Cancelling a contract

[Zahid]

I have a 1 bed apartment in Goldcrest Smart Towers and have paid 20% of the cost. i spoke to the developer about cancelling and they said they cannot do this due to the market conditions.

I have my SPA and there is no mention of cancellation in there hence nothing about charges if i were to cancel. the only mention of cancellation is on my booking form that states i would lose booking amount of 5%. i am prepared to lose my 5% but can the developer still refuse to cancel my apartment?

 

[financier888]

I have a 1 bed apartment in Goldcrest Smart Towers and have paid 20% of the cost. i spoke to the developer about cancelling and they said they cannot do this due to the market conditions.

I have my SPA and there is no mention of cancellation in there hence nothing about charges if i were to cancel. the only mention of cancellation is on my booking form that states i would lose booking amount of 5%. i am prepared to lose my 5% but can the developer still refuse to cancel my apartment?

You need to check with an atty and see if the same terms related to cancellation in your reservation form can still apply although I doubt it - I would think that the SPA you signed will supercede it but it's worth a check... The SPA should have contained language for cancellatiion - if it doesn't like you stated - then the local RERA laws would apply for cancellation and you are subject to lose 30% of what you have paid in... (are you funds in escrow?) If the project is in Dubai, then ONLY RERA has the power to cancel your contract - you should contact them...

good luck!

 

[Zahid]

hi. thanks for your reply. i just got the contract the other day so have not yet signed and returned it yet. the project is in Ajman so do you know what the Ajman RERA cancellation policy is? i tried calling them but no answer. the only thing i have signed is the booking form.

 

[dr_property]

Cancellation

hi. thanks for your reply. i just got the contract the other day so have not yet signed and returned it yet. the project is in Ajman so do you know what the Ajman RERA cancellation policy is? i tried calling them but no answer. the only thing i have signed is the booking form.

Hi,

As far as I know there is a certain charge that the developer will take when you cancel a project. I can check for you only if you can give me a copy of your reservation form.

Dubai RERA has no jurisdiction in Ajman and the Ajman RERA is as good as not being there. If you have not signed the SPA then the booking form will be looked at. To be honest nowadays there are no strict rules and regulations that apply...it depends on who you know and where.

If you feel upto it send me your papers on dr_property at mcbdubai dot com...I can talk to people...or if you are based in UAE, come visit me in my office...

Thanks

 

[Vicks]

What if you don't have an PSA or a contract but have been chasing for one but never got one?

If one wants to cancel having put down 20%, what are the chances of reimbursement?

 

[dr_property]

What if you don't have an PSA or a contract but have been chasing for one but never got one?

If one wants to cancel having put down 20%, what are the chances of reimbursement?

Hi,

Well do you have any written correspondences with the developer? As for the reimbursement, chances are less but its worth a try...as we all are aware nobody wants to let go of cash

Regards

 

[Vicks]

Hi,

Well do you have any written correspondences with the developer? As for the reimbursement, chances are less but its worth a try...as we all are aware nobody wants to let go of cash

Regards

Nothing in writing. The person just have an MOU but nothing else. No contract, no details of schedules payments although they are asking for the payment on scheduled dates, no receipts for previus payments. Just nothing. all Correspondence by email and sometimes they will not respond.

I have advised to hold of the next payment until i can find out more.

 

[financier888]

Mou?

Nothing in writing. The person just have an MOU but nothing else. No contract, no details of schedules payments although they are asking for the payment on scheduled dates, no receipts for previus payments. Just nothing. all Correspondence by email and sometimes they will not respond.

I have advised to hold of the next payment until i can find out more.

MOU? Is the nature of the MOU connected with a 'buy-back' / return gaurantee? If so, many of these types of MOUs contain language that NO FURTHER installments will be do. In most cases, (not sure as I have not seen yours...) the MOU is NOT a reservation form associated with a 'sale / purchase' - so no additional payments would be do... Again, this is based on most of the MOU specimens I have seen...

 

[Ronny19]

I have got the same situation as Mr Zahid's one,I mean I have paid 25% of the purchase value I have still not got the contract. In the reservation form is written that in case of cancellation seller has the right to forfeit 10% ( booking deposite). So I am also ready to loose 10% but don't know If I scan till get 15% back. Is there somebody who could give some info about that?
Thanks

 

[financier888]

I have got the same situation as Mr Zahid's one,I mean I have paid 25% of the purchase value I have still not got the contract. In the reservation form is written that in case of cancellation seller has the right to forfeit 10% ( booking deposite). So I am also ready to loose 10% but don't know If I scan till get 15% back. Is there somebody who could give some info about that?
Thanks

If I understand you correctly - based on the contracutal agreement you signed, ( the reservation form) you should be entitled to the 15% - however, best to check with an atty just to make sure or run it by the Escrow_officer on this site - he's quite knowledagble... However, there is one caveat - 'Does the developer have the funds to pay you the 15% ???? If you have this to take this to court - the lega fees can be high and / or the atty will take a large chunk of your 15% AND you still have to pay the court filing fee's. Without the SPA (sales purchase agreement) the developer would be bound by your current written agreement.

