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Delay in Possession Handover of Real Estate: Compensation to Claim from Developer

Most people are apprehensive about real estate investments or under construction projects as they fear false promises and delayed possession. With strict regulations and policies of the Dubai Real Estate Regulatory Authority, getting your dream property has become a lot easier. It’s brought forth regulatory standardization with the real estate industry as it safeguards buyers’ interests. If a developer causes delays in the handing over of property that you’ve invested into, you’ll be able to file a claim or case against this developer.

In this article, we’ll go over all the questions of buyers regarding delays in real estate possession, most especially compensation that buyers will be able to claim from real estate builders or developers in the UAE. Let’s start! 

I’ve signed a contract in purchasing a property from a builder but the builder wasn’t able to fulfill the delivery date for the apartment. What should I do?

As you have paid and invested into a property that wasn’t handed to you on the date that was specified in the contract, the developer can be put into question. You have rights when it comes to this party and you also have the right in receiving a remedy to the problem. The authorities in the UAE will receive complaints. Also, in certain situations, you’ll be able to start a proceeding for arbitration. However, it is best to consult first with real estate lawyers in UAE prior to implementing any action in order to know your options and also find out the best route to take in order to protect your interests. 

It’s recommended that not to sign the contract with your developer unless the contract legally reviewed and to run due diligence about the developer registration and the project by property lawyers in UAE.

Also Read:

Legal Options for Property Handover Delays in UAE

What’s RERA and what can they do for me?

The Real Estate Regulatory Authority in Dubai is a governmental authority that regulates the country’s real estate industry. RERA’s main aim is offering relief to buyers and investors for the malpractice of unfair developers. The authority specifies standards and norms with respect to the development and building of properties in order to enhance the transparency of transactions that occur in the industry of real estate. 

What are my rights as Buyer:

According to UAE laws and regulations and the agreement signed between you and the developer the main rights of the buyer and which is the obligations of the developer are:

  1. Possession Hand over on the agreed time
  2. Title and ownership transfer
  3. Accomplishment as agreed progress plan
  4. Meet agreed to construction requirements   

General provisions of RERA are as follows: 

  • In the case of builders’ false promises – when there’s any disparity regarding the promises that are given by the property developer as well as the property that’s delivered, a buyer of the said property will be given the choice in claiming full compensation for the project along with interest. 
  • In the case of defects after property delivery – structural defects within construction that are revealed within a predetermined number of years following the delivery of the property will be the responsibility of the developer to repair without the cost of the buyer. 
  • In the case of delivery delays – if the builder does not complete the project upon the date of completion, the buyer will be given the option of withdrawing from the construction project and will be entitled to a full refund from the developer. The buyer also has the option of continuing the project where he’s entitled to receive compensation for the delay of property handing over.
  • In the case of defects with the title – the buyer will be able to claim compensation from a builder. Concept of defects in a title aren’t barred by limitation 

 What are the Delayed Possession Penalties? 

RERA will determine the compensation that the builder has to pay for the delay in the handing over of property to the buyer. If a construction developer fails in handing over possession of the property as per the date that’s mentioned in the contract or sale and purchase agreement, then the buyer of the property has two options: to terminate the contract and seek compensation from the builder or continue the project for construction and claim reimbursement for the delay.  

When the buyer decides to withdraw from the project, a builder is going to be liable in returning the entire amount that’s paid by the buyer for the property plus the interest. If the buyer decides on continuing the project, the interest can be claimed for the period of the delay until the property is handed to the property buyer. 

Take note: if the property developer isn’t compensating the buyer voluntarily, the buyer has the right in filing a complaint with the Real Estate Regulatory Authority. The RERA will appoint an officer that will perform a judge’s functions. The officer appointed by the authority will perform an inquiry then pass an order if the expert has decided whether the buyer will be getting interested in regards to the money that was spent. 

It is advised for all buyers of properties that are experiencing issues to hire a property lawyer in UAE to help address your concerns. At HHS Lawyers, our team of experienced property lawyers and legal consultants in UAE can help you deal with anything related to real estate in Dubai and anywhere in UAE. Call us today! 

M. Al Khairy, LL.B. is a Senior Partner of HHS Lawyers in UAE. Practicing law for almost a decade, he has in-depth knowledge on UAE legislation with particular expertise on legal drafting, contract drafting, labor disputes, family law, and regulatory compliance for business organizations. Al Khairy also provides counsel on legal rights and obligations in the UAE to clients, including individuals and businesses subject to investigation or prosecution under Criminal Law by major regulators. Read more