Reader in UAE asks: Can I cancel agreement if developer delays delivery of real estate unit?

Real estate contract for property purchase

Question: I want to buy a property from a real estate developer and the property is off-plan. It will be completed, according to the developer, in three years and payments will be made within five years. My questions are: 1) What are the guarantees that I must obtain to ensure that the property is registered in my name and that I obtain its ownership? 2) Do I have the right to legally register the property in my name and in the names of my wife and son? 3) If the developer delays delivery of the property, do I legally have the right to cancel the agreement? Please advise.

Answer: Law No 13 of 2008, regarding the Interim Real Estate Register, gives you the guarantee you want because it is to be used to record all off-plan sales of real estate units and regulates it. An application to register a unit in the Interim Real Estate Register should be filed using the standard form. The property can be registered under the name of the purchaser and any other person he or she wants. Article 1 states: ‘Any sale or other disposition that transfers or restricts title or any ancillary rights will be void if not recorded in the Interim Real Estate Register.’ Article 7 of the Law provides that developers (both master developers and sub developers) are not allowed to charge any fees for the sale, re-sale or other dispositions of units. Article 8 states that ‘Developers must enter completed projects in the Property Register maintained by the department once they receive the completion certificate from the Competent Entities. This includes entering sold units in the name of purchasers who fulfilled their contractual obligations in accordance with the procedure adopted by the department. For the purposes of this Article, the department may, either upon the request of the purchaser or upon its own initiative, register in the Property Register in the name of the purchaser a Real Property Unit entered in the Interim Property Register which was sold off-plan, provided that the purchaser fulfilled all his contractual obligations.

You have the right to cancel the purchase order as per the general rules of contracts. Article 272 of the UAE Transactions Law states that in bilateral contracts, if one of the parties does not perform his or her contractual obligations, the other party may, after serving a formal notification to the debtor, demand the performance of the contract or its rescission.

The Effects of Contract’s Dissolution is to reinstate the parties to their former position as per Article 274, “When a contract is or shall be rescinded, the two contracting parties shall be reinstated to their former position, prior to contracting, and in case this is impossible, the court may award damages. This is also provided by Law No 19 of 2020, amending Law No 13 of 2008 as mentioned above, where the developer has not commenced work on the project for any reason beyond his control, without negligence or omission on his part, or where the project is cancelled pursuant to a final reasoned decision of Rera (Real Estate Regulatory Authority), the developer must refund all payments made by the purchasers.”

Bounced rental cheque

Question: Four months ago, I had rented a villa to someone and according to the lease agreement, the rent was supposed to be paid to me in four cheques. I encashed the first cheque while signing the lease contract. Currently, the second cheque has bounced and the tenant is avoiding payment and is still occupying the property. My question is: According to the rental law in Dubai, can I take quick action, before the tenant escapes, and secure the value of the bounced cheque? Please advise.

Answer: You may do this through the ‘performance order’. This mechanism is concerned with financial claims and could prevent the landlord from entering into different levels of litigation, in addition to the possibility of obtaining rent arrears within days, indicating that it is a step that avoids filing a case because of rent arrears, but it does not allow him to file an eviction suit.

This service enables customers to file a petition in the Rental Dispute Center requesting Provisional and Summary Actions Judge to issue a payment order to the tenant to pay the rent arrears. It is done by a request instead of a lawsuit and enables you to claim the amount of the returned cheque (in the event that the request is an obligation of the value of a bounced rental cheque) or to request the travel ban. You can also apply for other requests using the same mechanism for example to claim Dewa payments, maintenance fees, services charges or attachment.

This ‘performance order’ is done after informing the tenant about the payment by various means of notification, and the period of permission for the payment is five days.

The procedures begin by opening a file with furnishing the required documents, including the passport or Emirates ID of the owner and the tenant, a copy of the bounced cheque with a bank report on the reason for the cheque being returned and a copy of the lease contract and any other documents that the centre requests according to the claim applied. All documents must be submitted in or translated legally into Arabic.

This mechanism is in force of the Civil Procedure Law issued by Cabinet Resolution No 57 of 2018, which stipulates that the ‘Performance Order’ is an exception from the general rules in filing a lawsuit, if the creditor’s right is established in writing in what is required to accept the ‘performance order’. The creditor must assign the debtor to fulfil within a period of at least five days by any of the means of advertising specified in the regulations.