Question: Three years ago, I bought a plot of land to develop it and paid for it in full in agreement with the engineering consultancy office. I got the necessary drawings and licenses from the competent authorities, which cost me large sums of money and time. However, before starting the construction of the project, I found out that the land area was 15 per cent less than the total area indicated in the purchase contract. Am I entitled to cancel the purchase agreement because of this matter, knowing that I do not want any compensation?
Answer: The Executive Council Resolution No. (6) Of 2010 approving the executive regulations of Law No. (13) of 2008 regarding the organisation of the initial real estate registry in the Emirate of Dubai in Article (13) states that, “ 3: The developer is obligated to compensate the buyer for the change in the area of the real estate unit with a decrease whenever it exceeds 5 percent of the net area of the unit. 4: The compensation due to the buyer is calculated if the percentage of the net area shortage exceeds the percentage specified in paragraph (3) of this article on the basis of the price of the real estate unit agreed upon in the contract concluded between the developer and the buyer.”
Among the rules decided by the law regarding how and what is purchased as stated in Article 523 of the Civil Transactions Law, is that if the contract specifies the amount of the sale and there is a decrease or increase in it, and there is no agreement or knowledge in this regard, the following rules must be followed 1) In case severance is not detrimental to the thing sold, the increase shall be in favour of the purchaser, who is entitled to recover it in kind, and the deficiency recovered from his account whether the price is fixed by unit or for the total of the thing sold. If the thing sold shall be adversely affected by severance and the price is fixed per unit, the vendor is entitled to the value of the increase and the deficiency charged to his account. If, however, the named price covers the total value of the thing sold, the purchaser is entitled to the increment while the price shall not apply to any deficient quantity. 2) If the thing sold shall be adversely affected by severance and the price is fixed per unit, the vendor is entitled to the value of the increase and the deficiency charged to his account. If, however, the named price covers the total value of the thing sold, the purchaser is entitled to the increment while the price shall not apply to any deficient quantity.
Article (523) of the Federal Law No. (5) of 1985 on the Civil Transactions Law of the UAE states that “ 3) If the increment or deficiency added to the obligation of the purchaser beyond what he has intended to purchase or change the nature of the transaction, he may opt for the cancellation of the sale unless the difference is trifle and it does not contradict the purpose sought by the purchaser.4) In case the purchaser takes delivery of the thing sold with knowledge of the deficiency, he shall forfeit his right to the cancellation option mentioned in the preceding paragraph.
The Supreme Court has decided that “the buyer has the right to demand compensation or to cancel the sale and to recover what he paid of the price as long as this decrease is so great that if he had known him, the contract would not have been completed, and all of this There was no agreement or custom that contradicted it”.
But this guarantee is restricted by one year only if the delivery of the purchased thing is as per Article (524) of the federal law mentioned above. “The case for rescinding the contract or reducing the price, or completing it, shall not be heard after the lapse of one year as of delivery of the thing sold.”
The ruling of non-hearing contained in this text is limited to the cases stipulated in Article 523 only and does not extend to all other cases in which the buyer has the right to request the termination of the sale contract if the seller breaches his other obligation which will be a matter for the court with its power to check and decide about it as per the documents and proof submitted.