Questions & Answers
Is it safe to pay a down payment for an off-plan property before they open an escrow account?
Hi,
I am looking to purchase an off-plan apartment in Dubai. The agent said that the developer wants a 10% reservation fee/down payment before the project is officially launched i.e. registered at the DLD.
I have checked RERA and the project is not registered although the developer is licensed and I have been provided with their trade license.
They say the project will be registered with the DLD shortly, but in the meantime they want me to pay the down payment directly to the developer using my credit card.
I am assured that this is a normal process for pre-launch sales to guarantee me the unit that I want.
Is this normal and safe?
Should I insist that I wait until they have an escrow account?
Dear inquirer,
In Dubai, the establishment of an escrow account is a legal requirement for developers who wish to sell off-plan properties.
This ensures that the developer does not misuse the buyers’ funds or divert them to other projects.
All payments made by buyers for the purchase of off-plan properties must be deposited into this escrow account.
This includes down payments, installment payments, and any other funds related to the purchase.
Before making any payment, buyers should verify that the developer has an active escrow account for the project with the DLD.
Ensure all payments are made directly into the escrow account rather than to the developer’s general account.
Thank you for reaching out with your question regarding the off-plan purchase. It's great that you are doing your due diligence before proceeding.
While it is common for developers to ask for a reservation fee or down payment during pre-launch sales, it's essential to ensure that your interests are fully protected.
Typically, for off-plan properties in Dubai, the down payment should be made into an escrow account, which is a requirement by the Dubai Land Department (DLD) once the project is registered.
This provides a layer of security for your funds, ensuring they are used for the construction of the project.
Paying directly to the developer before the project is officially registered with the DLD and before an escrow account is established does carry some risk.
I would advise caution and suggest that you wait until the project is registered and the escrow account is set up. This way, you can be more confident that your investment is secure.
If you would like to discuss this matter further and explore the best steps to take, feel free to reach out to me directly via WhatsApp or phone. I'm here to help ensure that your property purchase is safe and sound.
Best regards,
Suhail Rana
According to UAE law, developers are required to register their projects with the Dubai Land Department (DLD) and open an escrow account for all off-plan sales.
This is to protect buyers' investments and ensure that the funds are used for the intended project.
