Monday, May 24, 2010

Land Department to deregister properties of defaulting buyers

The Dubai Land Department has begun to deregister properties wherein the buyers end up losing their title, if they have missed payments on off-plan projects, despite having received several reminders.

The letters were sent on behalf of developers, who have completed about 80percent or more of a project.

According to the release on 15th April of Executive Council Resolution 6 of 2010, it has allowed developers, including Deyaar, Emaar, Al Fajer, Omiyat Properties and Al Mazaya Real Estate, to repossess their properties and retain 40 percent of their value.

The Assistant Director General of Dubai Land Department, Mohammed Sultan Thani, said that few properties has already been de-registered since the beginning of the procedure, and the buyers too agreed, as they dint want to pay any more. He agreed that it is mostly happening through mutual agreements.

Seized properties will be auctioned by the Land Department, and the funds will go to the developer, unless the sales generate a surplus, which will be passed on to the original buyers.
However, Thani revealed that there are no properties currently put up for auction. There are several investors now considering legal action against a ruling which they consider to be favouring developers.

During the peak property boom, majority of the developers were dependent on the off-plan model, in which projects were financed by selling units before construction actually began.

The practice led to speculative buying at inflated prices, which fell by almost 50 percent or more by end of 2008, following a 78percent surge in a span of one year from June 2007. During this phase, certain property laws governed transactions between buyers and developers.

Majority of the developers are in a strong legal position, as there was less clarity in the contract, with lack of rules during the time when the contract were signed, said one of the buyers.

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