"courts are a lot busier with terminations& there
is certainly a huge rise in legislation right now," michael lunjevich,
partner at hadef and partners, said.
not allowing buyers to cancel their contracts would prevent a lot of people from trying to take advantage of a down market.
"if the law allowed people to cancel, there would be a huge influx of people wanting [to cancel]," lunjevich explained.
only developers can cancel contracts under law no 9 of 2009, meaning
the law is slightly sympathetic to developers, legal experts said
during yesterday's dubai property society meeting.
law no 9 came into effect recently and is related to cancellations of
all off-plan sale contracts, regardless of when the contract was
signed, making the amendment retroactive.
"when you first read the law, the perception is it is very
developer-friendly but actually it's not. underneath there is a lot in
favour of the buyer," lunjevich said.
three new regulations for law no 9 are awaiting approval, including one
saying the developer will not be able to cancel a contract without a
land department letter. without this, the cancelled contract will have
no value in court.
secondly, the land department must attach with the letter a technical report from the site.
and thirdly, while at the moment investors wishing to cancel must do so
in court, the investors group have expressed a wish to be able to
cancel in the land department, which is being studied.
for example, if a buyer defaults at the last minute, or when a minimum
of 80 per cent construction is completed, the developer is left in the
lurch.
"it makes sense to have payment linked to construction. it doesn't make
sense that the law, clause 2a, doesn't give developers any right to
terminate. once they've hit 80 per cent construction, it gives
developer the right to seek the rest of payment. in that perspective,
it's a bit unfair on developers," lunjevich said.
there was also a consensus during the meeting regarding the future of the escrow law.
"the inadequacy of the escrow laws are that they do not protect the
purchasers. dubai will follow the same route as [other countries],
where purchasers will deposit 10 or five per cent and the developer is
not allowed to touch it until the project is completed. this new law
will prohibit developers receiving any funds in advance so i see the
escrow law being [abolished]," said bugden.
other legal experts agreed, saying more efforts to be on the part of
the government to ensure developers can prove a project is viable and
will go ahead.
"once the money is given to the escrow, it doesn't mean the project
will be delivered. there needs to be a concerted effort by rera and the
land department to make the developer show how that project will be
delivered," lunjevich said.
key points: law no 9 of 2009
* if the developer has completed 80 per cent of a project, it can
keep the full amount paid and request purchaser to settle the remaining
amount of the contract price. if not possible, it can request the
property be sold at auction.
* if the developer has completed at least 60 per cent of project,
it may revoke contract and deduct up to 40 per cent of the purchase
price of the unit as stipulated in contract.
* if the developer has completed less than 60 per cent of
project, it can revoke contract and deduct 25 per cent of purchase
price as stipulated in contract.
* if construction has not yet started, the developer may revoke
contract and deduct up to 30 per cent of amount paid by purchaser.
Dubai Property Law's 
