Red Residence

[mike.stewart]

Are there any updates. local rumours are that there is a huge fine being imposed for selling as a hotel apartment and then trying to deliver as a residential apartment. There are also issues with some investors being offered guaranteed rents and also others promised interest free developer finance .

Hi,

Thanks for the information, but as you mention, these are rumours. In the current climate in Dubai, rumours are not really helpful.

I would be very keen on hearing from the lawyers (who are quite happy to take our money) to formalize the rumours, specially:
1) "huge fine being imposed for selling as a hotel apartment and then trying to deliver as a residential apartment"
2) "some investors being offered guaranteed rents"

If the rumours are correct (need to be confirmed) then it is certainly quite serious as MED has signed agreements with almost half of the investors to deliver rental flats (by offering discounts on the original purchase price),while the other half of investors have not changed their contracts.

Regards
M

 

[sven23]

Hi,
I just join these forum,
i am an investor from france.
I bought a 2 bedroom appartement in red residence as a private residential according to my spa.
after almost a year of delay (according to my spa),and with a clause mentioning compensation for such case, i would be interessted to join a group to start a legal action against med developpement, as i believe one unify action would be more relevent than many individual case.
i am not aware if such group already formed, and would apreciate any informations

regards
sven

 

[jaimeybug]

Hello Sven

Thank you for your post. Most of the subscribers to this forum are in the position of having bought into a hotel apartment building from around 2006 when it was launched. In the last year or so it has become apparent that MED are now delivering a normal residential apartment which it seems you have bought. The basis of our investment was, as I am sure you have read, for the building to be operated as a hotel and therefore represented a "hands off" investment. Most of the investors here have not taken any action at this stage as, until completion, we cannot be sure what it is they are proposing to handover to us as they will not categorically say It seems you are in a different situation although we are all in a "delay" situation. There are some on this forum in the early posts who have purchased in the same way as you and perhaps they can be helpful in some way.
I am sure we would all be interested to know when you purchased your unit as it could indicate to us at which point MED changed the format of the building? At this point in time we do not have a copy of the proposed Lease document and I am wondering if you have this?

Jaimeybug

 

[sven23]

i purchase these flat around march 2014, my spa state residential apartment only, nothing mention hotel aparment on it.
So according to the current messy situation of MED DEVELLOPMENT, i don't think they will be able to handover these project soon, unless you guys have more informations about these process, wich i would appreciate to be share.

salahudineossent

 

[jaimeybug]

Just posting this which came back from the Dubai Land Department in connection with the registration of our units.

Dear Sir

Thank you for writing to the Dubai Land Department.

In response to your E-mail, kindly be informed that unless your project status is not “Cancelled”, you need to register your unit before the 31st of October. Therefore, to check the status of your project, kindly click on the below link:

https://www.dubailand.gov.ae/English/Pages/Project-Indicator.aspx



If it is "Active", you may apply for cancellation of your unit with the Legal Affairs center in the Land Department. In case it is not and you wish to persue the developer kindly contact the Real Estate Court in Dubai Court because we are supporting Dubai Land Department only; hence your request falls out of the scope of our service.

Please do not hesitate to contact us on our number 600555556 from 07:30 AM – 06:00 PM Saturday to Thursday or email us at [email protected]

Thank you,

With Best Regards

Dubai Land Department Contact Centre

Quite frankly it defies belief that we are expected to pay to register a unit which could be finished 30%, 40% or 90% and a long way from complete maybe and which, as in our case, we do not intend to complete on if it is not what we purchased.

If anyone on the forum is in Dubai maybe they can get further information.

Jaimeybug

 

[mike.stewart]

i purchase these flat around march 2014, my spa state residential apartment only, nothing mention hotel aparment on it.
So according to the current messy situation of MED DEVELLOPMENT

Hi Sven,

Welcome to the forum.
When you purchased your flat, were you offered several choices of units to pick from?
The reason I ask this is because it gives us an idea of unsold units that MED is probably desperate to sell.

