What Happens If a Developer Delays Delivering a Real Estate Project in the UAE?

Adherence to the agreed delivery date of the property is one of the fundamental pillars of a real estate sale or purchase contract, as any delay in delivery negatively affects the buyer’s financial and housing plans. In the UAE, the Federal Civil Transactions Law and the executive regulations of the Land Department govern the procedures for addressing delivery delays, and also entitle the buyer to financial compensation or to terminate the contract and recover their funds. This article reviews the legal framework and the buyer’s rights in the event of a delay in delivering a real estate project in the UAE, and clarifies the practical steps available for filing a complaint and reclaiming one’s rights.

Legal Regulations Concerning Delays in Real Estate Delivery

UAE Federal Civil Transactions Law

Federal Law No. 5 of 1985 on Civil Transactions (Articles 873 and following) stipulates the seller’s obligation to deliver the sold property at the agreed time. In the event of non-delivery, the buyer has the right to claim compensation for the damages resulting from the delay, whether material (e.g., the cost of alternative accommodation) or moral.

Land Department Regulations

In Dubai, a buyer may file a complaint against the developer through the Real Estate Violations System (RVS) of the Dubai Land Department, which oversees dispute resolution and mediation. The process includes investigating the developer and obliging them to either compensate the buyer or commit to a new delivery timetable.

Buyer’s Rights and Available Procedures for Delivery Delays

Right to Financial Compensation

In the event of a delivery delay, the buyer is entitled to financial compensation, which may include:

1. The cost of alternative rental accommodation, if the buyer is forced to move temporarily.
2. Statutory interest on amounts paid in advance, at a rate of 9% per annum for civil transactions and 12% for commercial transactions, as specified in the contract.
3. Other losses stipulated in the Sale and Purchase Agreement (SPA), such as transportation costs and lost investment opportunities.

Requesting a New Delivery Date

The buyer can file a judicial application before the competent court to set a new delivery date when the sale contract clearly specifies a completion date. Courts accept such applications if the developer’s delay is established and the amount of damages is quantified.

Termination of the Contract and Refund

In cases of substantial or unjustified delay, the buyer has the right to terminate the contract, abandon the transaction, and recover all payments made, in accordance with Federal Law No. 5/1985 and the terms of the SPA. The complaint must include a clause demonstrating the developer’s breach of the delivery schedule.

Filing a Complaint with the Land Department

The buyer should follow these steps to lodge an official complaint:

1. Verify that all payments have been made and there are no outstanding balances.
2. Submit the complaint electronically via the Land Department portal or visit one of the service centers.
3. Attach a copy of the sale contract and any correspondence regarding the delay with the developer.
4. Await the committee’s decision, which may direct the developer to restore the buyer’s rights or compensate them during a mediation session before proceeding to litigation.

The Option to Resort to Litigation in Case of Delay

If mediation proves ineffective, the buyer may file a civil lawsuit before the Court of First Instance in the respective emirate. UAE courts have extensive experience in real estate contract disputes and have issued several judgments affirming the buyer’s right to compensation and contract termination in the event of unjustified delay. The buyer can claim:

• Compensation for material and moral damages.
• Termination of the real estate contract and recovery of payments.
• Payment of statutory interest by the developer for the delay period.

Tips for the Real Estate Buyer

• Carefully review the SPA clauses: Ensure there are clear compensation provisions and specified grace periods for delays.
• Document all correspondence: Keep copies of all emails and official messages with the developer concerning the delivery delay.
• Communicate early: Contact the developer promptly when the schedule slips and request a written explanation for the delay.
• Consult a specialist lawyer: Before filing complaints or litigating, seek advice from a real estate attorney to understand your rights and evaluate your options.
• Monitor similar complaints: Review other buyers’ experiences in similar cases on legal websites or real estate forums.

Read also: Sustainable Buildings and Energy Efficiency in the UAE

Conclusion

The UAE’s legal framework guarantees the buyer’s absolute rights in the event of a delayed real estate project—from financial compensation and contract termination to compelling the developer to fulfill the agreement or refund the payments. To achieve the best outcome, the buyer should act immediately by documenting the delay and filing an official complaint with the Land Department or pursuing litigation, with the assistance of a specialized attorney to ensure protection of rights and recovery of due compensation.

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