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Investors Hit By New Law To Aid Dubai Developers
June 9, 2009Article by Ray Withers
Off-plan Dubai property investors have given developers such a cash drubbing, a new law has been quickly brought in to force to shield the developers from further losses.
The law clearly stipulates that:
- If the developer has completed 80% of a project, it can keep the full amount paid and request purchaser to settle the remaining amount of the contract price. If not possible, it can request the property be sold at auction.
- If the developer has completed at least 60% of project, it may revoke contract and deduct up to 40% of the purchase price of the unit as stipulated in contract.
- If the developer has completed less than 60% of project, it can revoke contract and deduct % of purchase price as stipulated in contract.
- If construction has not yet started, the developer may revoke contract and deduct up to 30% of amount paid by purchaser.
The Dubai government claims passing the new law is a step forward to clean up the desperate financial mess in the property market – but fails to indicate that most large developers have connections to the ruling royal family. Law No 9 relates to all buyer-developer contracts for off-plan units, regardless of when they were signed. If the buyer fails to make payments, the developer must notify the Real Estate Regulatory Authority.
Then a written notice is given to the buyer pointing out the breach of contract and requesting full payment within 30 days. If no payment is made, the developer can cancel the contract. The law is the fact that it is retrospective that makes any other agreements are no longer valid. “Dubai off-plan property investors should carefully check the current documentation of their agreement with developers to make sure they are not in default,” said a spokesman for leading international real estate consultants Property Frontiers. “At this stage, the legislation is so new no one really knows whether it favours the developers or the investor.”
“We would suggest anyone in dispute with a Dubai developer should take professional advice.”
For more information contact Property Frontiers on +44 (0) 1865 202700.