Also, you purchased a unit in 2014, when MED might have promised you the completion and delivery date to be around 2016? The development is about 90% complete, what to you imagine would be the grounds for you to ask for a refund? Most other investors I know paid in 2005-07 with a delivery time of 2011, and have not been successful in getting a refund.

M

 

[mike.stewart]

Hi, i would be interessted to join a group to start a legal action against med developpement, as i believe one unify action would be more relevent than many individual case.
i am not aware if such group already formed, and would apreciate any informations

As far as Legal action is concerned, there are a few posts in this forum in regards to contact details of lawyers, but I would exercise caution as there are several inexperienced ones who are going to charge you with consultation fees and not really move you case forward.

As I have mentioned in a few posts here, I am very keen on getting in touch with a lawyer who is willing to provide full disclose of legal situation of investors and the current financial and legal challenges faced by MED, FIRST, and only then try to take on our case thereby providing clarity on our chances for a refund.

 

[sven23]

hi everyone,
i bought the flat in mars 2014 no option was given exept residential purpose.
my spa mention delivery in sumer 2014 with 6 month delay allowed.
over than those 6 month a clause mention compesation of 0.5 percent.
am back in dubai now.
if it can help

 

[mike.stewart]

Hi Sven,

The compensation clause of 0.5% is applicable if you have paid the asking price, in full.
Have you paid in full?

Legally, MED can compensate to some extent, and deliver late, and that is what they would do. A refund might be out of question for you, as it is too late in the completion stage of the building.

Were there many unsold units for RR?
Also, what made you decide to invest in RR, if I may ask?

Regards
M

 

[mike.stewart]

am back in dubai now.
if it can help

Hi Sven,

If you are currently in Dubai, it can be of some practical help.
1) You can make appointments and personally meet up with any one of the several Law firms who are known to handle cases against MED. TLG is one of them. They claim to have won cases for investors against MED. It might be worth approaching them.

2) The other thing you can do is find out about the rumours about "heavy fines have been imposed on MED for not delivering hotel-room", deviating from original contract. Also drive by and check on site activities to ensure that the contractors are active and working daily on the completion of the two MED projects : Red Residence and Kensington Royale. If the sites are standing still, then MED has run into issues with contractors as well.

3) Ask local agents as to the daily/monthly rental rates and occupancy rates in Sports City.

Regards
M

 

[jaimeybug]

To Philip

Are you perhaps in a position to give definitive clarification with regard to the registration of units by 31 October 2015 at the Dubai Land Department and what are the consequences of not registering. DLD advised that, in the absence of anything to the contrary in the SPA, the Seller is responsible for 2% of the 4% fee and the Purchaser the other 2%. Is this correct. We do not have any intention of accepting handover of our unit as we are certain that MED are not delivering what we purchased but rather a simple residential apartment. Most of the people on this forum have entered into a Rental Programme for 20 years leaseback to MED for the units to be operated as hotel apartments. The Agreement is an Addendum to the SPA and is very detailed and refers to the SPA in its content and each are dependent on the other.

We have written to the DLD explaining our situation and have been advised to contact the Legal Affairs Centre at the Land Department but they did not provide contact details. They said it may be possible to cancel our purchase through this
department. Do you have any knowledge of an e mail address for them

Jaimeybug

 

[philipsmithdxb]

Hi Jaimebug,

With regards to the registration fees, there were strong rumours floating around last month that the DLD were going to penalise owners if they did not register their properties before 30 June 2015. The speculation was that registration fees could be increased to 8% but none of this was confirmed. As such, many owners were frantically trying to register their units before this date as they feared a similar situation from Sept/Oct 2013 when the fees increased from 2% to 4% and these owners had to pay the difference (in many cases, regardless of what the SPAs said). It really depends on the exact terms of your SPA contract but I do know some owners who had to pay the increase themselves.

