Can Dubai property investor penalise developer for delayed off-plan purchase?
I have invested in an off-plan property in Business Bay but its delivery is delayed by approximately three years. Can I penalise the developer in any way for breaching the contract? AS, Dubai
In theory, there should be no reason why you cannot file a case and hold the developer to task for not sticking to the clauses of the Sales and Purchase agreement, essentially the first contract of the original sale. The reality, however, is not so straightforward. I’m sure that in their defence, the developer could look at wriggling out of their responsibility by pinning the delay on obscure clauses such as force majeure – this is a legal term for acts of God. Notwithstanding this, taking a large developer to court could be costly and involve a great deal of time. I’m not suggesting you should just accept this delay, I am merely explaining that unfortunately the process for justice could be long and expensive, with no real confirmation of success at the end of it anyway. Any investor ought to have the right to compensation for such things as delays on handover, but getting justice could be a distant reward unless you have the time and patience for the battle ahead.
We are looking to lease in Sustainable City. Which party is responsible for the Dewa and gas connection fee? Is there a chiller fee in Sustainable City? If so, who’s responsible for this? And is the housing fee and Ejari the landlord’s responsibility? It is written in the contract that the security deposit will be “held” by the landlord, does this mean that it won’t be cashed or we can give an undated cheque to be “held” until necessary? JM, Dubai
Connection to any service supplier is normally the responsibility of the tenant. There are sometimes exceptions to this, but if the property is vacant, you will find that the tenant is the one that has to connect or reconnect the services.
In the case of Sustainable City, each villa has solar panels fitted on to the roof that gather and store electricity. This electricity gets fed back into the grid and dramatically reduces the electricity bills of each villa. My understanding is that there is still a small charge for chiller, but the overall charges are much less than in other conventional villa communities.
The housing fee is the responsibility of the tenant to pay and is calculated as 5 per cent of the annual rent divided by 12 to get a monthly amount. This is then payable through the Dewa bill.
With reference to the Ejari, technically this is the responsibility of the landlord to arrange but it is the tenant who pays for it. Because of this, it is also common for the tenant to arrange the Ejari too, as he or she will have to pay for it anyway.
All rental or security deposits are “held” by the landlord, but this does not mean deposits are not cashed. In fact, quite the opposite – the deposit is always cashed. This money is used to repair or replace anything that might get damaged by the tenant or if stipulated in the contract, it is often used to repaint /clean the property at the end of the tenancy to ensure the property is given back in the same condition as it was first given to the tenant at the start of the tenancy. If no damage or repair is needed and the tenant pays for the repainting or cleaning on leaving the property, the deposit is returned in full to the tenant. This last statement is often not adhered to by landlords and is the source of many letters to me from tenants asking how to get their deposit back. Largely this is left up to trust, which is clearly not acceptable. The law ought to be changed or clarified on this topic alone.
Mario Volpi is the chief sales officer for Kensington Exclusive Properties and has worked in the property industry for the past 32 years in London and Dubai. The opinions expressed in this article are those of the author and they do not reflect in any way those of the institutions to which he is affiliated. It does not constitute legal advice and is provided for information only. Please send any questions to firstname.lastname@example.org.
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