 

[Ronny19]

I don't have any idea if my developer has the funds or not... I paid 15% over the booking deposite as 1 istallment and was supposed to get a contract,but as their manager was in home leave the prommised me to send by post as soon as he comes back.
How I realise maybe I had a good chance not have signed the contract and perhaps will be able to get back 15%. I have not disscused yet with my developer about this matter and only I have signed is the reservation form .

 

[financier888]

I don't have any idea if my developer has the funds or not... I paid 15% over the booking deposite as 1 istallment and was supposed to get a contract,but as their manager was in home leave the prommised me to send by post as soon as he comes back.
How I realise maybe I had a good chance not have signed the contract and perhaps will be able to get back 15%. I have not disscused yet with my developer about this matter and only I have signed is the reservation form .

The cancellation clause in your contract should also contain langauge as the procedure for cancellation - sending letter / notice etc. I would contact the developer 1st and talk to them and see what kind of response you get and by all means - DO NOT SIGN THE CONTRACT! - by law, the developer will be bound under the terms and conditions of the reservation form. In Dubai, you'd prevail in court in Ajman....well - that's another story..... talk to them first and see how they react...

 

[Ronny19]

Where could I send the contains of my reservation form to so that you can read it?

 

[romail]

I have a 1 bed apartment in Goldcrest Smart Towers and have paid 20% of the cost. i spoke to the developer about cancelling and they said they cannot do this due to the market conditions.

I have my SPA and there is no mention of cancellation in there hence nothing about charges if i were to cancel. the only mention of cancellation is on my booking form that states i would lose booking amount of 5%. i am prepared to lose my 5% but can the developer still refuse to cancel my apartment?

Why are these two laws important to you? They came into effect on October 31st, 2008 and have some extremely important ramifications. We’ve outlined the most important parts of the laws for you below, however we do recommend you read through the laws in their entirety to get a feel for their depth.

1)As of October 31st if your off-plan property is not registered on the Interim Real Estate Register you will not be able to sell it, and technically your agreement with the developer will be null and void. (Article 3, Law 13)


2)If you purchase an off-plan property after October 31st you will have to ensure it is registered otherwise the purchase can be construed as being null and void. (Article 3, Law 13)

3)It is the developer, not the owner, who must register an off-plan property. If you own an off-plan property and have not already done so we strongly recommend you contact your developer ASAP to make sure it has been registered. (Article 3, Law 13)


4)If you have purchased an off-plan property, and then default on the payment plan, the developer must refund a minimum of 70% of what you have paid. This has a significant affect as most contracts currently state a default results in losing all monies you have paid. (Article 11, Law 13)


5)Mortgages are not considered valid unless they are registered. (Article 7, Law 14)

6)A mortgage cannot be registered until the property is on either the Interim Real Estate Register (off-plan property) or the Real Estate Register (completed property).
If you own a completed property you must also make sure it is registered. (Article 8, Law 14)

7)A mortgagee/creditor can take legal action against the mortgagor/debtor if the property is not kept in a good condition. (Article 19, Law 14)

8)All mortgages on completed properties must also be registered with the Dubai Land Department. In addition all completed properties must already be registered with the Dubai Land Department so they are on the Real Estate Register. (Article 3, Law 13 and Article 7, Law 14)

 

[verity]

Why are these two laws important to you? They came into effect on October 31st, 2008 and have some extremely important ramifications. We’ve outlined the most important parts of the laws for you below, however we do recommend you read through the laws in their entirety to get a feel for their depth.