The DLD have since announced that the deadline date for registration has been moved back to 31 October 2015. Property owners (offplan or completed) have until this date to pay their 4% registration fees. If not, penalties are likely to be imposed but it is not clear yet what they will be. It is likely however that any increase or penalties will fall to the owners rather than developers.

Many owners have not paid already because they don’t want to pay until they absolutely have to (for example if they wish to sell) but the DLD are now clamping down on this. Ultimately registering the title will protect owners more as technically you are not registered as owner until this is done and the fees are paid.

With regards to not taking Handover, I am sorry but I cannot advise too much on this as I have never had anyone take this route before. I am not sure of the legality around this esp seeing as the building is going to be completed rather than being cancelled. You may have a case though given that there is a significant deviation from the contract/addendum stating that you were purchasing hotel apartments rather than simple residential units. I would however expect it to be a difficult prospect.

I do not have any details for the legal affairs centre at DLD but will try to make some enquiries. To be honest, it is not always easy to get an answer (or even a reply) from the DLD anyway.

These are just my thoughts but I hope they help in some way.

 

[a18lor]

How do I actually register the unit with Dubai Land?
It appears from the DLD website that only Initial registration is possible until the unit is complete and full payment has been made. The following information was on their site:
Service Details
Request of Registering Property Transaction in the Initial Register (Sale)
Customer Type
Developer, Investor, Financial Institutions, All
Service Description
This service enables investors who have bought off plan properties to register the property in their name in the initial registration system.
Service Requirments
1. A copy of the sale contract
2. A copy of the passport or trade license
Service Fees
2% from the seller
2% from the buyer
AED 1000 for Emirates Real Estate Solutions
AED 10 as knowledge surcharge for each fee

I will certainly be pressing for MED to pay the 2% 'seller' share of the fee. However I have not established how I actually go about registering. Can it be done online or is it necessary to register in person?
Has anyone actually registered yet? Any assistance would be greatly appreciated!

 

[jaimeybug]

Hi A18lor

Before we knew there were going to be problems with MED we made enquiries and were advised that you can appoint a Power of Attorney to act on your behalf to carry out registration. The cost we were given was $6000!!!!1 Quite ridiculous - it would be cheaper to go over yourself.

We are surprised that you are considering registering your unit as initially you were in favour of getting together and going for legal action against MED for the non delivery of what we purchased which we are pretty certain is going to be the case.
We have checked the description of our building and it is described as "a Residential tower" as opposed to the description of a building with hotel apartments which seems to be "a commercial tower". The Department of Tourism have checked their records and have advised that Red Residence is not registered with them as Hotel Apartments and therefore must be a residential building.

Our thinking is that once you have registered your unit it may be considered as tacit acceptance of what is being delivered by MED and once done it may be much more complicated to reverse it. We will not be registering out unit as having checked under General Regulations on RERA Article 4 states that if the Developer does not deliver what it has stated when we purchased (and hotel/apartments are mentioned) then we can claim damages. We cannot be certain but it seems the DLD can only retain the 4% until the completion paperwork is provided by MED to us which they state is necessary for registration. How are you going to get the 2% from MED at this stage? It is highly unlikely that they will give it to you prior to them declaring the building finally completed and if you do go ahead and pay the full 4% on the basis of them reimbursing you do you believe that MED will pay it back?

According to the DLD RERA General Regulations MED ARE in breach of their contract if as we suspect they deliver to us a Residential Apartment and on that basis we are entitled to damages

Jaimeybug

 

[a18lor]

Hi Jaimeybug. Thanks for your post. I am not convinced MED will complete and offer handover of the units before the end of October! At this point it is our belief MED will not deliver in accordance with our contracts but until that happens I don't believe there is any choice but to complete the initial registration and comply with the DLD requirements. Like others in this Forum I will not accept handover unless it is in compliance with the contract or there is compensation agreed to reflect the reduced value of the unit.
Failure to register, in my view, will simply weaken our position in the eyes of the Dubai authorities who may have to make judgement on our treatment by MED!

