Off-plan and ready property in Dubai: what changes in the process

Two Dubai purchases at the same price can behave nothing alike. A ready unit has a title deed, a service charge invoice and, often, a tenant. An off-plan unit has a payment schedule and an entry in a different register. The Land Department handles the two through separate portals, and the divergence starts on the day of signature.

Off-plan money goes into escrow. Article (7) of Law No. (8) of 2007 requires payments made by off-plan purchasers, or by the financers of the project, to be deposited in an account opened with the escrow agent. The escrow law covers every developer in Dubai selling units off plan. A ready purchase has no such account behind it, and the Department quotes the whole registration at 25 minutes.

When the 4% falls due

The fee is identical. The timing is not. Executive Council Resolution No. (30) of 2013, published on 18 September 2013, sets sale registration at 4% of the value of the sale contract. Article (2) covers the registration of dispositions in completed, under-construction and off-plan property alike, so the percentage does not soften because the building is a hole in the ground.

For a ready unit the 4% is paid at a Real Estate Registration Trustee centre on the day of transfer, alongside an AED 250 title deed fee. For an off-plan unit the same 4% falls due when the developer registers the initial sale through the Oqood portal, which can be years before anyone hands over a key. The schedule splits it 2% and 2%. Which side funds both halves is for the sale contract.

Provisional registration is not a title deed

Article (3) of Law No. (13) of 2008 gives the off-plan buyer a position at all. Any sale or other disposition of a unit sold off plan is void unless entered in the Interim Property Register. What the buyer receives is a provisional registration e-certificate. The deed comes later. The Department ties the issuance of title deeds to 100% completion of the project according to the result of the technical report. Until then the interest is registered, but in the interim register rather than the property register.

Borrowing against a unit that is not built

A mortgage over an off-plan unit is registrable. The Department's mortgage service covers ordinary, usufruct, provisional and portfolio mortgages, at 0.25% of the mortgage value plus an AED 250 title deed fee. The difference shows in the service partner line: AED 4,000 plus VAT on a standard registration, AED 5,000 plus VAT where the mortgage is provisional or over an Oqood unit. Where the bank files electronically, the Department lists one required document, the developer's no-objection e-certificate.

Loan-to-value ceilings are not a Land Department matter. They sit with the Central Bank of the UAE, and the limit in force on the day of application is the one that governs. Whether a lender will advance against an unbuilt unit, and when it releases funds, is its own commercial decision.

If the payment plan breaks

Article (11) of Law No. (13) of 2008 was replaced in full by Law No. (19) of 2020, issued in Dubai on 24 November 2020. A developer cannot simply cancel. It must notify the Land Department of the non-performance on the prescribed form. The Department then serves a 30-day notice on the purchaser and, where possible, mediates a settlement, which is recorded as an addendum to the agreement. Only when that period passes without performance or settlement does the Department issue an official document confirming compliance and the percentage of completion, calculated under RERA's standards. What the developer may then do, without recourse to courts or arbitration, depends on that percentage.

• Above 80% complete: keep the agreement alive, retain all amounts paid and claim the balance; or ask the Department to sell the unit by public auction at the purchaser's cost; or terminate and retain up to 40% of the value of the unit stipulated in the agreement.
• Between 60% and 80%: terminate and retain up to 40% of that value.
• Below 60%, where the developer has taken hold of the site and begun construction in line with the approved designs: terminate and retain up to 25%.
• Work not commenced for reasons beyond the developer's control, or the project cancelled by a final reasoned decision of RERA: refund all payments made by purchasers, under Law No. (8) of 2007.

Read the measure of the deduction closely. It is a percentage of the value of the unit stipulated in the agreement, not of the amounts the purchaser has paid. The original 2008 wording ran the other way, allowing a deduction of up to 30% of the payments made. A buyer who has paid a fifth of the price on a project past 60% completion can be exposed beyond the cash handed over. Refunds after termination fall due within one year of termination, or within 60 days of a resale to another purchaser, whichever comes first.

If the project does not finish

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. Article (6) gives it jurisdiction over claims concerning unfinished and cancelled projects and their liquidation. Article (11) makes its awards, orders and decisions definitive and not subject to ordinary appeal procedures.

One protection outlives construction. Article (14) of Law No. (8) of 2007 holds back 5% of the total value of each escrow account once the developer obtains the completion certificate, and releases it one year from the registration of units. Project data is public too. Dubai REST shows a project's completion percentage, its escrow account number and its payment schedule.

When service charges start

Article (25) of Law No. (6) of 2019 puts the annual service charge on the owner, as his share of the running costs of the common parts. The same article makes the developer pay for unsold units, and for sold units where he has undertaken to pay on the purchaser's behalf. Liability follows ownership and handover, not the first instalment. Article (27) bars a management entity from charging or collecting anything from owners without the approval of RERA, and Article (30) requires collections to reach a dedicated account within seven working days.

Approved figures live in Mollak, which issues quarterly service charge invoices, and can be looked up in the Service Charge Index by project, usage and year. For a completed building that lookup can be done before exchange. For a project not yet handed over, check whether an approved figure exists at all. A brochure projection is not a RERA approval.

The same law fixes what the developer owes afterwards. Article (40) makes it liable to remedy structural defects for ten years from the date of the building completion certificate, and liable for defective mechanical, electrical, sanitary and sewerage installations for one year from the handover of the unit. Both clocks start at the end of a project, which is precisely where the off-plan buyer arrives.

Selling before handover

Article (6) of Law No. (13) of 2008 permits a purchaser to dispose of an off-plan unit by sale, mortgage or other legal disposition. Article (3) then requires that disposition to be entered in the interim register, on pain of nullity. The practical gate is the developer. Its no-objection e-certificate, obtained through Dubai REST, is on the Department's list of documents for registering a sale in a freehold area, and again for a mortgage over a provisional sale.

Nothing in the published fee schedule or the e-service pages sets how much of the price a purchaser must have paid before a developer will issue it. That threshold sits in the sale and purchase agreement, and it varies by developer and by project. Read it before signing, not when a resale is wanted. Fees attach again to the new disposition: the 4% applies, and the 2013 Resolution lists AED 250 per unit to amend the interim real property register.

A short order of checks for an off-plan purchase. Confirm the project and its escrow account number in Dubai REST. Pay into that account, not to a company account. Ask for the Oqood certificate in the buyer's name. Read the resale threshold and the Article (11) position in the contract before signature. On a ready unit the equivalent list is shorter: the title deed, the developer's e-NOC, and the approved service charge in Mollak.