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While Dubai has tagged more projects as officially ''cancelled'' — dating to off-plan launches that took place between 2005-08 — it does not necessarily mean affected property buyers are closer to recovering their monies. (More than 150 projects now stand cancelled as per the Dubai Courts records.)
One investor who recently received a favourable verdict in the local courts against a developer for non-delivery said he has had no progress in getting his funds back. ''The verdict was for repayment by the developer of the original investment made to purchase the unit plus interest for the five-year period during which the project failed to materialise,'' the investor said. ''But I have yet to see the funds despite repeatedly pressing the claims with the developer.''
In many instances, the developers behind these cancelled projects may no longer be in the country, which makes the question of getting compensation all the more remote for investors. Some of these projects may also not have had escrow accounts set up, or if they did, those accounts would have been depleted by now.
So, what are the options available for those investors hit with cancelled projects and developers in no position to pay up? As per the local rules, ''Claimants who have received arbitration awards need to proceed to Dubai Courts to enforce their award against the assets of the defendant,'' said a senior legal counsel tracking the industry. ''There were two settlement centres set up in 2013 which are related to the Dubai Land Department.
''One was the Rent Disputes Settlement Centre (set up as per Decree 26 of 2013) and which only deals with rent disputes and the second was the Liquidation Committee (Law 21 of 2013) which deals only with the liquidation of cancelled projects.
''Investors should seek redress either in the Dubai Courts — a two- to four-year process — or Arbitration (a one- to two-year process) depending on which dispute resolution forum is specified in their contract.''
As per the current laws, ''Investors are entitled to be repaid their full investment amount (i.e., the amount they have paid to a sub-developer) if a project has been cancelled by order of Real Estate Regulatory Agency (Decree 6 of 2010).
''If they are not so paid [which is generally the case], the matter is referred to the Liquidation Committee consisting of Dubai Court judges [Law 21 of 2013]. In this case, the Liquidation Committee returns the monies in the project's escrow account to the investors.
''However, investors may only receive a small portion of their monies from the escrow account — 20 or 30 fils on the dirham,'' said a lawyer. ''This is because much of the money has already been spent or otherwise not deposited in the account.
''They will then have an outstanding claim against the developer for the balance which will be practically difficult to realise if the developer has run away or is insolvent.''
But investors can still lay claim to the land where the project was supposed to be built. But, unlike now, during those days there was no mandatory requirement that developers had to pay in full for the land to start off-plan.
''The uncertainty process is in the cleaning up of off-balance-sheet and on-balance-sheet liabilities,'' said Sameer Lakhani of Global Capital Partners. ''In an environment where the land is free of litigation risks, [new] developers have opted to buy and build for the most part.''
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Source: Manoj Nair, Associate Editor, gulfnews.com