Guarantee/Escrow Account for Property Developers in Dubai
Law No. 8 of 2006 concerning Guarantee Accounts of Real Estate Development in the Emirate of Dubai ("the Law") was recently passed.
With the enactment of the Law, property buyers can expect greater protection when purchasing new properties from property developers in Dubai.
The Law is applicable to all property developers selling uncompleted properties (including properties under construction) and accepting payments from buyers or financiers before the properties are completed.
Under the Law:
1. All property developer must register with the Land Department in the Register of Developers.
2. Developers need written permission from the Land Department to advertise in both local and foreign media to promote the sale of properties that are under construction.
3. Developers need to establish guarantee/escrow accounts with the Land Department.
4. All payments from buyers shall be deposited into a bank account under the name of the property development in an approved bank in Dubai.
5. Any loans obtained by the developer from the mortgage of the uncompleted development shall be deposited into the guarantee/escrow account.
6. Payments to the developer from the guarantee/escrow account can only be made after a certificate is issued by the consultant of the development describing the completed stage and the requirement of the subsequent stage of construction.
7. 10% of the value of the development is kept in the guarantee/escrow account for 1 year after the certificate of completion has been obtained.
The Law gives more transparency to property transactions involving uncompleted property developments and some level of protection to buyers in the event the property developer goes belly up.
What remains to be seen is if escrow accounts will be made mandatory for all property transactions, whether such properties are completed or not.
With the enactment of the Law, property buyers can expect greater protection when purchasing new properties from property developers in Dubai.
The Law is applicable to all property developers selling uncompleted properties (including properties under construction) and accepting payments from buyers or financiers before the properties are completed.
Under the Law:
1. All property developer must register with the Land Department in the Register of Developers.
2. Developers need written permission from the Land Department to advertise in both local and foreign media to promote the sale of properties that are under construction.
3. Developers need to establish guarantee/escrow accounts with the Land Department.
4. All payments from buyers shall be deposited into a bank account under the name of the property development in an approved bank in Dubai.
5. Any loans obtained by the developer from the mortgage of the uncompleted development shall be deposited into the guarantee/escrow account.
6. Payments to the developer from the guarantee/escrow account can only be made after a certificate is issued by the consultant of the development describing the completed stage and the requirement of the subsequent stage of construction.
7. 10% of the value of the development is kept in the guarantee/escrow account for 1 year after the certificate of completion has been obtained.
The Law gives more transparency to property transactions involving uncompleted property developments and some level of protection to buyers in the event the property developer goes belly up.
What remains to be seen is if escrow accounts will be made mandatory for all property transactions, whether such properties are completed or not.
Labels: Dubai, legal advice NOT
posted by H Who at 12:43 pm
0 Comments:
Post a Comment
<< Home