United Arab Emirates: Land Department's Decision To Cancel Registration Of Off Plan Properties (Decision From Court Of Cassation In Dubai And Law 19 Of 2017)

Last Updated: 30 August 2019
Article by STA Law Firm
Most Read Contributor in United Arab Emirates, September 2019

Due to the importance of the real estate market in Dubai, especially the sales system on the map, which allows the investor to buy through installments and allows the developer to implement the project with investors' funds over a period of time, the real estate legislation organized the sale on the map from the beginning until the end, The process as well as amendments to it in view of the flexibility of the legislation to keep pace with the development that occurs in the community in the sense that the legislation is amended whenever circumstances need this amendment.

The judiciary also follows this development in legislation and applies the new rules, with taking into account the retroactive effect of the law.

The contract may not be rescinded or amended except by the will of the parties or by a court order in accordance with the law.

Since the contract of sale on the map is not a completed contract, it is a contract that takes time to implement, where there is a period of time between the contract and the implementation for years, and during these years may arise some things whether the seller or buyer can not complete the implementation or delay, The buyer may falter in pay the installments or change his opinion or the value of the property decreases, and the developer may falter in execution, delay for some time or stop performing for any reason.

All these reasons raise the issue of termination of the contract, which means ending it without the implementation (annulment).

Whereas, Law No. 13 of 2008, which included how to terminate the contract in the event of breach of any of the obligations of the developer or investor, stipulated in Article 11 that "If the buyer breaches any of the conditions of the contract of sale of the unit with the developer The latter shall notify the Department of this and the Chamber shall grant the purchaser, either in person or by registered mail, or by electronic mail for 30 days to fulfill its contractual obligations. 2. If the time limit referred to in item (1) of this Article has elapsed without the buyer having fulfilled its contractual obligations, the developer may cancel the contract and return what he has received from the buyer after deducting no more than 30% of the value of the amounts paid from him.))

It was then followed by Decree No. 9 of 2009, under which Article 11 of Law No. 13 of 2008 was amended and states that "(Article 11) 1 If the buyer violates any of the terms of the sale contract of the real estate unit signed with the developer, (2) If the period specified in section (1) of this Article has elapsed without the buyer having fulfilled its contractual obligations, the following provisions shall apply:

  1. In the event that the developer completes at least 80% of the real estate project, the developer may retain all the amounts paid with the buyer's demand to pay the remaining value of the contract. In case of failure, the developer may demand the sale of the property by public auction to demand the remaining amounts due to him.
  2. In case the developer completes at least 60% of the real estate project, the developer may terminate the contract and deduct not more than 40% of the value of the real estate unit provided in the contract.
  3. In the case of real estate projects in which the construction started and did not reach 60%, the developer may terminate the contract and deduct not more than 25% of the value of the real estate unit stipulated in the contract.
  4. In the case of real estate projects for which construction has not begun for reasons beyond the control of the developer and without negligence or negligence, the developer may terminate the contract and deduct not more than 30% of the value of the amounts paid by the buyer. 3- For the purposes of paragraphs (c) and (d) of Article (2) "Construction" means that the Contractor shall receive the location of the real estate project and start the construction work according to the designs adopted by the competent authorities.

For the purposes of paragraphs (b) and (c) of item (2), the developer shall return the amounts owed to the buyer within a period not exceeding one year from the date of cancellation or within a period not exceeding sixty days from the date of resale of the real estate unit whichever is earlier. Notwithstanding the provisions of paragraphs (1) and (2) of this Article, the Foundation may, on the basis of a reasoned report, decide to cancel the real estate project. In such case, the developer shall return all amounts received from the buyers in accordance with the procedures and provisions stipulated in Law No. (8) for the year 2007 on the accounts of guaranteeing real estate development in the Emirate of Dubai. 6. The provisions of this Article shall not apply to contracts for the sale of land in which the sale has not been made on the map, and shall remain subject to the provisions of the contract concluded between its parties. 7 The provisions of this Article shall apply to all contracts concluded before the provisions of this Law. ))

This was followed by the issuance of the executive regulation of the law by Decree No. 6 of 2010.

Under this legislation, the law would have allowed the developer, in the case of breach of the investor's obligations, to resort to the Land Department to give a 30-day notice for the execution of the contract.

Some developers have already resorted to the department and issued decisions in accordance with those provisions. The contract was canceled and the registration was canceled and the units were subsequently sold to third parties.

