Dubai: How to Claim Compensation for Delayed Property Handover?

Thinking of investing in Dubai’s off-plan property? Discover what happens if the developer misses your handover deadline and how you might secure compensation for the delay.

Question: I am considering an investment in an off-plan property in Dubai, with the scheduled handover of my unit set for 2028 as per the sale agreement. Could you please clarify the implications if the developer delays the handover? Specifically, am I entitled to compensation, and if so, what is the timeline for receiving it?

Answer: When purchasing property in Dubai, the Sale Purchase Agreement (SPA) outlines the relationship between the seller and purchaser, including terms such as purchase price, completion date, compensation for breaches, and force majeure clauses. This agreement is governed by its specified terms and the principle of good faith, as per Article 246 (1) of the Federal Law No. (5) of 1985 On the Civil Transactions Law of the UAE, which mandates contracts to be executed in line with their provisions and in good faith.

If any terms of the SPA are breached, the affected party may be entitled to compensation. According to Article 295 of the UAE Civil Transactions Law, damages typically involve monetary compensation. However, a judge may also order restoration of the parties to their original status or specific performance related to the breach.

Developers are obligated to hand over properties once a completion certificate is obtained, provided that the purchaser has met all contractual obligations. This is stipulated in Article 7 (1) of the Executive Council Resolution No. 6 of 2010, which states that developers must hand over the property or register it in the purchaser's name upon completion, even if there are other financial dues.

In case of non-completion of the project, the developer may need to refund the purchaser based on the percentage of completion. Article 18 of Executive Resolution No. 6 of 2010 requires refunds to be made no later than one year from the agreement’s termination or within 60 days from the sale of the unit.

For disputes, the Dubai Land Department (DLD) can mediate to reach an amicable settlement, as per Article 14 of the Executive Council Resolution No. 6 of 2010. If the developer cites force majeure or fails to make refunds within the stipulated period, the Real Estate Regulatory Authority (RERA) may intervene, and the matter can be referred to judicial authorities.

If the developer delays the handover, you can first file a complaint with the DLD or directly approach a Dubai court to seek compensation for the delay.

News Source: Khaleej Times