Off-plan can make sense: you pay in stages and buy into a building or community before it exists. It also asks for trust, because the home you are paying for is still a set of drawings and a construction site. Dubai has a clear legal framework for this, built up since 2007. Knowing how it works is the best protection you have.
This guide covers Dubai. It is general information, and the details of any purchase depend on the contract you sign.
Escrow: your money is ring-fenced#
The foundation is Dubai Law No. 8 of 2007 on escrow accounts for real estate development. It applies to every developer that sells units off-plan and takes money from buyers. Only developers entered in the Land Department's register of real estate developers may develop property in Dubai, and a developer needs the Department's written approval before it advertises off-plan units or promotes them at exhibitions.
Before selling off-plan, a developer must apply to open an escrow account, supplying documents including the title deed of the land, the approved designs and an audited statement of the project's costs. Buyers' payments are then made into that account, held with an escrow agent: a bank or financial institution approved by the Land Department. A developer with several projects must keep a separate account for each.
The money in the account may be used only to build that project, and the developer's creditors cannot seize it. According to DLD, payments are released against the main construction stages set out in the developer's agreement with the bank. After completion, 5% of the account is held back and released one year after the units are registered in buyers' names, as a guarantee that defects will be put right. Buyers may also see and copy the records of their own payments into the account.
DLD's project registration service adds a further safeguard: to register a project and open the escrow account, a developer must provide a 30% guarantee, either through 30% of the construction already done, a bank guarantee for 30%, or a cash deposit of the same.
Oqood: the interim register#
Dubai Law No. 13 of 2008 created the Interim Real Property Register, known through DLD's Oqood system. Every off-plan sale must be recorded in it, and a sale that is not recorded is void. DLD's service terms say the sale contract must be registered within 90 days of signing.
The same law says a developer may not sell units off-plan before it has taken possession of the land and obtained the required approvals, and a sale contract for a project that has not been approved is void. It also stops developers charging fees on a sale or resale beyond the administrative costs the Land Department has approved.
Registration costs the same 4% of the price as any other sale. DLD's off-plan service lists it as 2% from the seller and 2% from the buyer, while its 2021 notice on off-plan registration describes the buyer paying the 4% to the developer, who registers the sale. Check what your contract says. Our guide to the real cost of buying sets out the other fees.
Payment plans#
Payment plans are set by each developer in its sale contract; we have not found an official rule fixing the size of a booking deposit or the shape of the instalments. What the law does control is where the money goes (the project's escrow account) and what happens if either side does not keep its side of the bargain.
One practical point: if you plan to borrow, the Central Bank caps mortgages on property bought off-plan at 50% of its value, whatever the buyer's status. That is lower than the limit on a completed home, so plan your cash accordingly.
If a buyer cannot keep paying#
The rules on buyer default were last replaced by Dubai Law No. 19 of 2020. The developer must notify DLD, which gives the buyer 30 days' notice and, where possible, tries to broker a settlement. DLD then issues a document confirming the procedure was followed and stating the project's completion percentage, calculated under RERA's standards. What the developer may do next depends on that percentage.
| Project completion | What the developer may do |
|---|---|
| Over 80% | Keep the contract and claim the balance; ask DLD to sell the unit at auction; or terminate and keep up to 40% of the unit's contract value |
| 60% to 80% | Terminate and keep up to 40% of the unit's contract value, refunding the rest |
| Under 60%, works started | Terminate and keep up to 25% of the unit's contract value, refunding the rest |
| Not started for reasons outside the developer's control, or cancelled by RERA | Refund everything the buyer has paid, under the escrow law |
If a project is delayed or cancelled#
RERA, the Real Estate Regulatory Agency, is part of the Land Department. It approves development projects, monitors their completion and regulates and audits the escrow accounts. Under the Implementing Bylaw of the 2008 law, it may cancel a project on a reasoned technical report, for example where a developer fails without good reason to start building despite having its approvals, or shows no real intention to build.
When RERA cancels a project, it appoints an auditor at the developer's expense and asks the escrow agent to refund entitled buyers within 14 days. If the account cannot cover the refunds, the developer must pay the shortfall within 60 days of the cancellation decision. Separately, Dubai Law No. 8 of 2007 requires a developer that has not started construction within six months of being allowed to sell off-plan, without an acceptable reason, to be struck off the register.
For projects that stall, Decree No. 33 of 2020 set up a Special Tribunal for Unfinished and Cancelled Real Property Projects. It hears unfinished projects referred by RERA, can hand their completion to another developer, and liquidates cancelled projects, ordering refunds from the escrow account. Its decisions are final.
What to check before you pay a deposit#
Before paying anything on an off-plan home
- Look up the project on DLD's Project Status Enquiry (by project name, number or land number) and check its completion percentage.
- Confirm the developer is registered with the Land Department and the project is registered for off-plan sale.
- Make every payment to the project's escrow account, never to a personal or general company account. The Dubai REST app shows the escrow account number for your unit.
- Make sure the sale is registered in Oqood within 90 days of signing, and keep the registration.
- Read the payment schedule against the construction stages, and ask what happens if handover is late.
- Ask which fees are the developer's approved administrative charges, and what a resale before handover would cost.
We can go through these checks with you for a project you are considering, and our partner pages and community guides show where each developer is building. If you are weighing a new building against a finished one, read off-plan or ready: how to decide.
If you are looking at an off-plan home, start a conversation with us. We can explain the payment plan and the published fees, and gather the project's public information, such as its status on DLD's enquiry service. Have an independent lawyer review the contract before you pay.