However, when the buyer appealed this decision before the judiciary, some of the provisions of primary and appeal to support this decision and others not to be acclaimed because it was issued by the Department of Land and Property is not a judicial body has the right to decide the annulment and concluded that these decisions are just a recommendation does not prevent Of recourse to the judiciary and does not have the authoritative prevention of reconsideration of the subject.

There may be no problem if the unit has not been disposed of to a third party and the court has concluded that the decision has been reviewed and concluded that the investor has been proved wrong and then the contract has been annulled in favor of the developer.

However, the problem is that if the unit was disposed of to a third party after the decision of the Land Department to cancel the contract, when the appeal against this decision before the judiciary, the conduct to a third party makes the implementation of the contract impossible, which leads to the separation of the force of law and the court so without consideration In the extent of breach of contract because it is broken by the force of the law and it is useless to discuss the breach.

This law was amended by Law No. 19 of 2017, which explicitly stated the right of the developer to apply to the Land and Property Department to request annulment without resorting to a court or arbitration after following certain procedures and obtaining a document from the Land and Property Department. Where it ruled that "Article (11) of Law No. 13 of 2008 regarding the regulation of the initial land registry in the Emirate of Dubai, as amended by Law No. 19 of 2017, stipulates that (A) The following rules and procedures shall be followed in the event of a breach by the buyer of its obligations to implement the contract of sale on the map signed between him and the real estate developer. (1) The real estate developer shall notify the department of the buyer's breach of his contractual obligations, The real estate developer and purchaser, the descriptions of the real estate unit that was the subject of the sales contract on the map, a clear description of the contractual obligations to which the buyer vacated, and any other data determined by the department, (2) the department immediately upon receipt of the notification and after verification (A) notify the buyer of the fulfillment of its contractual obligations with the real estate developer within thirty (30) days from the date of notification, provided such notice is in writing and fixed date, and shall be notified to the buyer by the Department either in person or (B) the friendly settlement procedure between the developer and the purchaser, if possible, and is evidenced by an annex to a contract signed by the developer and buyer, (3) If the period referred to in paragraph 2 (a) of paragraph (a) of this Article has expired without the buyer executing his contractual obligations or completing the friendly settlement between him and the real estate developer, the Department shall issue an official document in favor of the real estate developer stating: (A) The real estate developer's commitment to the procedures stipulated in paragraph (a) of this article; (b) Determination of the percentage of completion of the real estate developer's contract by the real estate developer on the map in accordance with the standards and rules approved by the institution in this regard. Of the official document referred to in the coffee (3) of paragraph (a) of this Article and according to the percentage of completion, the following measures shall be taken against the buyer without resorting to judicial or arbitration: (a) If the real estate developer accomplishes more than (80%) of the real estate unit, (1) to maintain the contract between the buyer and the buyer and retain the full amounts paid to him with the buyer's demand to pay the remainder of the value of the contract, (2) request the Department to sell the real estate unit of the contract by auction to require the remaining amounts owed to him, The buyer for all costs incurred by such sale; and (3) the contract is terminated by its own will And a deduction of not more than (40%) of the value of the real estate unit provided for in the contract of sale on the map, and refunds to the buyer within one year from the date of the dissolution of the contract or within 60 days from the resale of the buyer's real estate unit The third article of Law No. 19 of 2017 stipulates that "this law shall be implemented from the date of its promulgation and shall be published in the Official Gazette". This means that the amended article shall be effective from the date of the law. (A) The real estate developer's commitment to the procedures stipulated in paragraph (a) of e (B) to determine the percentage of completion of the real estate developer of the real estate unit in place of the contract of sale on the map, in accordance with the standards and rules adopted by the institution in this regard, as this was - and the court papers in front of the two degrees of litigation have been exempt from the official document provided for in the substituted article, Then there is no room here to confirm all the procedures followed by the appellant under the text of Article (11) of Law No. 13 of 2008 before replacing them for the absence of the article replaced by the text on the validity of those procedures. ))

The law also stipulates that all contracts on the map should be applied to all the contracts on the map, whether before or after the law. The law also states that these procedures are considered public order and result in violating them. The law also allows the investor to resort to the courts in case of abuse of the real estate developer provided for in this Act.

In light of the above, it is clear to us that the development of the legislation is accompanied by an evolution of the provisions to keep pace with the development in practice and to bring the law into line with reality. It is not logical that the law provides for a procedure that is not applied or recognized before the courts. In all cases, the victim is not denied access to the judiciary.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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