The legislation applies to companies
and individuals receiving ‘off plan’ payments for properties that are not yet complete.
Property
developers launching new residential or commercial multi-storey projects will have
to apply to Dubai Land Department to open a Guarantee Account, which are known more
commonly as ‘Trust’ or ‘Escrow Accounts.
How
does the Law work?
To open
an Escrow/Trust Account, property developers must submit:
-
Title
Deed of the plot being developed
-
Approved
architectural designs and layouts
-
A letter
of approval from a master developer
-
A trade license
If the documents are in order, the
Trust Account will be opened according to a written agreement between Developer
and the Land Department. Money from buyers or financiers is deposited in the account
opened under the name of the particular property development. The law stipulates
that developers should apply to the Trust Account Manager to release money from
the account. The developer must first produce a certificate from a consultant working
on the property that an agreed stage of construction has been reached. The trust
account manager then must inform the Land Department about the sums being released
to the developer.
Even
when a project is complete, the developer will not be granted access to all the
payments. The Land Department will keep 10% of the project value for one year after
completion until all units are registered in the names of buyers and title deeds
are issued in their names. Parties failing to meet the requirements of the Law will
be fined no less than Dh200,000.