Buying off-plan property in Dubai is one of the most profitable and legally safe investment options. People from worldwide show significant interest in Dubai property investments. However, buying property does not always come with profit. There are chances of fraud, too. Therefore, the government of Dubai has set up various regulatory authorities to manage the smooth flow of property buying and limit fraudulent activities.
RERA authors licenses for developers, brokers, and estate management firms and also monitors their activities. Such tasks are carried out with the primary purpose of making sure that all the parties follow the law.
A fine of AED 100,000 can be imposed for the non-registration of the estate project with RERA and the execution of relevant development work without the necessary license. According to the Escrow Law (Law No. 8 of 2007 on Escrow Accounts for Real Estate Developments in Dubai), other possible sanctions for the above misdeeds include imprisonment, which could be considered criminal.
Developers in Dubai must be approved and licensed by the Dubai Land Department (DLD) via developer registration. This, in turn, allows only licensed and credible developers to sell off-plan properties and get protection against scams.
If a developer is not registered, it simply means that their projects can be termed as illegal. Their projects can be canceled at any phase and face legal prosecution.
Investing in the property of unregistered real estate developers in Dubai can risk losing hard-earned money and places you in a financial burden.
In the project registration phase, Off-plan projects must be registered with DLD. It confirms that the project has been furnished with the land and money arrangements, ensuring a safe environment for real estate investment.
There are, however, severe implications for projects that are not registered, as they cannot be sold or advertised. Unregistered projects are available for investment but pose a threat to buyers as there are chances for those projects to get suspended.
Escrow is a legal arrangement that involves a third party holding the assets, money, or documents in financial transactions between two or more parties. In Dubai real estate, an approved bank acts as a third party to manage an escrow account used for construction.
As per escrow law, developers must open accounts in an approved bank to deposit and manage buyers’ funds. This ensures the buyer’s money is safe and used to develop the specific project.
If developers fail to manage the escrow account, they face serious legal obligations like heavy fines, license revokes, or lawsuits in court.
A SPA is an agreement between the buyer and the developer that outlines all the terms and obligations related to the property purchase.
In this Agreement, sellers are assured of the property description, including its cost, payments, and timelines for project completion.
The SPA violation by either party results in a dispute. Since the two parties could move into a legal dispute concerning the contract fulfillment or contract termination.
The validity of a contract looks at how the SPA and other agreements can be executed from the perspective of the property laws of Dubai. This protects the integrity of all contracts and ensures that they will be honored in the event of any disputes arising.
An invalid contract cannot be executed, leaving buyers unprotected while the developer risks getting penalized.
The Oqood system, an online platform, records off-plan property sales. DLD handles the Oqood system, ensures transparency in property-related transactions, and fulfills the required rules.
The property sale is not legally accepted if the transaction is not registered in the Oqood system. As a result, buyers could surrender their rights while developers encounter fines.
This article stipulates the registration of all off-plan property for sale in the Interim Real Estate Register. It guarantees and secures a buyer’s legal rights over a specific property even before it is fully registered in their name. Off-recorded sales are void, and the law will deny buyers protection.
When purchasing Dubai property that is not yet developed, it’s essential to consider some legal aspects. While sometimes it becomes hard to understand, you can get expert assistance from Dubai Off Plan. We have a team of experienced real estate agents who will guide you in buying a profitable off-plan property in Dubai and assist you in understanding all the legalities related to the real estate industry in Dubai. So, hire an expert today.
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