QI have paid 70 per cent of the total price of my unit. The contract states that the final 30 per cent is due on handover. The developer has written to me demanding that I pay 20 per cent of the price now, with the final 10 per cent following on handover. Do I have to do this?
A The sales contract from the developer to the purchaser is crucial. In the event that the purchaser has never agreed to a variation of the contract's payment schedule, then the final 30 per cent will remain payable on handover of the unit. The developer is not entitled unilaterally to demand payment of 20 per cent now and 10 per cent on completion. This said, the purchaser should consider the merits of possible compromise with the developer. Perhaps, if the developer was paid 20 per cent now, he would agree that on handover only 5 per cent would need paid by the purchaser. This would mean the purchaser receives a 5 per cent discount on the purchase price. There are no rules as to what can and cannot be achieved in negotiations like this - everything depends on how flexible and inventive the parties are willing to be.
Q I have paid 65 per cent of the purchase price for my villa. As little construction has taken place, I want to know that my money remains in the project's escrow account. What are my rights
A Under Dubai's Escrow Law, every project is required to have an escrow account. Payments from the purchaser to the developer must be deposited into the escrow account. As opposed to speaking to the developer, the purchaser may find it quicker to get information about the escrow account from Rera's (Real Estate Regulatory Agency) website (www.rpdubai.com) which lists escrow account numbers and escrow agents for registered projects. Armed with a project's escrow account number and escrow agent, the purchaser can make enquiries with the escrow agent as to the payments into and out of the escrow account. The developer, under certain circumstances, is permitted to withdraw money from the escrow account (for example to pay for the land on which the project is being developed) .
Q I have been making regular monthly payments to the developer of my flat. However, it seems that no construction has taken place. The developer is not responding to my phone calls or emails. What can I do to get my money back?
A Although the developer is refusing to respond to the purchaser, the developer may be more responsive where contact is made on behalf of the purchaser by the Land Department or by a lawyer. Although the Land Department is not obliged to this kind of service, on occasion it is able to arrange a meeting between both parties, at which the issue could be discussed and a settlement reached. If the purchaser engages a lawyer, the costs will not be recoverable from the developer. This applies even where the purchaser commences and wins court action against the developer. Consideration should therefore be given to the possible costs involved, as compared to the potential moneys that could be recovered. Many purchasers are deciding to use their lawyer as a basis for opening up negotiations with the developer, perhaps agreeing to a partial return of moneys or a transfer to a cheaper unit.
Andrew Yule (ayule@afridi-angell.com) is an associate at the law firm of Afridi & Angell. The above information is not legal advice and is neither intended to create nor creates a lawyer-client relationship. Neither the writer nor Afridi & Angell are responsible for anyone relying on the above information. It is recommended that you take independent legal advice.
