Investors need deep pockets to tackle developers on project delays

Once upon a time there was a developer who promised the earth. A hard working fellow handed over his life’s savings in pursuit of a dream. Four years later the developer handed over nothing but empty promises.

The dream became a nightmare, and the hard working fellow didn’t know where to turn. First he pointed out the clear breach of contract on the part of the developer, and politely asked for his refund.

The developer replied that the project might be completed soon. But they had no money so there would be no refund.

Then he pressed his point and demanded his money back. The developer said that the economic climate constituted an event of force majeure, and the project might be completed soon. But they had no money so there would be no refund.

He instructed a lawyer who charged him Dh10,000 and told him he was clearly entitled to his money back. The lawyer wrote to the developer who replied that the project might be completed soon. But they had no money so there would be no refund.

Then he instructed a local advocate who charged him Dh100,000 and filed a claim at the court. The court charged him Dh30,000. The translator charged him Dh10,000.

The Court of First Instance appointed an accountancy expert who charged him Dh10,000 and rejected the claim because he didn’t understand how a developer could sell something that didn’t exist.

The Court of Appeal rejected the claim because the expert said they should. The Supreme Court then found in his favour. The advocate sent the judgement to the developer.

The developer said the project might be completed soon. But they had no money so there would be no refund.

Then one day the developer called the fellow and told him his apartment was ready. Well, not exactly the apartment he had contracted to buy, but a similar one. Just not overlooking a canal. Or with a sea view. Or as big as the one he had chosen.

Anyway, it was ready and he had to now pay the last instalment and the whole of the 2 per cent transfer fee (Dh20,000), otherwise the developer would repossess it and keep all the money he had paid to date.

So the fellow ran the numbers. He had bought an apartment for Dh1 million. He had paid Dh500,000 in instalments and paid Dh160,000 in legal fees. He now had to pay another Dh520,000; otherwise he would lose his initial Dh500,000.

That would total Dh1.18 million paid to date. But at least he would have an apartment that he could sell. So he looked at the prices in the paper. It was definitely worth Dh4 million.

— The writer is with the law firm of Taylor Wessing.