22 Jan 2019

Hadef in the Courts: Option Agreements and whether they should be considered as a substitute for a Sale and Purchase Agreement in relation to Property

Authored by: Karim Mahmoud and Khalid El Derderi

The Dubai Court of Cassation recently issued a decision in favour of our client in relation to their claim that an Option Agreement for the purchase of property could not be considered to be a substitute for a Sale and Purchase Agreement. Option Agreements have been used by certain developers, particularly when dealing with bulk buyers in the early phases of large development projects.  The Dubai Court of Cassation agreed with our client’s position and held that because an Option Agreement cannot be registered with the Dubai Land Department (DLD), it could not be considered to be a substitute for a Sale and Purchase Agreement. Accordingly, the Court nullified the Option Agreement and our client was awarded the entire amount claimed, plus interest. This ruling limits the ability of developers to circumvent DLD regulations by entering into contracts for the sale of property without complying with regulations intended to protect consumers. A more detailed article on this judgment will follow in due course.

 
 

This article, including any advice, commentary or recommendation herein, is provided on a complimentary basis without consideration of any specific objectives, circumstances or facts. It reflects the views of the writer which may, in some cases, differ from those of the firm, especially in the developing jurisdiction of the UAE.