Paid 10% for a Dubai freehold flat but can't proceed. Can I get a refund without signing the SPA?

Dear Sir/Madam,

Thank you for sharing the details of your situation regarding the purchase of a freehold property in Dubai!

Based on the information provided and the applicable real estate regulations, here is a professional response to address your concerns:

1. Review the Reservation Agreement:

Carefully review the terms and conditions of the reservation agreement you signed with the developer.

Pay close attention to clauses related to cancellation or refunds. Many reservation agreements include terms stating that initial payments (such as the 10% deposit) are non-refundable if the buyer decides not to proceed with the purchase.

2. Negotiation with the Developer:

Although the developer has declined your initial refund request, you may attempt further negotiation by explaining your financial difficulties. Developers sometimes offer alternative solutions, such as:

- Partial refunds

- Transferring your payment to another property or project

- Allowing you to assign your reservation rights to another buyer (if permitted by the agreement)

3. Filing a Complaint with RERA:

If negotiations fail, you can file a formal complaint with the Real Estate Regulatory Agency (RERA), which regulates real estate transactions in Dubai.

RERA may mediate between you and the developer to explore options for resolving this issue. You can file a complaint through:

- The Dubai Rest App

- The Dubai Land Department (DLD) website

- In-person at a DLD service center

4. Legal Considerations:

Since you have not yet signed the Sale and Purchase Agreement (SPA), there may be an opportunity to argue that no binding contract has been finalized beyond the reservation agreement. However, this depends on the specific terms of your reservation agreement and Dubai real estate laws.

If RERA mediation does not resolve the matter, you may consider consulting with a legal professional specializing in UAE real estate law to assess whether legal action could be pursued for a refund or partial recovery of funds.

5. Key Points to Note:

In most cases, reservation fees and initial payments are considered non-refundable, especially if cancellation is initiated by the buyer.

The fact that your payment was made into an escrow account is positive, as this ensures that funds are regulated under RERA guidelines, but it does not automatically guarantee a refund in case of cancellation.

Recommendation:

Given the complexities involved in property transactions and cancellations in Dubai, I strongly recommend consulting with a qualified legal professional who can:

- Review your reservation agreement in detail.

- Advise on any potential avenues for recovering your funds under Dubai law.

- Represent you in negotiations or proceedings with the developer or RERA.

Should you require further clarification or assistance in this matter, please do not hesitate to contact us. We are here to support you throughout this process.

Yours sincerely,

ABDUL WAHIED

According to UAE law, developers are required to refund any payments made by buyers in the event that the project is canceled or delayed beyond a certain period of time.

However, if the buyer cancels the purchase for personal reasons, the developer is entitled to retain a portion of the funds as a cancellation fee. This fee is usually outlined in the reservation agreement or sales and purchase agreement (SPA).

In your case, since you have not signed the SPA yet, it is possible that the developer may be entitled to retain a portion of the 10% payment as a cancellation fee.

However, it is important to review the terms and conditions outlined in the reservation agreement to determine the exact amount that the developer is entitled to retain.

For more details, please contact us.

A reservation agreement, while not a Sales and Purchase Agreement (SPA), is a binding contract. It outlines the terms of the initial payment and the subsequent purchase.

Since you haven't signed the SPA, your rights are primarily governed by the reservation agreement. It's possible to negotiate with the developer to get a refund. We will let you know the procedures to be undertaken in detail.

Kindly share your WhatsApp number to proceed.

Dear Questioner,

Thank you for your inquiry. Based on your situation, here are the key points:

1. Refund of the 10% Payment:

The 10% deposit is likely held in an escrow account, and whether you are entitled to a refund depends on the terms of the reservation agreement you signed. If you have not signed the Sale and Purchase Agreement (SPA), there may be grounds for a refund, depending on the clauses in the agreement.

2. Next Steps:

- Review the Reservation Agreement: Check for any clauses regarding refunds if the SPA is not signed.

- Formal Request for Refund: Send a formal written request to the developer, referencing relevant clauses in the agreement.

- Legal Assistance: If the developer refuses, consider seeking legal advice to assess your options, including filing a complaint with the Dubai Land Department or taking legal action.

Please let me know if you need further assistance in reviewing the contract or taking legal steps.

Best regards,

Mohammed Salah

Legal Consultant

Hello,

The reservation agreement you signed likely outlines the terms under which you can cancel the purchase and potentially get a refund.

Check if the reservation agreement includes a clause that outlines the procedure for cancellation and whether a refund is possible.

In some cases, developers might treat the 10% reservation deposit as non-refundable, especially if they have already incurred costs or reserved the property for you. According to UAE property laws, money in an escrow account can only be refunded under certain conditions, such as:

- The developer failed to deliver the project as agreed.

- If the transaction is canceled by mutual consent or if there is an issue with the property.

However, refunding money from an escrow account is not guaranteed, especially if you haven’t signed the SPA and have not met the conditions for a refund as per the agreement.

If the agreement doesn’t explicitly say that the deposit is non-refundable, you should send a formal written request to the developer and property agent, stating that you wish to cancel the transaction and request a refund.

Ensure you reference your specific case and any relevant clauses in the agreement. If you require our assistance, kindly share your whatsapp number.

Dear Inquirer,

Thank you for your inquiry!

In your situation, as the 10% payment was made into the developer's escrow account, and you have not signed the Sale and Purchase Agreement (SPA), the developer is typically required to follow the terms set in the reservation agreement.

If the agreement allows for a refund under certain conditions, you may be entitled to recover your funds. However, many developers and agents may refuse refunds based on specific clauses or the nature of the agreement.

We recommend reviewing the reservation agreement carefully to understand your rights, as well as seeking professional legal assistance to pursue your refund claim.

To discuss your case in more detail and explore legal options, book a consultation with us or consider authorizing us to handle your case.

Best regards,

Yes, it may be possible to recover your funds, but it depends on the terms and conditions of the reservation agreement and the SPA.

You should review the agreement, negotiate with the developer, seek assistance from RERA, and consult a lawyer personally to determine the best course of action.