When a property transfer is delayed, the buyer has a number of options for recovering money or seeking compensation. Buyers’ rights and developers’ obligations are governed by the Dubai Executive Council Decision No.6 of 2010 and Federal Law No.5 of 1985.

Article 246 requires that all contracts, including Sale and Purchase Agreements, be carried out in a way that is consistent with good faith and in accordance with the terms that have been agreed upon. This means that developers are legally required to follow the deadlines and terms outlined in the SPA, which includes delivering the property on time and per the agreed-upon measurements.

Property delays in the handover may be considered a violation of the good faith requirement by the developer, and the buyer may be entitled to compensation or other remedies under the SPA and relevant UAE laws.

Article 295 stipulates that financial compensation may be granted as damages for contract violations. Property buyers who face delays in property transfers are entitled to compensation for the financial losses they have sustained as a consequence of the delay. The court may require specific actions in certain circumstances, such as ordering the developer to complete the property handover or ordering the parties to return to their initial positions to repair the damage. For example, if the buyer has been severely impacted financially by the delay, such as by being unable to rent or use the property, they may pursue legal action to recover these losses. Article 569 stipulates that share and purchase contract validity is subject upon the property’s availability at the time of delivery. 

Under these applicable provisions of the law, the buyer obligates the developer to deliver the property in good manner, size, and qualities that are outlined in the contract. If the developer fails to comply with the terms of the agreement, the buyer may pursue legal action as a breach of contract. For example, the buyer can request a contract cancellation or demand the suitable unit if the property is not ready for handover by the described date or if the developer delivers a unit that is smaller than the agreed-upon size.

Furthermore, Article 572 authorizes the buyer to choose between waiting for the correct unit size to become available or cancelling the SPA if the developer fails to deliver as agreed. This remedy is beneficial when the developer is unable to deliver the property due to unforeseen circumstances. In the event that if the developer is unable to rectify the problem within a reasonable time, the buyer has the right to terminate the SPA contract and is entitled to get a complete refund from the developer. Furthermore, Article 574 offers additional protection to buyers by allowing them to challenge unjust or unfair terms in the SPA. 

Article 574 offers additional protection to buyers by allowing them to challenge unjust or unfair terms in the SPA. In the event that a developer exploits the buyer’s situation by providing a unit with unfair conditions, such as a smaller size or poor quality, then the buyer may attempt to modify the agreement through the court. The buyer may either continue with the modified agreement or request a refund, and the court has the authority to revise the terms to address the imbalance.

Dubai Executive Council Decision No. 6 of 2010

Dubai’s real estate regulations offer further protections to buyers of off-plan properties, particularly in cases where there are disputes over delayed handovers. The Dubai Executive Council Decision No. 6/2010 outlines several remedies for buyers:

When a dispute arises between a developer and a buyer, Article 14 provides that the Dubai Land Department (DLD) will attempt to mediate and preserve the contractual relationship. The DLD may suggest solutions that are fair to both parties, and if a settlement is reached, it is documented in a binding agreement. This move encourages amicable resolution without initiating litigation. 

If the buyer fails to meet its obligations, Article 15 authorizes the developer to deduct a certain percentage of the paid sums, depending on the stage of the project’s completion. If the project is completed by more than 80 percent, the developer may retain up to 40 percent of the unit’s value, and the contract may be rescinded. If the project is less than 60 percent complete, the developer can deduct 25 percent and cancel the contract.  In all cases, the developer must return any excess amounts to the buyer. Furthermore, Article 18 stipulates that within a specific period if the buyer cancels the contract, the developer must return the sums due as per Article 15.