Buyers of off-plan properties in Dubai who fail to pay instalments on time may face contract termination and deductions from the amounts already paid. However, developers cannot cancel contracts without following legal procedures, and the amount they may deduct depends on the project’s construction progress.

Ahmed Al Zarooni, lawyer and founder of Ahmed Al Zarooni Legal Firm, said failure to pay instalments does not give a developer unlimited authority to terminate a contract or retain a buyer’s money.

Under Article 11 of Dubai Law No. 13 of 2008, as amended in 2020, the developer must first report the buyer’s breach to the Dubai Land Department (DLD). After reviewing the matter, the department issues a formal notice and gives the buyer 30 days to meet their obligations or reach a settlement with the developer.

If the issue is not resolved within that period, the DLD will issue the required certificate after confirming that legal procedures have been followed and determining the project’s completion rate. The developer’s options will then depend on the level of construction progress.

▪️More than 80 per cent complete: The developer may continue with the contract and claim the outstanding balance, seek the sale of the property through public auction, or terminate the contract and deduct up to 40 per cent of the property’s contractual value from the amounts paid.

▪️Between 60 and 80 per cent complete: The developer may unilaterally terminate the contract and retain up to 40 per cent of the property’s contractual value.

▪️Less than 60 per cent complete: If construction has begun in accordance with the approved plans, the developer may terminate the contract and deduct up to 25 per cent of the property’s contractual value.

In such cases, the remaining amount must be refunded to the buyer within one year of the termination date or within 60 days of the property’s resale, whichever comes first.

If construction has not begun for reasons beyond the developer’s control and without any fault on its part, or if the project is cancelled by a final decision of Dubai’s Real Estate Regulatory Agency, the law requires all amounts received to be refunded in accordance with the applicable regulations.

These rules apply specifically to Dubai. In the event of a dispute or failure to follow the required legal procedures, buyers have the right to seek recourse through the courts or arbitration.