Dubai Law No. 9 of 2009 – Bringing back buyers or scaring them away

                                                                                         

The recent development in the ongoing tussle between developers and investors in Dubai is a new amendment made by Dubai Land Department in real estate laws, the issuance of a new law which is known as Law No. 9 of 2009. Just when a decision by Dubai Real Estate Court took the edge off the investors' misery, this law might knock them over again. On the other hand, the developers who were infuriated by the decision, would be feeling much relieved now, seeing that the buyers now can not terminate off plan contracts on their own. On the face of it, the new law explains the ratios of refunds made by a developer to buyers in different circumstances, however it is perceived as a law, which practically disables buyers from terminating an agreement.

The law states that the only way an investor will be able to opt out of the agreement, is to take their case into the court with well founded reasons. Another way out of the agreement is to request Dubai's Real Estate Regulatory Authority (RERA) to cancel the project. In a market where investors were already feeling the heat, this law will perhaps, further dampen the spirits; still such law was expected to prevent buyers from exploiting the market, which is already going through a rough phase.

Law No 09 of 2009 sets down the rate of refunds, based on the overall completion of the project. For instance, if the developer has completed 80% of the project, the developer will not be liable to pay back any of the amount paid, and in case the investor defaults on the remaining amount, the developer can request for an auction of the property. If the project was 60% completed, developer can keep 40 percent of the purchase price. Less than 60% completion means 25% deduction, while in case of no construction at all, the developer will keep 30% of the total payment made by buyer. Note, that in first three cases, the relative amount is the total purchase price of unit, while in the last scenario (where no construction took place) we are talking about the total amount that buyer has paid to the developer.

Therefore, buyers are obliged to forego some amount unless the project is canceled by Real Estate Regulatory Authority (RERA). In that case, the developer has to return all amounts with no deduction, within one year of the cancellation.

About the author:
William King is the director of Dubai Property Rentals & Dubai Rents , Karachi Real Estate & Karachi Property and Wholesale Trade Suppliers, Dropshippers, Distributors & Manufacturers. He has 18 years of experience in the marketing and trading industries and has been helping retailers and startups with their product sourcing, promotion, marketing and supply chain requirements.

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