1)As of October 31st if your off-plan property is not registered on the Interim Real Estate Register you will not be able to sell it, and technically your agreement with the developer will be null and void. (Article 3, Law 13)


2)If you purchase an off-plan property after October 31st you will have to ensure it is registered otherwise the purchase can be construed as being null and void. (Article 3, Law 13)

3)It is the developer, not the owner, who must register an off-plan property. If you own an off-plan property and have not already done so we strongly recommend you contact your developer ASAP to make sure it has been registered. (Article 3, Law 13)


4)If you have purchased an off-plan property, and then default on the payment plan, the developer must refund a minimum of 70% of what you have paid. This has a significant affect as most contracts currently state a default results in losing all monies you have paid. (Article 11, Law 13)


5)Mortgages are not considered valid unless they are registered. (Article 7, Law 14)

6)A mortgage cannot be registered until the property is on either the Interim Real Estate Register (off-plan property) or the Real Estate Register (completed property).
If you own a completed property you must also make sure it is registered. (Article 8, Law 14)

7)A mortgagee/creditor can take legal action against the mortgagor/debtor if the property is not kept in a good condition. (Article 19, Law 14)

8)All mortgages on completed properties must also be registered with the Dubai Land Department. In addition all completed properties must already be registered with the Dubai Land Department so they are on the Real Estate Register. (Article 3, Law 13 and Article 7, Law 14)

Hi
thanks for info on Law.
Could you confirm if this law abides in Dubai ?
Would it apply to Ajman as well ?
v

 

[financier888]

ajman - it does not

Hi
thanks for info on Law.
Could you confirm if this law abides in Dubai ?
Would it apply to Ajman as well ?
v

Hi = this law, (well done R on the post ! ) only applies to Dubai. Although Ajman is adapting many of the Dubai laws - these only apply to Dubai for the time being. You should note them and act upon them where applicable..

 

[verity]

Hi = this law, (well done R on the post ! ) only applies to Dubai. Although Ajman is adapting many of the Dubai laws - these only apply to Dubai for the time being. You should note them and act upon them where applicable..

HI Financier
thank you for that
So what you think will now happen in Ajman ??
with all that ARRA registration, lack of infrastructure, and problems of plots handovers from masterdevelopers - (hence project delays and cancellations) ?
Will ARRA cancell lot of projects ?
What is the problem with plots handovers in Ajman
Is Ajman government( who are the original land owners) having second thoughts about Ajman development or they take plots back if unpaid by developers ?

take care
v

 

[financier888]

HI Financier
thank you for that
So what you think will now happen in Ajman ??

Slowly but surely they will get the regs and enforcement in place - this takes time but is moving ahead

with all that ARRA registration, lack of infrastructure, and problems of plots handovers from masterdevelopers - (hence project delays and cancellations) ?

The govt has committed $375 mil. to infrastructure projects so, it's a start. They need to do it - not only for the new projects but as well as for the existing ones and city proper

Will ARRA cancell lot of projects ?

No doubt - largely from developers that won't be able to move forward, under capitalized and will not be able to meet the compliance standards - i.e. - monies they collected gone.....................

What is the problem with plots handovers in Ajman
Is Ajman government( who are the original land owners) having second thoughts about Ajman development or they take plots back if unpaid by developers ?

That may be part of it for sure - If a Master Developer has not sold all the plots or the ones they have are having trouble making their land payments - that will put the Master Developer in a tough position to come-up with the money to complete the work for handover. (like Marmooka which the govt took back.....) Expect a lot of consolidation in Ajman and a scaling back - like Dubai and many other cities for that matter. Ajman was attractive becuase of the meteoric rise in prices in Dubai - so many were forced up there because of the price - In Ajman, prices shot-up to over AED 500-600 - and now it's half that.. With prices in Dubai having come down as much as 50% + - and still coming down, (we're not in the summer yet....) - many of the buyers priced out of Dubai - can come back...

It was speculators that fueled the market and drove the prices up - not that they are out of the equation - it will come down to the end users and there's not a whole lot of them.... Many buyers in Ajman were banking on getting the visa - and that was shelved. You'll find great deals on completed units - both in Ajman and Dubai but it will take 3-5 years for Ajman to turn the bend. Investors will need to see the infrastructure projects forging ahead in earnest... I see Ajman as a much longer term type of investment and the larger units will be more commercially viable - especially for rental


take care

v

Answers in BOLD

 

[verity]

Answers in BOLD

Thank you for response

So, stop payments to developers and wait & see what ARRA comes with ?

If ARRA cancels project will they also enforce repayments from developer ?

If developer has no money or
eg. they do not get plot handed over by masterdeveloper or
developer vanishes with all prepaid money
How does investor get money back ?

Will ARRA with Ajman authorities come up with rescue package to pay us back ?
wonder if there are any answers to these ?
take care
v

 

[Ronny19]

I have contacted my developer but have been told that in Ajman there is no any rules about cancelling a contract and they do not want to reimburse 70% of paid amount.I tried to contact ARRA but no response. Does anybody know some lawyer to help or at least to advise what to do?