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RERA - Chief Justice of Dubai Real Estate Court confirms 30% of Paid Amount

Discussion in 'Dubai property' started by dubai_or_not, Apr 12, 2009.

  1. dubai_or_not

    dubai_or_not New Member

    Xpress: News | Rera: Dealing with defaulters

    Rera: Dealing with defaulters

    By Awad Mustafa, Staff Reporter

    The number of property-related cases has jumped significantly this year – many of which involve off-plan sales, cases of investors withdrawing and illegal provisions in purchase agreements, Real Estate Court’s top judge said.

    Abdul Qader Mousa Moham-mad, Chief Justice of Dubai Real Estate Court, said from September 1 to December 31, 2008, the number of cases filed was 173. But, in just three months – from January 1 to March 30 this year – 267 cases have been filed. Investors not paying

    “Some investors do not make the payments or refrain from making further payments due to fears that developers may fold up or run away,” Mohammad said.

    The Real Estate Court, a civil court, was created in September last year to deal with property disputes arising in the wake of Dubai’s property boom.

    Most of the cases involve buyers who have stopped paying for units booked with developers.

    “In this case, the developer has to alert Real Estate Regulatory Agency (Rera), which then informs the investor that he has a 30-day period to fulfil his contractual obligations. “If the investor does not fulfil his obligations, the developer has the right to cancel the contract and return the money paid, minus 30 per cent of the amount already paid – and not of the total contract value,” he said.

    Pay back clause

    “A number of investors wish to discontinue payment and are trying to get back 70 per cent of the amount they paid. As per law, developers are supposed to retain 30 per cent of the amount already paid by the investor,” he added.

    The judge’s explanation puts to rest confusion surrounding this clause. Developers used to claim that they may keep 30 per cent of the total contract unit’s price and not 30 per cent of the amount paid, in case an investor withdraws.

    The judge also explained that when a purchase agreement signed by the buyer and seller contains provisions that contradict the law, those provisions stand null and void.

    “Property laws in Dubai contain general laws. Provisions in the purchase contract are accepted as legal if they do not breach the law,” Mohammad said. Other cases involve delays in construction and hand-over of properties sold off-plan, he explained.

    Developers at fault

    “We have cases lodged against developers who did not hand over projects on time or have not even started building. In such cases, we look at the contracts individually and then the court decides. If the developer is found to be at fault, we then nullify the contract and order them to repay investors the full amount paid by them.”

    Many of the cases lodged by investors have to do with properties sold off-plan, he added.

    “A lot of complainants come to the court without purchase contracts. They present only booking forms issued by either developers or property brokers. The court settles contractual disputes. So, in case of booking forms or instalment receipts issued to buyers, these documents are viewed as contracts, but disputes arising out of clauses not mentioned in these documents need to be proved in court,” he said.

    He also stressed that the law on escrow account is clear.

    The Escrow Law

    “Law No 8 of 2007 [the Escrow Law] states that a project developer has to place a deposit or financial collateral of equal value of the property at Rera.

    “This is why every buyer has to be registered in the Real Estate Registry in order to guarantee his rights.”

    The court demonstrated its strict adherence to the law last month when it ordered a Dubai developer to pay over Dh8 million to an investor after it deemed the purchase contract the company gave to the buyer invalid as the developer failed to register the land with the Land Department.

    Advice to buyers and investors

    Under Law No 13, 2008, the developer has no right to ask buyers to pay extra money for any increase in the size of the unit, if the project is completed

    Service charges must be Rera- approved. Before paying service charge, the buyer must register his unit with the Dubai Land Department and wait for approval

    Go to the Land Department directly to register the unit; don’t pay the excess charge if the unit is ready (Law No 13, 2008)

    Charges for utilities should be imposed by the utility provider; a developer has no right to charge unit buyers for chiller connection unless the provider allows the developer to do it contractually

    The property registration fee is two per cent, to be paid to the Land Department by the owner (one per cent) and the developer (one per cent)

    Buyers are not obliged under the law to sign anything they don’t agree on

    (Additional inputs from Mohammed N. Al Khan)

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  2. fsjstar

    fsjstar New Member

    good news at last
  3. Doobedoo

    Doobedoo New Member

    Does anyone know if this relates to all contracts or only those post August 08?
  4. AjmanInvestor

    AjmanInvestor Banned

    GOOD NEWS FINALLY Chief Justice of Dubai Real Estate Court : Pay back clause

    Pay back clause

    “A number of investors wish to discontinue payment and are trying to get back 70 per cent of the amount they paid. As per law, developers are supposed to retain 30 per cent of the amount already paid by the investor,” he added.

