Escrow accounts and off-plan payments in Dubai

Off-plan money in Dubai is paid for something that does not exist yet. The buyer signs, transfers a deposit, and waits. Law No. (8) of 2007 Concerning Escrow Accounts for Real Estate Development in the Emirate of Dubai decides where that money sits while the waiting happens, and who is permitted to move it.

The law is short. Twenty articles, issued on 6 May 2007, in force from publication in the Official Gazette. Its central instruction sits in Article 6: a developer who wishes to sell units off-plan must submit a request to Dubai Land Department to open an escrow account. Everything that follows is a question about drawdown. Who approves a payment out. Against what evidence. What is held back at the end.

The account belongs to the project, not the developer

Article 9 gives the account its force. Amounts paid in are dedicated to the construction of that development, and no attachment may be imposed on them for the benefit of the developer's creditors. A developer running several projects cannot pool them. Each project takes its own account. Under Article 13 money lent by a financing institution for the project goes into the same account.

The holder is an account trustee, which Dubai Land Department describes as a bank or financial institution licensed by the Central Bank of the UAE to receive third-party deposits. Trustees are approved by the Real Estate Regulatory Agency and entered in the Register of Escrow Agents kept under Article 10. As of September 2026 the published approval or renewal fee is AED 75,000 a year for an account trustee and AED 50,000 a year for an approved auditing firm. A trustee must sign an Escrow Account Trustee Agreement with RERA, run a dedicated escrow unit in Dubai, and either keep technical staff for site monitoring or contract consultants to do it.

Article 11 requires the escrow agent to give the Department regular statements of revenue and expenditure, and the Department may audit at any time.

What must exist before the account is opened

Project registration and account opening go through the Department's Register Project service. The land must sit in a freehold or long-term lease area and be held on a title deed, and preliminary sales certificates are not accepted in its place. The developer must be registered in Trakheesi. Units must be uploaded to the Survey Department against approved plans. A master developer's no-objection certificate must cover the project name, the off-plan sale and the marketing. Final building permits are required, not draft approvals.

Then the money test. Before a project is registered for off-plan sale the developer must put up a 30 per cent guarantee: 30 per cent of construction actually completed, a bank guarantee covering 30 per cent of construction, or a cash deposit of equivalent value. The registration fee is AED 150,000 plus the two AED 10 government fees. The service page gives a delivery time of 25 minutes. That is the counter transaction once the file is complete, not the approvals behind it, which is where projects actually sit.

Opening the account and being allowed to spend from it are different events

Activation of the disbursement mechanism is its own application, free of charge, with a published turnaround of three business days. Four bases are listed. Against the value of a bank guarantee, covering construction works up to 20 per cent completion. Against the developer's own funds moved in from its special account. Against amounts deposited by a mortgaging bank. After 20 per cent completion, against a percentage of the construction works, judged on a Dubai Land Department technical report no older than three months and carrying no red flags.

What may be drawn, and against what proof

The agreement between the developer and the account trustee sets out the major construction stages that must be completed on site before payments are released. The Department describes what happens next.

Payments out of the account go to the contractors, the consultants and the marketing of that project. Marketing is capped, and the Department puts the cap at 5 per cent of total sales. A buyer's instalment therefore does not become the developer's cash on receipt.

Profit comes last

A developer draws its surplus through a separate application, the withdrawal of project profits. The balance left in the main escrow account must cover the outstanding construction cost. A Dubai Land Department technical report no older than three months, with no red flags, is required. An amount equivalent to 5 per cent of net collections must stay in the project completion escrow account unless a no-objection certificate is obtained from Jointly Owned Property Management. Where the project is finished, the technical report must confirm 100 per cent completion.

The five per cent that stays behind

Article 14 requires the escrow agent to retain 5 per cent of the total value of each escrow account once the developer obtains the completion certificate. The retained amount is released one year from the registration of units in the name of purchasers. The point of it is defects. The Department explains the holdback as a guarantee that the developer attends to them promptly during the year after handover.

The two official formulations are not identical. The law ties the release to one year from registration of the units in purchasers' names. The Department's public explanation describes it as one year after completion of the project. Where handover and title registration fall in different months, that difference decides when the money moves. Closing the account is a further step, requiring approval for a no-objection letter, an NOC from the management company, a certificate confirming project completion, and no outstanding financial obligations on the project.

If the project is cancelled

Article 15 places the first duty on the escrow agent. Where a project is not completed, the agent must, after consulting the Department, take the measures required to preserve depositors' rights, so that the development is finished or the depositors have their payments back. Cancellation itself sits in Article 11 of Law No. 13 of 2008, amended most recently by Law No. (19) of 2020 of 24 November 2020: where RERA cancels a project by a reasoned decision, the developer must refund all payments made by purchasers, following Law No. 8 of 2007. The Department states that the account then passes to the project liquidation department, which requires the developer to return the money to investors within 60 days of the cancellation decision.

Liquidation and the disputes around it are not heard by the ordinary courts. Decree No. (33) of 2020, issued on 24 November 2020, established the Special Tribunal for Unfinished and Cancelled Real Property Projects in the Emirate of Dubai. It liquidates projects that RERA has finally cancelled and settles the related rights. It may order an escrow agent or a developer to refund amounts deposited in the account or paid to the developer. Other courts in the Emirate may not hear matters within its jurisdiction, and its decisions are not subject to ordinary appeal.

A 60-day refund obligation is an obligation, not a balance. Where an account has been drawn down against work genuinely carried out, what is recoverable is what remains plus whatever the liquidation realises. That gap is why a project's completion percentage matters more to a buyer than the existence of an escrow account.

What the law punishes

Article 16 attaches a jail sentence and a fine of at least AED 100,000, or either penalty, to carrying on development activity without a licence, to submitting fraudulent documents to obtain an escrow account, to selling units in projects that do not exist, to misappropriating money held in the account, and to false audit reports. Article 17 concerns the register: a developer may be struck off for bankruptcy, for failing to commence construction within six months, or where its licence is revoked.

What a buyer can verify without asking the developer

The Dubai REST application publishes the percentage of completion, actual pictures of the project, the escrow account number and the payments due. That account number is the useful line. Check it against the account named on the payment instruction before transferring anything, and treat a request to pay a company account, a personal account or a broker's account as the problem it is. A purchaser may also obtain a completion percentage report prepared by the technical auditor at RERA, against an audit fee of AED 15,000.