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The Abu Dhabi government recently announced a new real estate law to protect end-users and investors as well as secure their interests with regard to off-plan property development projects.
This concerns projects that have been delayed to some relevant and unavoidable reasons and projects where the developer has defaulted. Most importantly, the new rule makes it compulsory for brokers and developers to be licenced and have the necessary documentation.
The new rule states that all upcoming and under-construction developments have to be registered with the Department of Municipal Affairs. It will be a stringent process and each application will be scanned thoroughly to ensure security and safety. The registration process requires the submission of documents pertaining to finances and other details. Unless the stamp of approval is given, the developer cannot announce the project or start any work pertaining to it and this includes any form of advertising.
When the rule is enforced, brokers will also not be permitted to represent more than one client at a time and in a single transaction.
The Department has also drawn up plans to create a registry that will help them track the documentation of all ongoing and upcoming projects. There is also the compulsory introduction of a version of the internationally accepted escrow account. Amounts deposited by the buyers towards the payment schedules for the project will be held in a separate neutral bank account known as a project guarantee account. The account will be created in an accredited bank and will be solely used for this purpose. The amounts deposited by the buyers will only be released to the developer as and when they fulfill their obligations and only if the project is progressing ahead as per schedule.
To sum up, the new property law protects the interests of every entity who is part of the process: the broker, the developer, the seller and the buyer. It also looks into the issues that concern landlords associations and helps deal with them.
• New decree expects to improve transparency in Abu Dhabi real estate sector
• Payments deposited by the buyers will be deposited in a separate account
• Projects cannot be promoted or sold until government approval is received
Get a glimpse on the history of real estate legislation in Sharjah
Source: Urmila Santosh, Special to Properties
The writer is a freelancer