Law No. (8) of
2007 Concerning Guarantee Accounts of Real Estate Developments
in the Emirate of Dubai
We, Mohammed bin Rashid Al
Maktoum, the Ruler of Dubai,
After perusal of Federal Law No. 5 of
1985 in respect of Civil Transactions,
as amended;
Law No. 7 of 2006 in respect of real
property registration in the Emirate of
Dubai; and
Law No. 3 of 2006 specifying the
areas where non-UAE nationals may own
real properties in Dubai,
Do hereby issue the following Law:
Chapter
One
Definitions and General Provisions
Article (1)
This Law shall be named "the Law
Concerning Guarantee Accounts of Real
Estate Developments in the Emirate of
Dubai No. 8 of 2007”.
Definitions
Article
(2)
Unless the context requires
otherwise, the following terms and
expressions shall have the meanings as
set out opposite each of them:
The Emirate:
The Emirate of
Dubai
Department:
Lands Department
President:
The President of the
Department
Director:
The General Director of the
Department
Register:
The Register prepared at the
Department to register
Developers
Guarantee Account:
The bank account designated
for a property development in
which the amounts paid by buyers
of units off the plan or the
project financing parties will
be deposited
Developer:
A natural or legal person
licensed to carry on the
activity of buying and selling
properties for developing and
that includes the master
developer and sub-developer
Account Trustee:
A bank or financial
institution certified by the
Department for the management of
the Guarantee Account
Competent Authority:
The Government authorities
authorised to license the
Developers
Real Estate
Development:
The construction of
multi-storey buildings or
complexes for residential or
commercial purposes.
Property
Everything that is
permanently fixed in its space
and cannot be shifted without
destruction or alteration in
appearance.
Unit:
An allocated part of the
property sold by the developer
to third parties.
Article
(3)
The provisions of this Law shall
apply to a developer who sells off-plan
units in real estate development
projects in the Emirate and, in
consideration, receives payments from
buyers or financing parties.
Article
(4)
A special register to be named
"Register of Developers" shall be
prepared at the Department. The names of
developers licensed to carry out real
estate development activities in the
Emirate shall be recorded in the said
register. No developer may carry out the
said activities unless it is registered
in the said register and licensed by the
Competent Authorities pursuant to the
conditions issued related thereto.
Article
(5)
A Developer shall not advertise in
local or foreign media, or participate
in local or foreign exhibitions, to
promote the sale of units or properties
off the plan, until having obtained a
written permit from the Department. The
Director shall issue the necessary
decisions as required to regulate the
requirements for advertising in the
media and participating in exhibitions.
Chapter
Two
Establishing a Guarantee Account
Article (6)
A Developer
wishing to sell units off the plan must
apply to the Department to open a
Guarantee Account. The application
should be accompanied with the following
documents:
Dubai Chamber of Commerce and
Industry membership certificate;
Trade License;
Title deed of the plot to be
developed;
Copy of the contract executed by
the master developer and the
sub-developer;
Architectural designs and
layouts approved by concerned
authorities and the master
developer;
A financial statement certified
by a certified legal accountant,
containing the revenues and expenses
of the project and approved by the
development’s consultant about sums
payable to creditors of the
development;
An undertaking by the
sub-developer to commence the
project construction after obtaining
the master developer’s approval to
sell off plan or an undertaking from
the master developer in case a
sub-developer does not exist.
A sample sale contract between
the Developer and a buyer.
Article
(7)
The Guarantee Account shall be
created under a written agreement
between the Developer and the Account
Trustee through which sums paid by
buyers of units off the plan or paid by
financing parties shall be deposited in
a special account to be opened in the
name of the real estate project with the
Account Trustee.
The said agreement shall set out the
terms for managing the account, the
rights and obligations of the
contracting parties and a copy of this
Agreement shall be deposited at the
Department.
Article
(8)
The Department may record the
purchase agreement entered into between
the master developer and the
sub-developer related to the land, or
any part of it owned by the master
developer, in the folio concerning such
land.
