Dubai: Will I get compensation if apartment is not delivered on time?

Question: I had booked an apartment in mainland Dubai two years ago. The completion date was 2019, with a grace period of two years. However, the grace period ended in December 2021 and the flat has still not been handed over to us. What are my legal options here? Could I get compensation? If so, how much? I only ask because we are still staying in a rented property, despite owning a flat that was supposed to be handed over to us two years ago.

Response: Pursuant to your queries, it is assumed that you have signed the sale and purchase agreement (the ‘SPA’) with the developer while booking the apartment. It is also assumed that you have already paid relevant monetary consideration in full to the developer prior to revised completion date in 2021.

The provisions of Federal Law No. (5) of 1985 On the Civil Transactions Law of the United Arab Emirates (the ‘UAE Civil Transactions Law’), the Law No. 19 of 2017 Amending Law No. 13 of 2008 Regulating the Interim Real Property Register in the Emirate of Dubai and the Law No. 8 of 2007 Concerning Escrow Accounts for Real Property Development in the Emirate of Dubai (the ‘Dubai Escrow Accounts for Real Property Development Regulations’) are applicable.

It should be noted that it is responsibility of the developer to hand over the property which it has constructed to the purchaser on or before the completion date. The relationship between you and the developer is primarily governed by the SPA and the aforementioned provisions of law prevailing in the UAE and Dubai.

Both your developer and you need to abide by the terms mentioned in the SPA. This is in accordance with Article 246 (1) of UAE Civil Transactions Law, which states: “The contract shall be implemented, according to the provisions contained therein and, in a manner, consistent with the requirements of good faith.”

Further, you may be not required to pay the balance amount of consideration to the developer, as the latter failed to hand over the apartment in December 2021.

This is in accordance with Article 247 of the UAE Civil Transactions Law, which states: “In bilateral contracts, where the reciprocal obligations are due, each of the contracting parties shall have the right to abstain from executing his obligation in case the other party does not honour his obligation.”

Based on the aforementioned provisions of law, you may initiate legal action against the developer for not handing over the completed apartment on or before December 2021 as agreed by the developer. You may request the competent dispute resolution authority to direct the developer to hand over the completed apartment immediately or you may seek repayment of consideration amount, monetary compensation and interest payable by the developer to you.

In Dubai, the rights of the purchaser of the property are protected under the provisions of Dubai Land Laws. Article 1 (B) of the Law No. 19 of 2017 Amending Law No. 13 of 2008 Regulating the Interim Real Property Register in the Emirate of Dubai states: "Where the Real Property project is cancelled pursuant to a reasoned decision of RERA, the Developer must refund all payments made by the purchasers in accordance with the procedures and rules stipulated in the above mentioned Law no. 8 of 2007."

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Article 15 of the Dubai Escrow Accounts for Real Property Development Regulations, states: “In case of any emergency resulting in non-completion of a Real Property project, the Escrow Agent of that project must, upon consultation with the DLD, take the necessary measures to preserve the rights of depositors by ensuring the completion of the Real Property project and refund of the payments made by the depositors.”

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

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