Sunday, April 11, 2010

New law defends investors in stalled projects

A new law by the Dubai Government prevents real estate developers from keeping any funds of individual investors, who have invested in projects that have never seen the light of the day, owing to failure on the part of developers.

The Decree No.6 of 2010 by the Dubai Executive Council, says that both industry officials and the government will have to work hard in bringing about transparency in the market, which has seen 50 percent fall in real estate values.

The law also stipulates new rules that help purchasers who had signed deals with developers during the boom-time, but had to remain empty handed, owing to real estate projects that never started.

The Assistant Director General of Excellence and Organizational Governance at the Dubai Land Department, Mohammad Sultan Thani, said that this is just another step towards maintaining transparency in the property market.

The newly amended regulations of Law No.13 of 2008, indicates a sliding scale of refunds to help both developers and investors towards settlements.

The new law states that the developer intending to cancel projects, should notify the investors in writing, to abide by his contractual obligations. The developer should then wait for a period of one month for the contract to be fulfilled by each investor, after which, the developer can cancel the contract, and refund a portion of investor's money, as per the sliding scale.

If the developer has been found to have delayed the project due to failure or negligence, he is not eligible to retain any of the original project funds and should return the money in full.

However, if the developer has not begun construction of the project, due to reasons beyond his control, he can ask the land department to cancel the contract with purchasers and retain 30 percent of the value of the sums paid by the purchasers.

The regulations have clear details about what is deemed as "negligent attitude" on the part of the developer, and what are the factors that are "beyond the control of the developer".

When the Land Department cancels a certain project, an auditor will be appointed at the expense of the developer and a trustee of the escrow account will be asked to repay the sums deposited into the account to the purchasers within a period of 14 days from the date of cancellation.

In case the trust is found to be short of cash, the offending developer will be given 60 days to make the payment, or the land department will take the necessary measures to protect the rights of purchasers, including referring the matter to competent judicial authorities.

1 comment:

dorissai said...

How do I request a refund from the developer , who sold the unit I paid for. then spent the money. The payments went into their account ,not the escrow account as this was in 06, and the escrow acccounts were not set up, by rera as yet It seems no one has authority on the Minc property.And them keeping my money. Lk.