Ask the experts

Every month, we invite you to have your property questions answered by an expert. This month, Andrew Gibson tackles the task.

Q We purchased a two-bedroom townhouse unit in Hydra Village, which was originally due for completion at the end of 2009. A few months back we were informed that due to a revision in the master plan the size of the unit has increased, and as a result the purchase price has gone up as well. Now we are being pressured to sign a new contract with an increase of Dh150,000 to the original purchase price and a new completion date at the end of 2011. Is it legal for a developer to randomly increase the price of a unit (even if it is due to a change in unit size), after a contract has been signed?

A Once a valid contract has been formed, it is unlawful for either of the parties to resile, vary, or rescind the same without the other party's consent, or an order of the Court. This is reflected in Article 267 of Law No.2 of 1987, otherwise known as the Civil Code.

This explains why the developer is requesting you to sign a new sale and purchase agreement, i.e. so as to procure your consent. However, this does not mean that it is able to compel you to sign the new agreement.

Some sale and purchase agreements reserve the developer a right to either increase or decrease the final total square footage of a unit and adjust the purchase price on a pro rata basis, although this is often expressed to be limited to a certain percentage, e.g. variations up to 5 per cent.

Therefore, it is worth checking whether your current sale and purchase agreement contains a similar provision in this regard.

Finally, a developer might also seek to argue that because the necessary variations were brought about due to circumstances outside its control, a force majeure event (i.e. act of God) has occurred. However, even if this were to be a valid defence, it would only serve to bring the existing sale and purchase agreement to an end, and would not result in you having to sign a new agreement.

Q I purchased an apartment off-plan in a building in International City Phase Three. The building, developed by ECC, is complete but DEWA is not yet connected. I have been told that the contractor has to submit the relevant drawings, which it didn't do because Nakheel terminated its contract without paying its fees, and that this is why the building is not yet delivered. I have been waiting for one year now. Can I terminate my contract?

A Your ability to validly terminate your sale and purchase agreement in this regard ultimately depends upon the terms and conditions contained therein. For example, most agreements contain an anticipated completion date, lapse of which then entitles the purchaser to terminate after a certain period of time, and recover some or all of the instalments already paid.

Otherwise, if your sale and purchase agreement does not contain a provision similar to the above, and the developer is in breach of its contractual obligations, you may seek to rely upon Article 272 of the Civil Code to terminate the agreement, which states that: "In contracts binding on both parties, if one of the parties does not do what he is obliged to do under the contract, the other party may, after giving notice to the obligor, require that the contract be performed or cancelled."

* Andrew Gibson is an associate at Bin Shabib & Associates (BSA) LLP, e-mail andrew.gibson@bsa.ae