Wednesday, April 28, 2010

Land Department to seize off-plan properties of defaulting investors

The Dubai Land Department (DLD) may soon begin seizing off-plan properties, whose owners are at default.

The authority has notified investors who are at default, that if they fail to pay their outstanding payments within two weeks, 40 percent of any amount that they have paid so far, will be confiscated, and the properties will be sold at auction.

The amount so obtained, will be handed over to the developers, along with profits received from the auctions. This rule will be made applicable to projects that are at least 80 percent complete.

According to Mohammad Sultan Thani, Assistant Director General at the Dubai Land Department, such a measure is aimed to promote completion of incomplete properties, rather than leading to cancellation of properties.

Several developers were dependent on off-plan mode of sales, during the peak of property sales, wherein, properties were sold before beginning construction, so as to obtain sufficient funds for construction. However, analysts are of the opinion that such models have led to speculative buying and inflated prices.

Several developers, including Al Mazaya Real Estate of Kuwait, with eight projects in Dubai, have issued such cancellation notices to investors.

However, Thani mentioned that the authority is yet to auction out any properties, and believes that there are only few such cases, as people will go ahead in making payments, if the building is almost complete.

Meanwhile, lawyers in Dubai have hit back, claiming that the Land Department does not have the right to do so, as Land Department is not a judicial body, and therefore these judgements cannot be implemented.

1 comment:

Arcus Properties said...

As we all know that real estate market is fighting for its survival. The steps which are being taken to secure it but authorities should check it first that will these steps helpful to save the market because market is already in a great risk.