 

[jaimeybug]

Hi A18lor We actually think that we have a very good reason not to register our units as MED are not delivering on the contract that both parties signed. Once registered it may be that MED will suggest that you have accepted the apartment by paying the fees and it may be a lot more difficult to claim any damages or a refund which we will be going for.

The DLD demonstrates a complete lack of logic and common sense in expecting investors to pay registration fees on something on which you may well not accept handover and it defies belief if you extend it to them requiring off plan investors to do the same for something which is not yet out of the ground and may never be completed. In our opinion, in introducing this law, the DLD were really targeting buyers who have had their properties maybe for years and not bothered to register as there was previously no deadline and developers like MED are only too happy to use this to push us into registering our units.

Just some thoughts

Jaimeybug

If you think that MED are going to hang out until end October in the belief that we will pay the fees you have to ask yourself why? It could well be that once you have paid you have tacitly accepted the status quo and it will then be much more difficult to reverse.

 

[a18lor]

Hi Jamieybug.
My thoughts are as follows:
(a) I have a contract with MED and it is in regard to that contract I am registering the apartment with DLD.
(b) I have not received any notification that MED will not fulfil the terms of the contract.
(c) The law of Dubai requires that initial registration of the apartment is made with DLD before the end of October.
I am certain MED will eventually confirm they will not meet the terms of the rental agreement. However I believe full compliance with all the requirements of both the contract with MED and the law of Dubai puts me in the strongest position to negotiate compensation with MED. It is also possible the Dubai authorities may actually support investors who have registered their apartments as required and then the developer fails to meet the terms of the contract!!!

 

[jaimeybug]

Just posting that a contributor on the (moderated) forum has posted that he has paid his cheque for the DLD to MED and visited the site which he described as locked up and deteriorating!!!

Jaimeybug

 

[jaimeybug]

For Sophielsie

In view of the DLD requesting that we register our unit by 31 October 2015 I wrote to your solicitor for advice as to how we move forward in terms of when it would be appropriate to start legal action against MED. I have posted hereunder their response and as you will see they are contacting DLD for information on the title/licence for our building to determine the "use". I have also requested this info from DLD.


"We thank you for your emails dated 19th July, 2015 and earlier today in respect of the captioned matter.

You have sought our legal opinion as to the strategy of dealing with the MED LLC in view of their request of getting your purchase registered with the Dubai Land Department. Please note that prior to giving our legal opinion, we would need all relevant documentation from your end in this deal, particularly the contract signed with MED LLC for the captioned purchase and the detail of payments that have been made by you to MED LLC. In the meanwhile, from our end to expedite this matter we will be reviewing the title/licence issued by the Dubai Land Department to MED LLC with respect to construction of the Red Residence building.

Kindly send us all relevant documentation at the earliest possible to enable us to proceed further in this matter on urgent basis.

On behalf of this office, I will be handling this matter from hereonwards. If you have any queries or additional information, please feel free to contact me at any time of your convenience."


I did write to your contact but received a reply from someone else. Are you still in touch with your solicitor. I ask because obviously we would want to be using the same solicitor and from a paperwork point of view I imagine we are pretty much in the same position.

I will wait to hear back from them as to their request at DLD which I think will then set in motion any action we are going to be able to take.

Jaimeybug

 

[sven23]

I am back again in dubai(i am travelling a lot) , went on the site , building seamed finish mostly till last floor, but electrical wired to conect switch and bulb are still outside , and finition such as windows in the reception, and pavement outside are still not done ... no contractor seam to work there anymore , it look quite abandoned.

MED office says it just need a major cleaning, and says that they wait for completion certificate from DLD , to start handover process, but they have been saying that for the last 6 month.

I Wrote formal letter to claim compensation due to delay as per SPA, i now wait for answer.

didnt have time to get in touch with law firm yet.

sunday i ll pay a visit to MED office.