Ras Al Khaimah strengthens property market

Dubai: The Ras Al Khaimah government on Sunday said it has made escrow account (guarantee accounts) of real estate developments mandatory, through a decree issued on July 3, which will help regulate the emirate's booming property sector.

"Shaikh Saud Bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of Ras Al Khaimah, has issued Emiri Decree No. 22 of 2008 pertaining to creation of guarantee accounts for real estate development projects in the emirate," the government said in an e-mailed statement.

"The decree, concerning guarantee accounts of real estate developments in the emirate of Ras Al Khaimah, makes it mandatory that developers wishing to sell off-plan units in real estate development projects must apply to Ras Al Khaimah Investment Authority (Rakia) to open a guarantee account in which amounts paid by buyers towards property purchases or by project financing parties will be deposited."

Licensed developers should register themselves in the 'register of developers' to be prepared by Rakia.

To open the guarantee account, the developers should submit a set of documents including the title deed or affection plan of the plot, copy of the contract executed by the master developer and the sub-developer, conceptual designs and layouts approved by Rakia and trade licence of the firm, among others.

The guarantee account shall be created under a written agreement between the developer and the account trustee, which shall be a bank or financial institution certified by Rakia.

As per the decree, Rakia is also authorised to become itself an account trustee providing guarantee account services.

Payments from the account will be made to the contractors and suppliers based on the progress of the project and in accordance with the agreement concluded between the developer, contractor and the consultant.

The account trustee will have to provide Rakia with statements on a regular basis.

The registration will be cancelled if the developer does not tender the project within six months from the date of approval to sell off- plan.

However, the provisions of the decree shall not apply to RAK Properties, nor to any other company for which a special decree has been issued.