Monday, November 22, 2010

Buyers can claim compensation from developers for false disclosures

Beginning 13th January 2011, the developers will have to pay compensation to purchasers if the disclosure statement provided by them is incomplete or inaccurate in a material way, stipulates the latest Strata regulation.

The latest real estate update by Clyde and Co states that failure to attach a full disclosure statement (instead of the present interim disclosure statement) from 13th January 2011, or a full disclosure statement to a contract for sale of unit, will result in issues with enforceability of the contract.

Further, Article (5) sub-clause 3 of the Direction for General Regulation Concerning Jointly owned Properties, states that developer will have warranted the information given under sub-clause (1) of article (4), and if any information found in that is inaccurate or if found so within two years from the date on which the unit is transferred from the developer, or if it is incomplete in a material way, the developer will be liable to pay compensation to consumer to whom the unit has been transferred, irrespective of whether the consumer purchased from the developer or from another consumer.

Since the introduction of Strata regulations in Dubai, earlier this year, an extensive disclosure is needed, as per the directions when selling units in Jointly Owned Property (JOP), particularly for “off plan” sales. The interim provisions, which is currently in practice, ensure that an interim disclosure statement be attached to any contract of sale of a unit within a JOP, wherein the title to the unit has not been issued by Dubai Land Department, and if the seller is a developer.

The interim disclosure statement should include extensive project details, and the unit, as prescribed in the directions. The interim disclosure provisions will expire on 13th January 2011, and thereafter, a full disclosure statement will have to be attached to any sale contract. The disclosure statement should also include a copy of the proposed JOP Declaration for the project, and an extensive project detail and the unit as mentioned in the directions.

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