Investing in off-plan properties has always been popular in Dubai’s real estate market because of affordable prices and flexible payment plans. However, some projects may face delays or cancellations. To protect buyers, the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA) have set clear rules to manage unfinished or cancelled projects.
Here’s what you need to know about cancelled real estate projects and how refunds work.
What Do “Cancelled” and “Under Cancellation” Mean?
- Cancelled Projects:
A project is officially labelled as “cancelled” when RERA issues a final decision due to severe delays, insolvency, or regulatory violations. The Special Tribunal for Liquidation of Cancelled Real Property Projects handles refunds and settlements. - Under Cancellation:
A project is “under cancellation” when RERA is still assessing its status. Factors like project progress, financial health of the developer, and regulatory compliance are considered. RERA will decide whether to cancel or allow the project to proceed.
Laws Governing Refunds for Cancelled Projects
Dubai has strict laws to ensure refunds are processed transparently. These laws include:
- Decree No. (33) of 2020:
This decree restructures the special tribunal responsible for cancelling and liquidating real estate projects. - Law No. 13 of 2008 (Amended by Law No. 19 of 2020):
Developers must refund payments to buyers if a project is officially cancelled. - Law No. (8) of 2007:
It governs guarantee accounts, ensuring funds paid by buyers are protected and refunded.
Refund Scenarios for Buyers
- Completion Between 60% and 80%:
- Developers can cancel the contract but can deduct up to 40% of the property’s value.
- The remaining amount must be refunded:
- Within 1 year from cancellation, or
- Within 60 days of reselling the unit.
- Completion Below 60%:
- Developers can deduct up to 25% of the unit’s value.
- Buyers receive the refund:
- Within 1 year or 60 days of reselling the unit.
- No Work or Project Cancelled:
- If no work has started or the project is officially cancelled, buyers must receive full refunds.
- Refunds are processed through the guarantee account managed by a trustee and supervised by DLD.
Steps to Claim Refunds for Cancelled Projects
Follow these steps to secure a refund for cancelled or unfinished real estate projects in Dubai:
- File a Grievance:
Buyers must submit a grievance to the Judicial Committee responsible for unfinished projects. - Judicial Review:
The committee will review the case, assess the complaint, and request a report from RERA. - RERA’s Report:
RERA provides a detailed project status report, including financial data and potential solutions. - Final Decision:
The Judicial Committee will decide on the refund and issue binding orders. - Implementation:
The developer or escrow account trustee must follow the decision and refund buyers. These decisions cannot be appealed. - Refund Process:
Buyers are refunded using funds from the guarantee account, which is securely managed and monitored by DLD.
Legal Protections for Buyers
Dubai’s laws strongly prioritize buyers’ rights in cancelled projects. Key highlights include:
- Refunds are transparent and overseen by RERA and DLD.
- Funds in guarantee accounts are legally protected and solely dedicated to the project.
- Buyers can also file legal actions or grievances with the Special Tribunal, which has the power to settle claims, oversee liquidation, and enforce refunds.
Conclusion
Dubai’s real estate laws ensure that buyers have a clear path to reclaiming their investment in cancelled off-plan projects. Whether through judicial committees or legal frameworks, investors are protected under laws like Law No. 8 of 2007 and Law No. 13 of 2008 (amended). While delays may occur, the process ensures fairness, accountability, and buyer security.
By understanding these steps, buyers can confidently seek refunds and protect their rights in Dubai’s property market.
