Homefront: 'Can I cancel an off-plan purchase and recover my money if the delivery is late?'
The UAE resident bought the Dubai apartment in April 2017 but the developer is running behind schedule
I agreed to purchase an off-plan apartment in Dubai from a developer in April 2017. I have since paid six cash instalments to make up 30 per cent of the purchase price. These payments were made early, ahead of the developers' payment plan. In addition, the developer pushed me to register the property with the Dubai Land Department in April 2018, which I paid the full amount for. On my sales and purchase (Spa) agreement, the anticipated completion date was the second quarter of 2018 or June 2018 at the latest. The latest completion date the developer has provided via email is the third quarter of this year or July at the earliest. My Spa states that the developer may extend the completion date for a period of up to 12 months. My question is: as the developer will be at least 12 months overdue on the completion date, do I have grounds to cancel the purchase and recover my money, including the DLD registration fees? JT, Dubai
From what I can see you have paid 30 per cent of the property purchase, so I guess that the payment plan is 30/70 with 70 per cent due on completion/handover. Normally a developer is allowed to be 12 months behind the Spa-scheduled timing for the project.
Whether you will be successful in recovering all your money paid to date, including the DLD registration fees, will be determined by a competent judge should you wish to file a case against the developer. In the past, the courts have tended to favour the developers with off-plan projects but we are seeing the tide shift to being more in favour of investors.
The amount already paid does has a bearing on the result and the more one has paid, the greater the chances of being able to cancel and recover the costs. This is not the definitive solution but in your case, as we are potentially talking about a 13-month delay - assuming the developer does actually complete in July 2019 - it's possible a judge may not see this extra month as being of material importance.
Before doing anything, please check your Spa for any arbitration clauses, as this may be a smarter way to go about resolving your issues with this particular developer. Arbitration is beneficial as it is normally faster than going to court; it is private and specialist arbitrators can be used to resolve the matter. In Dubai the most popular arbitrator venues are before the Dubai Chamber of Commerce and Industry or the Dubai International Financial Centre/London Court of International Arbitration (DIFC/LCI) centre based in the DIFC.
The only advice I can give is that you will have to weigh up the pros and cons carefully in taking the developer to court. If you do decide to go ahead, you must file an application to the court through a lawyer to inquire the status of the project from the DLD then file the case against the developer for the cancellation.
Court fees depend on the value of the claim and are capped at Dh40,000. This fee is payable either on an application for provisional relief or on the filing of the main lawsuit. I rate your chances as only 50-50, so please think carefully before deciding what to do next.
Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for 35 years in London and Dubai
The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to firstname.lastname@example.org
Updated: April 25, 2019 07:33 AM