Dubai: People who have invested their money in real estate projects which are now delayed say they have had enough. Far from tending to fall for developers' scare tactics, including demands for late payment fees, they are fighting for their rights.
Delays in construction and delivery are not new. However, when buyers delay or stop paying instalments due to delays in construction, developers usually hit them with ‘late payment fines', to the dismay of investors and the end-users.
"If the developer is not building, then a buyer should be able to withhold payment pursuant to Article 247 of the Civil Code, and penalties should not be applied [by the developers against them]. In this market some try it on as it's a numbers game, for every person who challenges it there are 10 who don't," says Michael Lunjevich, partner at Hadef & Partners.
Those seeking legal advice are not falling for scare tactics, says Ludmila Yamalova, partner Al Sayyah Advocates & Legal Consultants.
Although cancellation letters can now be sent directly, they need the approval stamp of Dubai's Real Estate Regulatory Agency (Rera).
The agency has long been advocating payments to be linked to a construction schedule. And in case of investors filing complaints with the agency, it checks the construction progress and issues a new schedule which the developer and investor must adhere to.
Some developers, however, do not adhere to the construction schedule and her clients don't trust the developer or Rera when it comes to defining the construction milestone, Yamalova says.
Not all developers are villains; some have simply been caught in the real estate downturn. Investors are equally responsible for their actions.
"When you invest in property you should be aware of the risks, especially when it is an off-plan development. Delays and cancellations are not unique to Dubai," says Steve Morgan, Director of Cluttons UAE.
The solution is to cooperate rather than fight. With this in mind the Land Department has been mediating as best as it could. The idea was to bring investors and developers together to cooperate and offer a fair solution.
Swapping policy
Developers with more than one building completed or near completion will usually offer consolidation into another building from the one that is delayed.
A Nakheel spokesperson confirms that it will assist customers in longer- term projects in their consolidation or swapping process to find an alternative investment in an active development if they so choose. Those who do not wish to consolidate or swap into near-term projects can get credit.
How and where to
- Step 1 - Check www.rpdubai.com website for developer and project registration.
- Step 2 - In case of cancellation notices write back a letter ‘without prejudice' (recorded delivery) that you reject the notice.
- Step 4 - Visit the land department and Rera to file a complaint.
- Step 6 - If the committee fails. The next step is the Dubai Property Court (expensive). This might turn out to be expensive.
