone who ever read law 13 in the first instance...
 
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TommyC

New Member
Anything could happen but i don’t think anyone is going to jail for bouncing a cheque from a developer for a development that hasn’t been completed or even begun - the powers that be have worked to hard to create a great city - investors imprisoned on the headlines – is not going to happen.

The confusion comes from the fact that developers haven’t given their sales staff/customer service staff clear directives on how to address concerns regarding defaults, so they just say what they feel like - ie. we make you pay, you loose your deposit etc without actually knowing anything about your case and even less about the law. In truth the front office staff haven’t been given direction by their management since their management are still trying to work out what to do…

I have found when you request to see someone more senior and explain your position its possible to get 6 month payment holidays. I’ve done this twice now. Not as good as 70% back but non the less much better then walking away. Remember, they dont want you to walk away, they have no one else to sell your units to, so negotiate before walking away. Maybe things will be worse in 6 months, maybe better....

PS the interpretation of law posted above - totally correct and obvious to anyone who ever read law 13 in the first instance...
I'm not to sure they want everyone to stay with them, from what I've seen with my developer they rather have you default and get your cash straight away.
 
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dbxdude

New Member
I'm not to sure they want everyone to stay with them, from what I've seen with my developer they rather have you default and get your cash straight away.
Fair point - let me qualify, it depends on the developer. larger developers (ie the big 3) could be more reasonable, there commissioned by Dubai govt to help them build the city and for the large part they are Dubai Govt, so they should have less interest in foreclosing people. Legally speaking, they don’t really have a case to do this anyway - unless they change law 13. That circular is nonsense, law is clear 70% of monies paid not 70% of contract value – REARA cannot just change the law and make it up, howeevr, perhaps they can get it changed – but they don’t have the authority to do this themselves.

The big three developers know this so they should be more amenable to negotiating payment terms – if not file a case, it cost next to nothing and there is no way they wont try and come up with a solution rather then risk president being set.

Smaller international developers could be different story. I brought it up because someone was talking about walking away from a Emaar property - which i don’t think they should do, they should press them for a payment holiday while waiting to see how we progress with law 13.... I know for a fact they are open to negotiation if you press them from a position of strength – if you walk away quietly, course they will let you….
 
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Ajmanprop

New Member
Clarification

Dbxdude:

When you say filing a case costs next to nothing - do you mean from a developer standpoint? Or individual buyer standpoint?

If the latter;
I was quoted close to 30,000AED in court fees, 1200AED or so per hour for the lawyer etc. It wasn't trivial.

Appreciate any comments on whether the #s involved are in the ball park of what you had in mind.
Thanks
 
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TommyC

New Member
Dbxdude:

When you say filing a case costs next to nothing - do you mean from a developer standpoint? Or individual buyer standpoint?

If the latter;
I was quoted close to 30,000AED in court fees, 1200AED or so per hour for the lawyer etc. It wasn't trivial.

Appreciate any comments on whether the #s involved are in the ball park of what you had in mind.
Thanks
That's a serious amount of money for an individual. What really is necessary right now is to realise a few things; Private developers have a tough future and are probably looking to leave the market in the short-term, taking with them any money they can get. It wouldn't surprise if escrow accounts are being emptied as we speak by different claims and so on. The government owned companies wont go anywhere, hence they are slightly more willing to seek solutions (change payment plans etc. at least not the same interest in cancellations as the private developers). So the original Law 13 is aiming more at the private developers in my opinion, so now there's a crossroad, where does the government want to go; Keep the investors confidence or protect developers which are looking to leave? In my opinion, the answer is pretty clear which is the right one!
 
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therealdubai

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If anybody knows an escrow accountant with some experience please inform me.
Thanks
 
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varindani

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Dear Mr. Muhammad
I have sent you an email with regards to joining the group. Please check.
 
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