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how the ESCROW is used
http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100315/BUSINESS/7...
please read the linked POST especially the LAST paragraph it clearly indicates how the ESCROW account is being used.
"Beachfront Living was never officially launched for sales, but the company sold more than 200 apartments in a “pre-sale” and collected Dh314.7 million, according to an official review of the project’s escrow account by Caliber Middle East, an accounting firm that works with the property regulators.
Of that money and other funds Omniyat invested in the project, the company spent Dh237m on land payments and Dh101.6m on marketing expenses, according to the Caliber review. Just Dh738,866 was spent on construction."
this is a project by OMNIYAT in DUBAI the above PARA is WORD TO WORD from the article link above
IN this CASE after the company collected close to 314 milllion it only used 700 thousand on construction rest was used to buy land and marketing expenses
VERY SCARY
Ajman : Emirates City | Humaid City | Marmooka City
fools
Its no wonder the market is in disarray. I would have thought that construction was more important than
marketing. They have too much land and they paid too much for marketing. They must have thought the
boom would last forever.
Banks wont allow marketing
Hi Guys,
I swapped recently to a company called Kings Group in Marmooka city. I went to the bank to pay money in
and couldnt because i didnt have proof i had an apartment in the building i was paying into.
I returned with my reservation form and passport and they accepted payment. The bank
said they will only allow direct construction costs to be paid from the escrow account.
Marketing and land payments were also not allowed according to Ajman bank. I was
over the moon that they are so strict.
Was swapping to the company easy
Hi Unkle,
I have gotten some information from that company you have swapped to. The information about how strict the
bank was with you is also very promising. Was it hard to swap over and is there any advice you
can give me so i will be prepare when i speak tothem. Also how do i contact the company?
Your help would be much appreciated.
Guarantee
Good Day unkle, just for clarification sake.
If the payment is made through escrow account, halfway down the line, the developer stops construction or goes missing. Does the escrow account guaratantee you full refund of the amount paid in case the apartment is not handedover as per contract?
My understanding, th investors money will be with the bank but it does not specify how th amount will be refunded in case of developers failure to handover as per contract.
In the end it is the investor who will suffer, with or without escrow account, he loses his investment.
clarification
I asked the company that very question. They explained that they had paid up the land and they will receive no profit
unless the complete the tower. They explained it was their incentive to complete. I understand formtalking to them
and the bank that if something did go wrong you could only get back the portion of money belonging to you in the Escrow
account as the other money would have been spent on construction. However the also expained that the majoerity of
their customers are swapping in from cancelled projects and they are all willing to pay into escrow when a construction milestone
is reached. They also said they would not be walking away from the project as the customers money is in the escrow account
and they paid over 15,000,000 AED on the land from their own resources.
Im in a far better situation than i was before and if the laws ever become more favourable to investors, i will take a case against
my previous developer
what is arra going to do
what is arra going to do with projects & developers which are not register yet? what will happen to such projects investors payments?do they loose their money or the government suport them?
ESCROW turns to SCREW
the SCREW UP account requires a COURT case to get the money back from banks in case your developer runs away half way through your project. MEANING first get screwed by the developer then get screwed by the banks and finally get screwed by the courts.
There is a lot of Screwing around here these days................