    The judge’s explanation puts to rest confusion surrounding this clause. Developers used to claim that they may keep 30 per cent of the total contract unit’s price and not 30 per cent of the amount paid, in case an investor withdraws.
  5. patience

    patience New Member

    If one has paid 65% and the development hasn't started, can we take the developer to court and get ALL our money back. We are not getting any responce via email from RERA with this?
  6. dubister

    dubister New Member

    BS, I went to Rera to confirm this yesterday and they told me that it is 30 pct of monies paid if the property is paid upto 30 pct in full. Then he went on to say that the contract must be cancelled by the developer not the buyer. And then he said that it is nearly impossible to get teh big companies like Emaar, Nakheel etc to cancel any contracts. He suggested one can file a case at the property court across the street, but the investor must pay a percentage of total investment as a fee to the court to lodge a case, which he then said is rarely ever won.

    Then I went and visited Emaar, and they said they have stopped terminating or cancelling contracts, period as long as you are in the country and trackable. And basically Law 13 never comes in to play. They keep the property and charge a fine of 5000 + 2% interest per month on the investors account and the investor can choose to start back with the property even after two years as long as they pay the fine. But NO CANCELLATION!!!
  7. dubister

    dubister New Member

    I have NO trust in the legal system here. I used to read all these stories and listen to thousands of opinions. And always kept my last resort on the legal system here. Till yesterday, everything collapsed when I went and saw and met Rera and thier legal advisers there. I met many people like your case, whom sat and sat and sar and met a few reps and then decided to leave with no solution. Its a fish market there.... go and see for yourself.
  8. pisandre

    pisandre New Member

    I agree with dubister. I would be very pleased about people who succeed to get anything good from RERA. Positive testimonies are missing here...
  9. AjmanInvestor

    AjmanInvestor Banned

    Rera and arra must take action and bring back the confidence in dubai and ajman

    rera and arra must get into swift action and bring back the confidence in dubai and ajman, only may june 2009 will tell what will happen to the thousands of buyers and investors who are very badly stuck with their investments in dubai and ajman

    lets hope for the best and get ourselves prepared for the worst to come, because the worst has just started to show itself a little to us.

    All of my friends are stuck with their properties investments in ajman and dubai.
  10. petershan

    petershan New Member

    Is this law for all contracts or for those after August 2008, can anybody help.
  11. guillaume hess

    guillaume hess New Member


    Yes you can go to court and get ALL your money back. I am a lawyer in Dubai and we have won cases similar to the one you describe.

    You have to act fast though!!!

    If you need assistance please contact me:
  12. petershan

    petershan New Member

    HI ,

    You have paid 65% , and the development not started, Which developer is this and what is the project ? , Any reply from your developer about this.
  13. guillaume hess

    guillaume hess New Member

    Some of the information here is not accurate because it comes from the RERA!! I am a lawyer here in Dubai concentrating on real estate disputes.

    A buyer can get a cancellation in court in certain cases. Usually it is when the developer is very late or has cancelled his project. A lawyer I work with even won a case in which a project was delayed for only a month ! ! !

    The RERA won't tell you this because it is not in their interest! Also in court, to lodge a case it is no longer a percentage as it has been capped to 30 000 AED. We have been able to make developers pay this amount back to our clients.

    Solutions exist! If you need further assistance, please do not hesitate to contact me:
  14. fsjstar

    fsjstar New Member

  15. pisandre

    pisandre New Member

    Last edited: Apr 15, 2009
  16. Sajeel

    Sajeel New Member



    This news is not appearing on RERA.........and it is not appearing on other news papers..........I want to know the procedure to get back 70% of the investment..............please help
  17. pisandre

    pisandre New Member

    Man you need to hire a lawyer (and pay big bucks) and go to court...
  18. AjmanInvestor

    AjmanInvestor Banned

    Lawyers are so busy they are taking only big cases as they are already full

    Lawyers are so busy they are taking only big cases as they are already full, cases which will give them big money, therefore now there are investors group which is picking up, they are teaming up say for each project all the investors grouped together they are hiring a lawyer against a developer all teamed together so that there expenses for hiring a lawyer are shared by all of them.

    What all new things are happening, and everybody knows now that by july 2009 lot of legal matters will start functioning, investors and buyers i mean INVESTOR GROUPS THE NEW TERM IN THIS MARKET against the developers.

  19. guillaume hess

    guillaume hess New Member


    I must be the exception that confirms the rule. I am working as a mwyer here in Dubai and my firm is willing to take cases big or small. We are here to help the ones who are in dramatic situations and desperate to retrieve their investment.

    I cannot promise miracles but I will assist you in the best possible way. In my opinion, grouping investors against developers is the best solution as it will give you more power in court.

    Should anyone need assistance for court proceedings or any other type of advice please feel free to contact me :

    Good luck to you all!


    Guillaume Hess
  20. Davor

    Davor New Member

    Hi AjmanInvestor,
    Any idea how to contact Investors groups or find the investors in the same project?
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