Chapter
Three
Management of a Guarantee Account
Article (9)
The Guarantee Account shall be
opened in the name of the project
and the proceeds shall be used
exclusively for the purposes of
constructing the real estate
project. The Developer’s creditors
are not allowed to attach the money
deposited in the Guarantee Account.
If the Developer has many
projects, a separate Guarantee
Account must be opened for each
project.
Article (10)
The Department shall prepare a
special register named “Register of
Account Trustees” to register the
names of the Account Trustees.
The Account Trustee is required
to be qualified to manage the
Guarantee Account.
Article (11)
The Account Trustee must provide
the Department with statements for
the revenues and expenses of the
Guarantee Account on a regular
basis. The Department may request
the Account Trustee at any time to
provide it with the information and
data it deems necessary, and the
Department may appoint individuals
it considers qualified to audit the
statements and data.
If the Department finds that the
Account Trustee committed any
violation of the rules of this law
and/or its implementation
regulations, then it shall serve him
written notice and grant him a
period to rectify the violation.
Article
(12)
The depositors or their
representatives may examine their
account records and request copies and
the representatives of the official
authorities may examine the records and
obtain copies.
Article
(13)
In the event a Developer mortgages a
development to obtain a loan from
financing establishments or companies,
then these establishments and companies
have to deposit the loan sum in the
Guarantee Account to be disposed
pursuant to the terms of this law.
Article
(14)
The Account Trustee has to retain 5%
of the total amount of the Guarantee
Account after the Developer obtains the
completion certificate and the reserved
amounts shall not be paid to the
Developer until one year after the units
are registered in the names of buyers.
Article
(15)
In the event of a force majeure which
prevents completion of the real estate
project, then the Account Trustee for
that project, after consultation with
the Department, shall take all the
required actions to safeguard the
depositors’ rights to ensure the
completion of the real estate project or
the refund of the depositors' money.
Chapter 4
Penalties
Article (16)
Without prejudice
to any penalties provided for in any
other law, a penalty of incarceration
and payment of a fine not less than
100,000 Dirhams, or either one of them,
shall be imposed on anyone who:
Carries on a property
development business in the Emirate
without a license.
Submits false documents or makes
misstatements to concerned
authorities in order to obtain a
license for carrying on a property
development business.
Knowingly offers to sell units
in bogus property developments.
Embezzles, uses or squanders
payments delivered to him for the
purposes of construction of property
developments, and misappropriates
such payments.
Any auditor who deliberately
prepares a false report about the
results of an audit he conducts on a
developer’s financial position, or
intentionally conceals significant
facts from his report.
Any consultant who knowingly
approves false documents about a
property development.
Any Developer who deals with a
broker who is not registered in the
Broker’s Register at the Department
pursuant to by-law No. 85 of 2006
regarding the Real Estate Broker’s
Register in the Emirate of Dubai.
Article (17)
A Developer shall
be cancelled from the Register in any of
the following events:
If he declares
bankruptcy.
If he does not commence
construction within six months of
the date he was granted approval to
sell off plan without an acceptable
excuse.
If his license is
cancelled by the licensing
authorities.
If he violates any of
numbers (2) or (3) or (4) or (5) of
article 16 of this law.
If he is in violation
of any of the laws and/or by laws
regulating the real estate
development activity.
Chapter
Five
Final Provisions
Article (18)
Existing
Developers at the time this law becomes
effective should adjust their status in
accordance with the provisions herein
within six months of the date of
publication in the official gazette, and
the Department may extend this period to
any other period which it considers
suitable.
Article (19)
The Department may
collect fees against the services
offered in accordance with this law.
Article (20)
Any article in any
law or bylaw is cancelled to the extent
it contradicts the terms of this law.
Article (21)
The President
shall issue the necessary decisions to
implement the terms of this law.
Article (22)
This law shall be
published in the official gazette and
shall be effective from the date of
publication.
Mohammad Bin
Rashid
Issued in Dubai 6 May 2007.
19 Rabi’11 1428 H.
