Defaulting on property installments and refund from the developer

Dear Questioner,

I am not sure whether you have already received a notification from the land department or not.

Normally the procedure as per Law No. (19) of 2017 [partially amending Law No. (13) of 2008 on interim property registration], when a purchaser makes a default in the agreed payment, the developer must notify the Dubai Land Department that such a breach has taken place.

Once the notification is received, the Land Department shall give a 30-day notice to the property buyer.

The buyer or purchaser can have negotiations and reach a settlement where the same shall be documented and signed by both parties.

If there is no settlement, the Land Department may issue an official document stating that the developer has fulfilled his legal obligations, specifying the percentage of completion of the property.

Clear guidance has been issued on the percentage of refund based on the percentage of completion which is as follows:-

* If the percentage of completion on the off-plan project is over 80 per cent, the developer can ask the purchaser to abide by the terms of the sale contract and confiscate the paid amount.

* If the percentage of completion is less than 60 per cent, the developer may void the sale contract, retain up to 25 per cent of the sale contract’s value and return the remaining within one year of the date of contract cancellation.

* If the developer did not initiate the work in the property for reasons beyond his control and without negligence, the developer may void the sale contract, but deduct not more than 30 per cent of the paid money and return the remaining within 60 days of the date of re-selling the property, whichever is earlier.

Hope the above explanation could add clarity to your situation.

If you need any further information.assistance or guidance please feel free to contact me.

Thank you.

Regards,

Rajasree Ravivarma

0544461746