The UAE law is one of the first Arab laws that defined the off-plan sale contract as the sale of real estate units that are separated off the map or have not been completed. In this context, several local legislations appeared in the Emirates dealing with this issue and its legal organization.
The issue of selling real estate off-plan is one of the critical issues in the country, which at the same time raises several legal problems.
The off-plan sale contract is one of the modern sales, which has spread in recent years due to urban development and significant real estate investment, and as an inevitable result of the rapid real estate developments taking place in the country, which resulted in the emergence of defects and advantages for that sale, in addition to some problems about the reality of such a contract and its legal adaptation. And what distinguishes this contract from other contracts.
There is no doubt that selling real estate on the map is one of the vital activities that play a pivotal and essential role in the growth of investment activity and real estate investment. Despite the many advantages that the off-plan purchase enjoys but in the other hand not without problems and defects that we will present to you to take caution, including:
- Failure to register the real estate contracted on the map between the developer and the buyer under the buyer’s name in the initial real estate registry.
- The developers neglected the clause of opening the escrow account for the real estate project.
- A delay in real estate implementation after a period of 6 months passed since obtaining the off-plan sale license, which leads to the disruption of interests.
- The developer asked the buyer to pay other amounts in another account different from the main account of the contract.
- Practising the profession of real estate development without a license.
- Scam and fraud may accompany this type of investment from some sellers of real estate on the map.
- The risk of economic fluctuations that may occur during the execution of the contract; In the event of economic stagnation and the resulting increase in interest rates and a decrease in the value of the national currency, the contractors and owners of real estate companies will be unable to fulfil their obligations, and thus these projects will stop.
- The ownership does not transfer once the contract is concluded, and the real estate developer retains his right to the property until the completion of construction and then transfers the ownership to the buyer after that, which leads to fear buyers fear of the real estate developer.
- Failure to complete the project on the specified date in the contract for reasons related to the bankruptcy of the real estate developer or for any reason whatsoever which threatens the rights of buyers to lose. Likewise, in the other case, the buyers’ reluctance to pay the price of real estate units due to their bankruptcy or another negative and indirect effect on the real estate developer’s activity.
- The real estate developer’s failure to obtain the title deed of the land on which he will build the project for any reason whatsoever, which will inevitably lead to entering into a judicial dispute that may last for many years between the developer and government agencies on the one hand, and between him and the buyers on the other.
Finally, the wrong wording of the draft contracts for the ownership of real estate units, known as the purchase and sale agreement, often includes legal loopholes usually in favour of the real estate company at the buyer’s expense.
Therefore, a lawyer who specializes in off-plan sales contracts should be consulted, where Kashwani Law Firm, in cooperation with the Office of Spencer West, provides the necessary legal advice to its clients to resolve real estate disputes for properties sold off-plan. It includes the finest real estate lawyers, property lawyers and real estate projects in the United Arab Emirates.
Eman Jad
Legal Counsel