RAK enforces escrow law

DUABI - Ras Al Khaimah yesterday announced a law - Guarantee Accounts of Real Estate Development - in a move to streamline property purchases in the emirate.

Shaikh Saud bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of Ras Al Khaimah, issued Amiri Decree No. 22 of 2008 for the creation of the Guarantee Accounts, which is similar to Dubai's Escrow Law of 2007. The RAK law, effective from July 3, makes it mandatory that developers wishing to sell off-plan units in real estate development projects must apply to Ras Al Khaimah Investment Authority (RAKIA) to open a Guarantee Account in which amounts paid by buyers towards property purchases or by project financing parties will be deposited.

Jihad Quzmar, Legal Advisor, Government of Ras Al Khaimah, said that the decree intends to streamline property purchases in the emirate by bringing in more transparency and would help boost the confidence of real estate investors by securing their interests.

According to the law, developers licensed to carry out real estate development activities in the emirate should be registered in the Register of Developers' to be prepared by RAKIA.