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The escrow account is the bank’s account of the project in which amounts collected
from buyers of off-plan properties are deposited or amount by project’s financers.
The escrow account aim is to regulate the functioning of the construction process of
units sold off-plan, thus safeguarding the rights of investors.
The law applies to all developers in Dubai without any exception who sell properties
off-plan in Dubai, and in return they receive payments from the buyers or financers.
The law applies to all developers in Dubai without any exception who sell properties
off-plan in Dubai, and in return they receive payments from the buyers or financers.
The law applies to all projects selling off-plan either before or after the law.
The law gives a period of 6 months since its release for all developers to adjust their
situation in accordance with Law No. 8/2007 concerning real estate escrow account.
You can communicate with the department by:
If the project hasn’t started or under cancellation: The Land Department isn’t
authorized to terminate any contract between the developer and the investor at
the request of the investor. If the investor is willing to terminate the contract,
he/she must refer to the concerned real estate court.
The Department’s role in this case is to try to reach an amicable settlement between both parties.
If the project is canceled: The escrow account is transfer to the Section of Projects’
Liquidation which, in turn requires the developer to repay investors within 60
days from the date of the cancellation. In case RERA sees a necessity to postpone
the deadline it might extend this period. In case the developer fails to commit,
the case is transferred to the court in order to secure the right of investors.
If the percentage of project progress is 5% or less, and all paid amount are deposited
into the escrow account and the investor is willing to obtain the money back through RERA,
given the developer hasn’t and wouldn’t construct the project, refer to the answer
of question No 6 in the first paragraph.
If the project isn’t cancelled and the investor is willing to obtain the money back,
the investor must refer to the court.
If the project in the process of cancellation or cancelled: At this stage, the project
isn’t cancelled yet. And there are several procedures that must
be followed prior to the cancellation such as (submitting remedy,
the Committee’s consideration of the remedy, issuing statement by the committee
on which the necessary action is taken). This process takes 3 months at least.
The liquidation section role begin once the project is cancelled upon the
developer’s request/or the project is cancelled and not in the process of cancellation.
Then, the section will recover the amounts from the escrow account and deposit them in
the Trust Account in the Land Department to be distributed to beneficiaries,
whether in full or in a certain percentage according to what is available in the account.
RERA monitors progress of construction on the project on a regular basis and in the
event that the project is stalled or the progress is very minor, the developer will be
addressed to cancel the project. If there are no reasons justifying halt of construction
of slow progress and failure to provide justifiable reasons for that, RERA will start the
process of cancellation of project as per the procedures it follows.
Due to the current situation, and developer’s inability to start construction
so there is no timeframe given about the start of construction by the developers,
so it is difficult to identify specific date for the completion of these projects.
However such projects might be subject to cancellation.
The period is indefinite, once the complete documents and details of payments and
eligible persons each projects will then be in the track of liquidation.
Most investors complain about the inability to communicate with some developers and
about the process and completion phase and they can’t obtain this clear
information from the developer, however they are demanded to make new payments.
However, due to the payments are scheduled according to the percentage of completion,
and the investor has the right once received a request for payment from the
develop to inquire about the percentage of completion in the current project by a
letter from the project consultant/approved by the Land Department. Otherwise,
the investor is not required to make the payment unless the project reached the
specific stage or completion percentage according to the agreed payments schedule
between the parties.
Does the investor have the right to request the completion rate for any project or a
simplified report on the project.
Investor may obtain completion percentage report prepared by the technical auditor
of RERA after paying the audit fees of AED 15000 + AED 10 as knowledge surcharge.
The Land Department isn’t authorized to terminate any contract between
the developer and the investor at the request of the investor.
If the investor is willing to terminate the contract with the developer,
then he/she must resort to the concerned real estate court.
The LD role is limited to conciliation between the parties and settles the
dispute amicably without having the final word in the dispute and
without intervention in the final settlement.
In such cases, the Land Department and RERA intervene to safeguard the
rights of the concerned parties and for the completion of the project.
All laws issued stipulate the existence of sanctions against developers in
conflict with the laws and regulations for real estate development.
The developer must fill the form on "registration developer & project approval"
and provide the required documents after the adoption of the project by
RERA represented in the Department of escrow account.
The account is opened by the account trustee based on the certification of the project.
A bank or financial institution licensed by the Central Bank of the United Arab Emirates
to receive deposits of others and operating in Dubai can serve as account trustee.
This bank or institution, must be accredited by RERA and must sign a written agreement
with RERA stating the terms and conditions of managing escrow accounts.
Yes, the bank or financial institution can serve as account trustee can provide financing of the project.
As a general rule, the amounts can only be paid from the escrow account to
make payments for the land, contractors, consultants and marketing related to the project.
Not all expenses incurred by the developer on the project are eligible to be paid from
the escrow account. For example, a 5% only of total sales can be used for marketing the project.
The written agreement between the developer and the account trustee
contains details of the main phases of construction required for releasing
certain amount from the escrow account. The project’s manager working for the
developer will inform the account trustee abut completing a certain major phase,
and will submit a request to make payment to service providers. The responsible
engineer of the trustee side will visit and audit the project, and to confirm that the
major construction phase mentioned has been completed. Once this is done,
the account trustee is entitled to pay the needed payment to service providers from the escrow account.
Article 14 of the escrow account law states holding 5% of the total amount paid in the
escrow account for a period of one year after completion of the project.
This amount act as a guarantee that the developer or contractor will effectively address any
clear flaws in that property upon completion which can appear within one year of completion.
The law became effective on June 28, 2007, when it was published in the Official Gazette.
Yes, all amounts received from the buyers must be deposited in the escrow account.
| 1. Dubai Islamic Bank |
| 9. National Bank of Abu Dhabi |
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| 2. Emirates IslamicBank |
| 10. Bank of Sharjah | 14. Al Masraf |
| 3. Abu DhabiCommercial Bank |
| 11. Bank of Baroda | 15. First Gulf Bank |
4. Emirates NBD Bank
| 5. Standard Chartered Bank |
7. Al Ahli Bank of Kuwait
8. Noor Islamic Bank |
| 12. Citibank
13. Abu Dhabi
Islamic Bank
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16. Sharjah Islamic Bank
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The law was issued in order to control of the real estate market in Dubai and to regulate
the construction and selling of properties off-plan to guarantee the rights of buyers.
The law applies to all projects announced by before/after the publishing
of the law in the Official Gazette. In some cases, the developer may be excluded
from opening the escrow account, especially for projects near completion and has
if company doesn’t have other issues in its projects or with its investors.
However, the granting of the exception, is jurisdiction of RERA.
The escrow account must be opened bearing the name of the project, and it must
be utilized for purposes related to developer of the project. The amount deposited in
the account can’t be seized on behalf of the developer’s creditors.
if you need more information on the Dubai market please contact me on edith@flashproperties.com
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