Saturday, May 30, 2009

RERA freezes escrow accounts of major developers

Dubai Real Estate Regulatory Authority (RERA) has frozen the accounts of several major property developers, until such time that they prove that construction is in progress, and that the land has been properly registered.

This move by RERA to freeze escrow accounts of developers is being done in the interest of property market, as it is grappling with fall in prices and shortage of lending.

All money made from the sale of off-plan properties must go into an escrow account, and be used solely for property construction.

The Chief Executive of RERA, Marwan bin Ghalita, said that the developers will have to provide technical reports detailing the progress of construction prior to withdrawing money from the accounts. Payments will be linked to progress made in construction.

The developers will also have to prove to RERA that they have registered investors' rights with the Land Department.

RERA is yet to reveal the number of accounts frozen.

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