Draft of Investor Protection Law for Dubai

Property investors in Dubai will be eligible for cancellation of their contracts and may seek “full” refunds if the real estate developer fails to provide the promised unit or services within a specific timeframe, according to a proposed new Investor Protection Law. From a delay in handing over of units to a failure to deliver promised facilities as per the sales contract, the proposed law gives property investors in Dubai the right to seek cancellation of their contracts and get “full” refunds. Under the proposed law, an investor will get the right to cancel the contract and obtain a full refund if the developer has taken more than eight months (beyond the promised handover date) to hand over the unit(s). Another provision proposes to make it mandatory for the developer to provide all the common facilities promised in the contract at the time of handover. Therefore, swimming pools, gyms or any other promised facility in the building will have to be ready before officially handing over the keys to the owners. Failure to do so on the part of the developer will allow the investor to cancel his or her contract and claim refund on investment. At present, some developers have failed to provide the facilities mentioned in their sales purchase agreements (SPAs) or marketing collateral. Until now, owners did not have much recourse and could only hope that the facilities would get completed at some point in time. On the other hand, developers will face fines if the units they promise are not delivered on time, or to agreed specifications. A proposed provision of the draft law says that if a unit turns out to be 30 per cent smaller than the actual net area in the contract, the investor will have the right to cancel the contract and obtain a full refund.

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