An off-plan property is a residential or commercial unit purchased while it is still under construction. In Dubai, there is a specific legal framework aimed at protecting purchasers of off-plan properties, mainly:

  1. Law No. 13 of 2008 on the Interim Property Register;
  2. Executive Council Resolution No. 6 of 2010 relating to dispute settlement before the Dubai Land Department;
  3. UAE Civil Transactions Law, particularly Articles 246 and 295 relating to good faith and compensation.

There has been an increase in incidents involving delays in the handover of off-plan properties by developers.

Oqood: Making the Off-Plan Sale Legally Valid

  1. Article 3(1) of Law No. 13 of 2008 provides that any disposition, including the sale or mortgage of an off-plan unit, must be entered into the Interim Property Register.This is done through Oqood, the online registration system managed by the Real Estate Regulatory Agency and the Dubai Land Department, where:
    • the developer registers the project;
    • the developer uploads the purchaser’s details and the SPA;
    • and the DLD issues an Oqood certificate as interim proof of the purchaser’s rights.
  2. This registration ensures that the sale is legally recognised and helps protect the purchaser if a dispute arises. Once the property is registered, it may be resold, mortgaged, or otherwise legally disposed of.

Selling an Off – Plan property

  1. An off-plan property can be sold by creating a new Sale Purchase Agreement with the new buyer and the new buyer will complete the remaining payment obligations of the property.
  2. A NOC is required from the developer for the transfer to happen. The developers need the purchaser to pay a minimum threshold ranging from 30 – 45 % of the property value before selling.
  3. This threshold is not uniformly fixed by Dubai Land Department legislation and usually depends on the developer’s policies and the terms of the SPA.
  4. Different developers have different assignment thresholds. For example:
    • Damac generally requires 35% of the property value to be paid.
    • Emaar generally requires 40% payment.
    • Nakheel generally requires 45% payment.
  5. The NOC fees may range from AED 500 to AED 15,000 depending on the developer and project. Certain developers may also charge additional assignment fees ranging from 0.5% to 5% of the resale value.

The SPA and the Duty of Good Faith

The SPA is the primary contractual document between the purchaser and the developer. It generally sets out:

  1. the purchase price,
  2. payment schedule,
  3. completion and handover date,
  4. delay penalties,
  5. force majeure events,
  6. and termination rights.

Article 246 of the UAE Civil Transactions Law provides that both parties to a contract must perform their obligations honestly, fairly, and in good faith. In the context of off-plan property transactions, this means that the developer is expected to complete and hand over the property within the agreed timeline unless there is a valid legal justification for the delay. It also requires the developer to take reasonable steps to complete the project as soon as possible. Where there is a delay, the SPA should be carefully reviewed to determine the obligations and responsibilities of the developer.

Compensation when the Developer Breaches

Under Article 295 of the UAE Civil Transactions Law, compensation is generally awarded in monetary form. Depending on the circumstances, the court may also order other remedies, including restoring the parties to their original position or directing the performance of a specific act.

If the developer delays the handover of the property, the purchaser may claim compensation for losses suffered because of the delay.

Compensation may include:

  1. rental expenses,
  2. financial losses,
  3. or compensation clauses agreed upon in the SPA.

The court may consider:

  1. the terms and conditions of the SPA,
  2. the reason and duration of the delay,
  3. force majeure claims,
  4. and whether the purchaser complied with their payment obligations.

Dubai courts generally apply both Law No. 13 of 2008 and the UAE Civil Transactions Law while deciding disputes relating to delays in the handover of off-plan properties.

Conclusion

Dubai law provides significant protection to purchasers of off-plan properties through Law No. 13 of 2008, the Oqood registration system, and the UAE Civil Transactions Law. In cases of delayed handover, purchasers may seek compensation or other legal remedies depending on the terms of the SPA and the circumstances of the dispute.

At Ayesha Aldhaheri Advocates & Legal Consultants, we advise clients on matters relating to off-plan property disputes, delayed handovers, SPA enforcement, and compensation claims.