ASK THE LAW

Ask the law: I paid 60%, developer has stopped building, and is now asking for the rest of the payment

Do I have the legal right to demand cancellation of the purchase agreement?

Last updated: October 05, 2023 | 09:47

Mohammad Ebrahim Al Shaiba, Special to Gulf News

2 MIN READ

For illustrative purposes only. As a general rule, the delay in implementing the contract, which gives the right to one of the contracting parties to request termination of the sales agreement or request compensation, depends on the jurisdiction of the trial court according to the situation and documents submitted in the lawsuit.

Gulf News File

Also In This Package

Ask the law: Business partner wants to liquidate shares

Ask the law: Business partner wants to liquidate his company shares

Ask the Law: I was fired without reason

Ask the Law: My employer fired me without reason, without notice

Ask the law: Employee set my factory on fire

Ask the law: Employee committed arson, set my factory on fire

Ask the law: Wife's divorce case rejected

Ask the law: Divorce case filed by wife rejected

Landlord refused to do maintenance on villa I rented

Question:

I bought an off-plan property from a developer two years ago and paid about 60% of the property value, but the developer has stopped building for more than two years. A month ago, he sent me an email asking me to pay an amount according to the agreed upon payments, according to the developer’s statement.

My question is, do I have the legal right to stop paying the installment because the developer has stopped building? Do I have the legal right to demand cancellation of the purchase agreement and a refund of the amounts I paid in addition to the appropriate compensation? Please advise

Answer:

I would advise the the following:

If the developer did not start building, and the project is in Dubai, he should return the money back to the purchasers as per Article 11 of Law No. (19) Of 2020 Amending Law No. (13) of 2008 Regulating the Interim Real Property Register in the Emirate of Dubai ("Where the Developer has not commenced work on the Real Property project for any reason beyond his control, without negligence or omission on his part, or where the Real Property project is cancelled pursuant to a final reasoned decision of RERA, the Developer must refund all payments made by the purchasers, in accordance with the procedures and rules stipulated in the Law No. (8) Of 2007)".

As a general rule, the delay in implementing the contract, which gives the right to one of the contracting parties to request termination of the sales agreement or request compensation, depends on the jurisdiction of the trial court according to the situation and documents submitted in the lawsuit.

And any contract is binding on both parties. Either party has the right to request the termination of the contract as long as it is proven that the other party has breached his contractual obligations.

It is better to check with the Land Department about the situation of the project before taking any action.

If the developer had stopped building for more than two years and as per your contract, the completion date is not due yet, and the installments are not accompanied with the percentage of completion that the developer should accomplish, then it is better if you keep paying the installments because the developer is still having the chance to complete building and deliver the unit on time.

But if the installments are accompanied with the completion date and you had already paid more than the completion percentage specified in the purchase contract then your reasons for termination will be strong.