12 Aug 2013


Authored by: Brent Baldwin


As the Dubai property market continues its recovery, a raft of new property related legislation is expected to issue over the coming months. Although the full details of this legislation is not clear in all cases, it appears that we can expect to see developments in three key areas. Brent Baldwin, Partner of Hadef & Partners discusses some of these developments and the impact they may have on the Dubai property market.

In brief:

  • A new decree has been announced which concerns the formation of a special judicial committee to deal with liquidation of cancelled projects which will give greater certainty and a faster process for purchasers to make claims.
  • A draft Real Estate Investor Protection Law is currently in progress, which should see an increase in protection for purchasers, the issuing of this law appears to be getting closer.
  • Further activity may be seen in relation to the Jointly Owned Property Law which will help ease some of the frustrations for property purchasers.

The establishment of a new judicial committee to deal with the liquidation of cancelled real estate projects

A new Decree has been announced known as Decree No.21 of 2013 concerning the formation of a special judicial committee for the liquidation of cancelled real estate projects in the Emirate of Dubai and the settlement of the relevant rights (Decree 21). It appears that this Decree will provide for the following:

  • a number of panels will be created, each of which must contain at least three judges from the Dubai Courts, and others who may be nominated by the Chairman of the Judicial Council;
  • these panels will be tasked with making decisions on claims relating to real estate projects cancelled by RERA, and liquidating those projects should it be considered appropriate; panel members will be entitled to seek assistance from outside experts and auditors, and panels are also authorized to make orders against escrow agents;
  • and the DIFC and Dubai Courts will no longer be entitled to consider any claims in relation to cancelled projects, and any judgements issued prior to the effective date of Decree 21 will be unable to be executed by those Courts.

It appears Decree 21 will create greater certainty, and a faster and more inexpensive process for aggrieved purchasers to make claims. However given that the Decree applies only to projects that have been cancelled by RERA, it is too soon to assess with any accuracy how dramatic the impact of Decree 21 will be in the property market.

The Real Estate Investor Protection Law 

In early 2012 various law firms, including Hadef & Partners, were asked to make submissions to RERA regarding a draft Real Estate Investor Protection Law. It appears that the issuance of that law is moving closer to fruition.

This will be an important development in the Dubai property market, particularly as we are seeing more new property developments and improved investor interest.

We expect the new law will place additional obligations on developers, including in terms of delivering what was represented as being sold, delivering within agreed timeframes, compensation to purchasers and other obligations aimed at protecting purchasers. If the law works as intended, it should help to improve investor confidence and create greater protection for purchasers.

New rules for Owners Associations

Despite Law No.27 of 2007 concerning jointly Owned Property in the Emirate of Dubai and its implementing Directions (JOP Law) having been in place for some time, property owners have reported continuing frustration with the full implementation of the JOP Law and their ability to control their community. It now appears that progress may be made which may assist property owners.
Sources suggest that we may see further activity relating to the JOP Law over the coming months, including:

  • The uploading of approved Owners Associations into RERA’s “Mollak” system;
  • The full registration of Owners Association Boards;
  • The ability for approved Owners Association to open bank accounts in their own names;
  • Penalties for developers who do not comply with RERA directions regarding their obligations under the JOP Law; and
  • Changes in the obligations of Master Developers under the JOP Law.

These are exciting times for the Dubai property market across a number of fronts and it will be interesting to assess the impact of this new property related legislation as and when it becomes effective.

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 develop jurisdiction of the UAE.