After the real estate registry regulation law No.13 of 2008 issuance by the Dubai land department, the process of buying real estate becomes more regulated, especially off-plan purchases.
Since 2008 there are many numbers of real estate projects in Dubai that have been announced. In addition to entered many new developers in the market to be a part of those projects., which made every real estate developer draft the purchase agreement and put the clauses that only protect its interest.
It is very rare to find a buyer eager before signing on the agreement to obtain a legal opinion to understand the terms and conditions especially that the amount paid will be for an empty land and the models of the apartments or villas will be on the computer (3D drawing).
I have been representing many of my clients for more than 10 years before the Dubai courts on many real estate disputes between the buyers and developers. There was always known mistakes committed by a buyer on the sign the agreement, which I have limited in 10 mistakes and are as follows:
- The buyer must know that each purchase agreement, whatever for a villa or apartment, must be there obscure points may cause him many problems in the case failure developer in completing the project. Therefore, each buyer must take legal opinion from the experts in this field.
- The buyer must know that each purchase agreement, subject to discussion with the developer and the buyer has a right request for any change or modify any condition which will harm or prejudice against the right of the buyer.
- The buyer must be sure of the project completion date because some of the developers put the time expected completion for the project, for example, in 2018. And in the same agreement puts the actual completion date 2019, besides, also sets another date of extending the project handover to an additional year, meaning 2020.
- Usually, the buyer paid down payment between 10 to 20% and is obligated to pay installments according to a payment plan based on the project completion rate. But we find some buyers are paying more than 70% as a down payment. And in my opinion, this is the biggest mistake a buyer makes. Because there is a high risk that the developer failed to complete the project for any reason, which leads to the cancellation of the project, and the buyer will struggle to obtain his money back.
- From the common mistakes also, I often notice the buyer signs on the purchase agreement, which contains the arbitration clause without knowing the damage he will do. Such as the arbitration expenses, higher than court fees and the time to get arbitration award will take more time than court.
- Most of the buyers, after signing the agreement, overlook to verify if the developer has committed to registering the buyer name in the initial registration at the land department or not. Because if the developer ignores to register the buyer name in the initial registration, this will lead to invalidating purchase agreement.
- Many buyers make a mistake failing to pay the installments if the developer failed to deliver the project on the time agreed without going to the court, believing that they have a right to do so. And this matter which is exploited by the developer to terminate the agreement and take all the money was paid by the buyer.
- The buyers of real estates, whether villas or apartments, should pay attention to the technical specifications of the property where these specifications must be clearly mentioned in the contract and not just in general as some of the developers deliberately include unimportant details about the specifications without clearly identifying them.
- When the buyer receives a notification from the developer to pay the installments, the buyer directly transfers the money to the developer. All of that, without verify with the land department in Dubai about the state of the project.
- Sometimes the buyer will sign the purchase agreement for a hotel apartment. After a while, he receives notification from the developer to inform him the description for the unit has been changed from a hotel apartment to a residential apartment for any reason. So, it is very important that conditions in the agreement clearly states to terminate the agreement immediately in case the description for the unit changes any time during the contract period.
Finally, the buyer when he decides to invest in the real estate, to make sure of all the points mentioned above. Also, the developer’s reputation and the projects accomplished also very important. It’s really important for the buyers even if they are aware of the business to seek an opinion from those who have expertise in this field; there are many disputes in the courts, which buyer that could be avoided if he just takes a legal opinion before signing on any paper.
And even if the buyer invests in any project and there is a delay from the developer for handover the unit, there are many judgments from the cassation Dubai court that give the buyer right to repeal the agreement and bind the developer to return all the money that he received from the buyer including with the legal interest and all legal cost.
Lastly, I would like to shed light on the most critical part of the agreement, which is the name of the developer. The buyer shall pay attention to the name of the developer when signings any documents as the developers often resort to establish many LLC companies with similar names which it the name of the developer is different from the actual developer in the agreement and all of that to protect the developer assets from any legal action.
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