How Dubai protects off-plan buyers' money

A buyer of a new-build apartment in Dubai pays for something that does not exist yet. That is why the emirate built a system in which buyers' money is not freely available to the developer and every sale is visible to the regulator. Below is what Dubai law actually says, what RERA does, what happens if a project is delayed or cancelled, and how to check registration and the escrow account yourself. The laws are published on the Dubai Legislation Portal (dlp.dubai.gov.ae); where versions differ, the Arabic text prevails.

The legal backbone

The escrow account under Law No. 8 of 2007

• Only a developer entered in the DLD Register of Real Estate Developers and licensed may carry on development (Art. 4). Advertising off-plan or taking part in exhibitions requires written DLD authorisation (Art. 5).
• To sell off-plan, the developer applies to open an escrow account, attaching the land title deed, approved designs, an auditor-certified project budget and a standard sale contract (Art. 6).
• The account is opened in the project's name with an escrow agent listed in the DLD register and is used exclusively to build that project. The developer's creditors cannot attach it. Each project needs its own account (Arts. 9, 10).
• The escrow agent reports revenue and expenditure to DLD regularly, and depositors may access and copy their own records (Arts. 11, 12). Bank loans for the project must also be paid into the escrow account (Art. 13).
• Once the completion certificate is issued, the agent retains 5% of the account's total value and releases it to the developer one year after the units are registered to buyers (Art. 14).
• If a project is not completed because of an emergency, the escrow agent, after consulting DLD, must ensure either completion or a refund to depositors (Art. 15).
• Unlicensed development, selling units in fraudulent projects and misappropriating funds are punishable by imprisonment and a fine of at least AED 100,000 (Art. 16). A developer is struck off the register if, without acceptable reason, it has not started construction six months after being permitted to sell off-plan (Art. 17).

One key detail from the implementing rules: if a broker sells the project, the broker must pay the unit price straight into the project escrow account. Paying it into the broker's own account or deducting commission from it is prohibited, and any agreement to the contrary is void (Art. 12 of Resolution No. 6 of 2010).

The Oqood interim register under Law No. 13 of 2008

• Every disposition of an off-plan unit is entered in the DLD interim register. A sale not entered is void (Art. 3).
• A developer may not start a project or sell off-plan before taking possession of the land and obtaining all approvals (Art. 4). Contracts for unapproved projects are void (Art. 10).
• A developer may not charge buyers fees beyond DLD-approved administrative costs (Art. 7).
• After completion, the developer must register units in the names of buyers who met their obligations; DLD may do so at the buyer's request (Art. 8).
• If the actual area is more than 5% below the contract area, the developer pays compensation (Art. 13 of Resolution No. 6 of 2010).

When a buyer stops paying: Article 11 as it stands

Article 11 has been rewritten several times. The original 2008 text let the developer terminate and keep up to 30% of the amounts paid; completion thresholds appeared in 2009. The current text comes from Law No. 19 of 2020:

1. The developer notifies DLD of the breach on the prescribed form.
2. DLD verifies it, serves the buyer a 30-day notice and, where possible, mediates a settlement.
3. If the buyer does not pay and there is no settlement, DLD issues the developer an official document stating the project completion percentage under RERA standards.

The excess is refunded within one year of termination or within 60 days of resale, whichever is earlier. If works have not started for reasons beyond the developer's control, or RERA has issued a final decision cancelling the project, the developer must refund all payments under Law No. 8 of 2007. These rules are a matter of public order, and the buyer keeps the right to go to court or arbitration.

If a project is delayed or cancelled

The law sets no fixed compensation for a late handover; that is normally governed by the SPA. But there are mechanisms for serious problems. Under Resolution No. 6 of 2010, RERA may cancel a project based on a reasoned technical report, in particular if:

• the developer fails without valid reason to start construction despite having all approvals;
• it is shown that the developer has no genuine intention to build, or it acted with gross negligence;
• the developer is declared bankrupt or committed offences under Art. 16 of Law No. 8 of 2007.

The developer may file a grievance within 7 working days. After cancellation, RERA appoints an auditor at the developer's expense, and the escrow agent refunds buyers within 14 days. If the account is short, the developer pays the shortfall within 60 days; if it does not, RERA refers the matter to the courts (Arts. 23–27). Separately, a buyer may ask a court to terminate the contract if the developer refuses to link payments to construction milestones, materially deviates from specifications, or serious defects appear after handover (Art. 20).

RERA's role

RERA is the regulatory arm of DLD. It licenses developers and brokers and registers projects, and its Real Estate Escrow Account Division audits and monitors project accounts on a regular basis. For legal purposes, completion percentage is confirmed by a technical report from a RERA-approved consultant after a site inspection (Art. 17 of Resolution No. 6 of 2010).

How to check project registration and the escrow account

1. Open the Dubai REST app: for off-plan projects it shows completion percentage, construction photos and the escrow account number.
2. Use the DLD Project Status Enquiry service on the website, in the app or on WhatsApp (8004488), searching by land number, project number or project name.
3. Check the developer in the Licensed Developers list on the DLD website or in Dubai REST.
4. Match the payment details in the SPA and invoices against the project's escrow account number. Pay only into the escrow account, never into personal accounts.
5. After signing, make sure the contract is registered in Oqood and you have received the electronic certificate.

Developer profiles from our catalogue are in the developers section, and the projects themselves are in the new developments catalogue. This article explains the official rules and is not legal advice: in a dispute with a developer, consult a lawyer in Dubai.