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It was published in the national official gazette yesterday
Refund sliding scale for defaulters - The National Newspaper
Refund sliding scale for defaulters
Bradley Hope
Last Updated: May 06. 2009 3:49PM UAE / May 6. 2009 11:49AM GMT ABU DHABI // The Dubai Land Department has officially issued an amended property law that mandates refunds for investors who default on their payments on properties that have not been completed.
The new law, known as Dubai Law No 9 of 2009, sets a sliding scale of refunds depending on the level of progress a project has reached. It shows preference for developments that are nearly finished, a sign that the Government favours helping developers finish projects.
The effects of the global financial crisis have left some developers in the UAE scraping by and unable to continue construction, a situation that the authorities have been deliberating over for months.
Mohammed Kamal, a lawyer at Lovell’s in Dubai, said it provides “significant guidance to the property market and will clarify the uncertainty on terminations and damages”.
Law No 9 introduces a sliding scale for purchasers who default.
For instance, it stipulates that in cases where developers have completed at least 80 per cent of construction, a purchaser who defaults on their payments is liable to lose all the money they paid until that point.
If a developer has completed at least 60 per cent of the project and the buyer defaults, the developer is entitled to keep 40 per cent of the purchase price. But if a developer has completed less than 60 per cent of the project, it can only keep 25 per cent of the purchase price.
If the developer has not been able to start construction “without any negligence or omission on the developer’s part”, the developer may keep 30 per cent of the money paid by the buyer to that point.
The consequences for a defaulting purchaser are not immediate. The law requires that first the developer notify the Land Department, which then gives the purchaser 30 days to fulfil his contractual obligations. After that period, the sliding scale goes into effect. Developers would have to refund any money due to the purchaser within one year, or within 60 days of the resale of the home.
One of the most important aspects of the law is the fact that it is retroactive, meaning that any other agreements spelt out in contracts and purchase documents are no longer valid, lawyers said.
Refund sliding scale for defaulters - The National Newspaper
Refund sliding scale for defaulters
Bradley Hope
Last Updated: May 06. 2009 3:49PM UAE / May 6. 2009 11:49AM GMT ABU DHABI // The Dubai Land Department has officially issued an amended property law that mandates refunds for investors who default on their payments on properties that have not been completed.
The new law, known as Dubai Law No 9 of 2009, sets a sliding scale of refunds depending on the level of progress a project has reached. It shows preference for developments that are nearly finished, a sign that the Government favours helping developers finish projects.
The effects of the global financial crisis have left some developers in the UAE scraping by and unable to continue construction, a situation that the authorities have been deliberating over for months.
Mohammed Kamal, a lawyer at Lovell’s in Dubai, said it provides “significant guidance to the property market and will clarify the uncertainty on terminations and damages”.
Law No 9 introduces a sliding scale for purchasers who default.
For instance, it stipulates that in cases where developers have completed at least 80 per cent of construction, a purchaser who defaults on their payments is liable to lose all the money they paid until that point.
If a developer has completed at least 60 per cent of the project and the buyer defaults, the developer is entitled to keep 40 per cent of the purchase price. But if a developer has completed less than 60 per cent of the project, it can only keep 25 per cent of the purchase price.
If the developer has not been able to start construction “without any negligence or omission on the developer’s part”, the developer may keep 30 per cent of the money paid by the buyer to that point.
The consequences for a defaulting purchaser are not immediate. The law requires that first the developer notify the Land Department, which then gives the purchaser 30 days to fulfil his contractual obligations. After that period, the sliding scale goes into effect. Developers would have to refund any money due to the purchaser within one year, or within 60 days of the resale of the home.
One of the most important aspects of the law is the fact that it is retroactive, meaning that any other agreements spelt out in contracts and purchase documents are no longer valid, lawyers said.
