Ask the law: Unregistered property broker

Q. I signed an agreement to sell my property through a real estate broker. After signing I found out that the broker is not registered with Rera. I believe he did not have proper knowledge of the market, did not give me proper advice and should not have been doing business at all. Based on this fact, I would like to withdraw from the sale. However, in the contract, there is a clause that states that if I withdraw, I am liable for a penalty equivalent to the deposit amount. I was wondering if there is any way I can cancel this contract with minimum or no penalty if at all possible.

A. It certainly sounds as if the broker has acted in breach of a number of regulations, most obviously the need to be registered with Rera.

He would also appear to have acted in breach of various articles of the Brokers Code of Ethics (there is one, contrary to public opinion!). This requires brokers to act fairly and with integrity throughout their dealings with the customer. Specific breaches include misleading a buyer or seller on the value of the property, pressuring a customer to sign an agreement without them understanding it, and denying the customer the chance to seek legal advice if they ask for it.

If there have been such breaches, not only should you report the broker individually to Rera, but you should also report the company by which he was employed. They should have ensured that he was Rera registered before allowing him to conduct sales. Article 22 of By Law 85 states that a broker should be liable for the loss incurred as a result of his or her breach of the Code of Ethics. If therefore you can prove that you have suffered loss by virtue of the property being sold at an undervalued rate due to the broker’s misrepresentations, you can claim that loss from the broker and his employer. What you should not do however is breach the terms of the agreement signed between you and the buyer by withdrawing from the transaction, as that would entitle the buyer to retain the deposit security cheques drawn on the account that you are now proposing to close.

Q. I am a 22-year-old secretary earning Dh20,000 per month. An Islamic bank in Dubai approved a mortgage for me with a loan to value (LTV) of 100 per cent. They didn’t ask for any supporting documents and just asked me to sign. They also stated on the forms that my salary was Dh40,000. Are there any laws here regarding miss-selling?

A. The first thing you should do is contact the bank and register your concerns as a formal complaint. Any form of miss-selling is unacceptable, and the falsification of figures in the paperwork could even warrant criminal action. The bank should take the matter very seriously. At the same time you should lodge your complaint with the Central Bank, which is responsible for regulating all banks in the UAE.

I would also suggest that you write to the Consumer Protection Department of the Department of Economic Development, which has shown a willingness in the past to become involved in such matters. If miss-selling has occurred, then the bank should cancel the transaction and compensate you for any loss or damage.

Q. I purchased a property with a mortgage and I am paying the instalments by standing order from my local bank. I may have to leave the UAE for work and obviously in that case my current employer will cancel my residency visa and I will have to close my account in the local bank. What do you think the mortgage provider will ask me to do?

A. Your mortgage documentation probably imposes on you an obligation to notify the mortgage company of any change in circumstances, address, etc. Also, the fact is that the standing order cease will alert them to your position.

You should therefore be open with them and let them know where you are going, what your new contact details are, and that you intend to service the mortgage from your new salary going forwards. Provided you comply with your obligations under the mortgage documents and the mortgage company is assured of your intention and ability to continue to pay the instalments, they should not have any need to take any further action.
They may, however, ask you to provide some form of alternative security if you have previously submitted security cheques drawn on the account that you are now proposing to close.

Q. I bought a flat in Jumeirah Village in 2008, with a Sharia-compliant mortgage. The project is delayed but the developer claims it is a case of force majeure, as the plot was handed over late by the master developer. The SPA states that if force majeure delays the project beyond the end of September 2011, the seller may terminate this agreement and refund the buyer. The contractor told me that my property will be completed in December 2011. The developer does not want to cancel, and the bank does not want to take any legal action against the developer. I want my money back.

A. The first issue here is whether an event of force majeure has in fact caused the delay or not. If the developer is saying that the plot was handed over late by the master developer, then depending on the wording of your SPA there may well be an argument that the developer should be entitled to extend the anticipated completion date by the period of the handover delay.

The end-September 2011 long stop date for a force majeure delay appears, from what you say, to entitle the developer, but not the buyer, to terminate the SPA. In such a circumstance, neither you, your bank nor the mortgagee have a contractual right to terminate. If the SPA does in fact provide a right of termination on the part of both the developer and the buyer where the force majeure delay period has been exceeded, you should note that in the case of Islamic finance, you will probably have assigned your rights under the SPA to the financial institution. In that case, the decision to terminate the SPA ultimately rests with the institution, and not with you.

Do you have a property question that needs answering? Post your queries on www.facebook.com/propertymagazine or email property@alnisrmedia.com along with your contact details.

Jerry Parks is a partner and head of real estate at Taylor Wessing.