His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, has issued a new Dubai real estate law amending the existing policy.

This new Dubai real estate law makes clear the new policies and procedures in case the buyer breaches sale contracts, in order to protect both real estate developers and investors.

Under the new policy, the developer should give notice to the Dubai Land Department (DLD) in cases of breach of sale contracts. DLD, in turn, will issue a 30-day notice to the buyer in writing. The notice will be delivered via direct mail or email, whichever method is specified by DLD.

If the developer and the buyer decide to settle terms, the agreement should be added to the sale contract for the signature of both parties. In case the purchaser fails to fulfill his supposed obligations in the agreement, DLD can issue an official document that clearly states the developer’s fulfillment of its legal obligations, including the percentage completion of the property.

DLD will then give the developer options on how it can go about with the case. If the project is 80% complete, the developer can oblige the buyer to follow the terms of sale contract, confiscate the paid amounts and make the buyer pay the remaining balance within a year of the date of the cancellation of contract or within 60 days of the reselling of property (whichever date is earlier).

Under the new Dubai real estate law, in case the project is 60 to 80% complete, the developer can void the contract of sale in itself and maintain not over 40% of the value of the sale contract. The developer can return the remaining amount to the buyer within a year since the cancellation or within 60 days of the date of reselling the property (whichever date is earlier).

If the project is less than 60% complete, the developer may declare the sale contract void in itself, and keep 25% of the sale contract’s value. The developer will then return the remaining amount to the buyer within one year.

If it is the developer’s fault why the property does not have progress (either for reasons beyond his control or because of negligence), the developer can void the sale contract and deduct not more than 30% of the money paid by the buyer. The remaining amount must be returned to the purchaser within 60 days of the re-selling of the property.

If the project is cancelled through a resolution by Real Estate Regulatory Authority (RERA), the developer should refund all the payments made by the purchaser, in line with the law on Escrow accounts for all Dubai real estate developments.

Note that the new Dubai real estate law does not apply to land sale contracts, and is still subject to the provisions of the sale contract. The law terminates any legislation that does not support the provisions of the new property law.

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