Questions & Answers
Is it advisable to cancel the contract upon developer's failure to handover on time?
Hi,
I would like to raise my concern regarding my off-plan purchase of a 1-BR unit in Dubai. The handover should be last quarter of 2022 as per SPA, but the construction is still under 50%.
Next month Sept. 2022, I will be paying my final downpayment to complete the 20%. Our original plan was to mortgage the property after paying the DP of 20%, however, it would be perhaps impossible to mortgage given the current status of the building.
By Oct. 2022, I need to pay 40% (227k AED) and the remaining 40% on handover in Dec. 2022. My question is, do I have the right to terminate the contract based on the current status of the project?
They called me to negotiate in their office in AUH to discuss with top management our options and the new handover date is the 3rd-4th quarter of next year (2023). My current situation is not so favorable (financially).
My only option is to either mortgage the property or cancel the contract.
Your advice is highly appreciated. Thank you!
Regards,
Hi Sir,
The developer generally gets 12 months additional time from the anticipated completion date to hand over the unit as per the law and it is always specified in the SPA.
So, if in your SPA the anticipated completion date is mentioned as September 2022, the developer will get another 12 months to hand over the project.
If they fail in handing it over even after this period, you can raise it to the land department.
I will not advise you to cancel the contract as the developer will forfeit a certain percentage of your payment as per the SPA.
So, it would be advisable to write to the developer about your situation and ask them to give you time till the handover date/the final installment to be made at the time of the handover without putting any fines or extra charges on you.
They delayed handing over the project which indeed resulted in the impossibility for you to apply for the mortgage.
And ask them to give you everything in writing.
Dear Questioner,
Unfortunately, you can’t terminate the contract even if they have delayed the construction because the handover date didn’t come yet.
Also, they have the legal right to extend for extra 12 months more than the date mentioned in the agreement.
For more information, you can reach me via phone, WhatsApp, or email.
Dear Roland,
Good afternoon.
Thanks for your message. Basically, what has been done by the developer is a kind of breaching the contract that has been signed by you and him.
Due to delaying of achievement, you have the absolute legal right to terminate the SPA with the developer and get your money back provided that you have done your commitments.
Moreover, the legal action that must be taken against the developer will lead to obtaining compensation for you due to delaying achievement.
Obviously, this is our initial advice to you. For more clarification, you can provide us with a copy of the SPA to our email address to study it and we will let you know any further legal advice.
Thanks.
Mohammad Salah
