In the past, real estate disputes in the UAE were extremely common, especially after the global crisis until the end of 2012 due to the effects of the real estate crisis. Despite many reforms in the real estate development systems, project batches, the existence of developer funds in the possession of the Land Department and its periodic reports on the completion ratios of buildings, there are numerous real estate issues disputes. Such disputes may be the result of either the circumvention of developers with regard to such systems, misuse of funds, or the inability to implement projects and finalize them. In rare cases, there may be compelling circumstances in such disputes.
Nour Attorneys & Legal Consultants team works in a highly professional manner to represent clients and developers in real estate disputes in cases such as completion delays, failure to provide services, the existence of a difference in areas, applying different specification than those agreed upon for finishes and raw materials, and other issues that usually arise in those contracts. We have professional real estate lawyers in Dubai.
Eventually, we offer valuable advice and consultation for anyone who is about to sign real estate agreements to protect them from the depletion of their funds in real estate as well as to help them avoid paying for the costly litigation fees. It is noteworthy that judicial proceedings before courts and compensation claims are known to all investors and always lead positive results whose strength varies depending on the skill of your real estate lawyer in real estate cases.
You should always consider the following carefully in rental contracts:
1- You Should Always Make Sure to Receive an Original Copy of the Detailed Rental Agreement and Contract
You should never think that the booking agreement is sufficient for you to complete the contract, on the contrary, you have to make sure that you receive your detailed rental agreement within the appropriate time to study it carefully and sign it. If you start making payments and you have not received the agreement until one or more years after the contract, you will be forced to sign it. Therefore, the ability to negotiate the agreement’s terms and conditions will be limited, the loss may be severe and there may be compulsory conditions that do not satisfy you, but under pressure to register or receive the unit, you would eventually sign it. You should always mention the fact if you have received a copy of the detailed agreement or not if it is included in the booking agreement and you can add this to the signature (I did not receive a copy of the detailed agreement). This procedure aims at ensuring that the developer will not claim that he gave you the same copy of the contract, as this may lead to issues concerning the extent of your knowledge of the agreement’s terms and conditions.
2- Choosing Arbitration or Litigation Compared to the Unit Price
Imagine if you choose to resort to arbitration at an arbitration center by 3 arbitrators at an average cost of 350-425 thousand dirhams, while the unit price ranges from 500 to 800 thousand dirhams. Even if the unit was not delivered, you will not be able to pay for the required amounts to file the case. You should take into consideration that in some cases, due to the insignificance possibility of collecting the due amounts, the unit owners may refrain from filing claims due to the arbitration costs of the arbitral bodies. This is especially the case when the body is tripartite. Concerning the litigation, the fees have a maximum of approximately 30,000-50,000 dirhams and it varies from one court to another. Moreover, if you choose to resort to filing an appeal or a cassation appeal, the cost will amount up to 50,000-75,000 dirhams. You can also postpone the payment of such fees in court until the end of the lawsuit or request their installment. The court may also give you a discount, and in this case, you will not need to pay these costs.
You should always review the litigation and arbitration condition and consider the cost you would incur in the light of the value of the unit and the extent to which you can manage to pay for the dispute costs.
3- The Reputation of the Real Estate Developer
Moreover, you should always inquire about the reputation of the real estate developer by asking real estate marketers about the completion ratios of his projects, the disputes that usually arise around his projects, and in cases of delay, whether the delay is a long-term or a short-term delay. Furthermore, you should also learn more about if his projects usually differ from the agreed specifications, how the company resolves disputes with clients, as well as verifying the information contained in the company’s portfolio such as the number of projects it has completed. As an additional step, you can review the company’s projects at the Land and Property Department, its completion ratios and delays.
4- Making Payments to the Real Estate Escrow Account Either by Cheques or Bank Transfer
In all cases, the owner shall not make any payment to the real estate developer, whether by cheque in the name of the developer, bank transfer or otherwise, but must transfer it or deposit the cheques himself to the real estate escrow account to ensure that funds arrive at the Land and Property Department according to each emirate. This procedure aims at ensuring that the developer is committed to completing certain ratios of the project for the disbursement of payments and making sure of the non-use of these payments in other projects. Moreover, this procedure allows you to receive a refund of a percentage of the paid amounts in case of the cancellation of the project at the Department. It is noteworthy that you can only pay commission checks or administrative and register expenses to the developer or his bank account, however, construction payments have to be paid to the escrow account.
5- Making Sure That Payments Are Associated with Completion Ratios Rather Than a Time Schedule, Unless the Latter Was a Better Option for You
You should agree through a contract that payment shall be associated with the completion ratios with the existence of a specified schedule rather than an absolute schedule. Postponement of payment should be done automatically if the completion ratios are not completed according to the report of the Land Department or its approved consultants according to each Emirate and not just the statement issued by the developer. You can agree on a time schedule if the payment is to be after the receipt or completion of the entire unit. In such a case, agreement on this matter shall be better than the legally required minimum which making payments that are proportional to the completion ratios.
6- Refraining from Payment in Case if the Developer Breaches any Obligation (In proportion to the Breach)
You should always be aware that the Civil Code governing all contracts and its general principles has determined that if either party breaches their obligation in the contract, the other party may suspend the execution of their obligations due to the breach by the breaching party. Moreover, the latter shall not be considered a breach of the party who has suspended to fulfill his obligation. You should consider that your refrain shall be proportionate to the breach; as you may not refrain from making a due payment just because the developer did not send you a monthly completion report. However, you may refrain from paying in case of not receiving the original agreement and you are entitled to terminate the contract due to the unclarity of the terms and conditions of the contract.
7- Sending a Warning to the Developer to Make Him Liable for Default Before the Court or the Dispute Resolving Entity
One of the doctrinal principles known in a simplified language is that the warning is: “Stating that the breaching party is liable for default.” This means that you clarify to the breaching party that he has breached the contract, the obligations and the conditions. Thus, you reserve the right to claim compensation and refrain from the implementation of your obligations in the event of failure to address the breach within the appropriate time. The accumulations of warnings sent to the developer without an action taken, in addition to all of the above, allow you to claim a bigger compensation as well as not considering your silence as a waiver of your rights against the developer. Therefore, your refrain from committing to your obligations becomes valid without having to compensate the developer for this.
Nour Attorneys & Legal Consultants team has best real estate lawyers in Dubai which provide our clients, in a highly diligent and professional manner, with the legal advice and consultation on how to deal with real estate purchase offers, negotiate contracts and make market inquiries through our real estate brokers or investors in the real estate market. We also offer litigation services in such real estate claims.