THIS IS FAQ AND ANSWERS FROM DUBAI LAND DEPARTMENT.

What is the real estate escrow account? The goal of it? Who has to have it?

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.

Who are the parties obliged to open an escrow account?

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.

Which financial institutions are approved by RERA to manage the escrow account?

You can visit the Department's account of Trustees
http://www.dubailand.gov.ae/English/Tanzeem/Developers/trusteeslist.aspx

Does the law apply to projects that have been announced before its release?

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.

What are the ways available to communicate with the Real Estate Escrow Account Department?

You can communicate with the department by:

E-mail: trust@dubailand.gov.ae
Phone: 042030555
Fax: 042349219
For more information, please visit the website: www.dubailand.gov.ae

What if the investor pays amount far outweigh the completion progress
or the project hasn’t started or under cancelation?

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.

What is the role of the liquidation of real estate projects section,
specifically for all projects canceled - under cancellation - completely stalled.

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.

What about projects that have not been cancelled and the progress is less than 5%?

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.

Why there is no enough information about the history of progress in ongoing projects and delayed?

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.

What the expected time period for the liquidation is of cancelled and stalled projects?

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.

Can the investor cancel his contract with the developer without resorting to the judiciary?

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.

What if completion rate, for example, 40% - 60% and the project is
completely stalled and the developer is absent like Dubai Star Project?

In such cases, the Land Department and RERA intervene to safeguard the
rights of the concerned parties and for the completion of the project.

Is there a law deterrent to developers’ manipulation and those offenders by RERA?

All laws issued stipulate the existence of sanctions against developers in
conflict with the laws and regulations for real estate development.

What are the procedures to open an escrow account?

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.

Who can manage the escrow account?

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.

Can escrow account trustee, offer financing for the project’s developer?

Yes, the bank or financial institution can serve as account trustee can provide financing of the project.

For which purposes amounts deposited in the escrow account can be utilized?

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.

Can amounts deposited in the escrow account be used for making payments?

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.

What is the purpose of the withheld amount of 5%?

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.

If the developer had begun selling off plan and need to open an escrow account,
shall the developer deposit the amount he collected earlier from the investors?

Yes, all amounts received from the buyers must be deposited in the escrow account.

What are the financial institutions approved by RERA for the management of the escrow account?

1. Dubai Islamic Bank

9. National Bank of Abu Dhabi

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

6. Mashreq Bank

7. Al Ahli Bank of Kuwait
8. Noor Islamic Bank

12. Citibank

13. Abu Dhabi
Islamic Bank

16. Sharjah Islamic Bank

17. United Bank

What are the objectives of the escrow account law?

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.

What about projects that have been announced before the law issuance?

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.

How to manage the escrow account?

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

What to expect during World Expo vote

Dubai should know by 9pm on Wednesday whether it will host the 2020 World Expo.
The Bureau International des Expositions (BIE) is due to meet in Paris on Tuesday and Wednesday ahead of three rounds of voting on Wednesday evening, Dubai time.
Each of the four cities bidding for the event – Dubai is up against the Turkish city of Izmir, Brazil’s Sao Paulo and Russia’s Yekaterinburg – will make a last presentation to the 168 BIE member nations.
About 5pm on Wednesday, Dubai time, the 168 members will sit behind closed doors and vote for their chosen candidate.
In this first round, the city with the least number of votes will be eliminated and a second and third vote will be held, with the last city eliminated each time until one winner is remaining.
Each round is expected to take about one hour, meaning the final winner should be announced about 9pm.
Dubai's bid has been publicly backed by UK Prime Minister David Cameron, former US Secretary of State Hillary Clinton, London Mayor Boris Johnson, former US president Bill Clinton, Canada, France and a number of international superstars.
It would be the first time the World Expo – which is more than a century old and has been responsible for the launch of multiple inventions including the typewriter, tomato sauce and electricity – has been held in the Middle East and many of Dubai’s supporters say they are backing the emirate’s bid because the UAE has built a prosperous, open and secure society in only a decade.
Many countries also want to boost their business ties with the emerging international capital.
About 25 million tourists are expected to visit Dubai during the six-month event if it wins, while Sheikh Ahmed bin Saeed Al Maktoum, the emirate’s top financial official and a member of the Expo committee, said the emirate would invest $8.1bn in new infrastructure if it was successful in its bid to host Expo 2020.
The infrastructure would include new roads, an extension to the metro, as well as the site itself, in Jebel Ali.

The Dubai World Expo website, www.expo2020dubai.com, is planning to broadcast a live stream from Paris on Wednesday evening.