Emirates City Forum

actually it is 30% of paid amount as per dxb law. Byt coz we dont go into law developers manipulate by saying 30% of total price. Which is not true. This has started in dxb courts and many refunds have taken place.

Law no. 9 of RERA which allow the developer to deduct 30% from paid amount is not valid for Ajmam, ARRA is still respect the written agreement between buyer & developer.

refer the below link published to gulf news on 17 May 2009 -

http://www.gulfnews.com/business/Real_Estate_Property/10314135.html

Text :

New law provides way out for real estate investors
By Suzanne Fenton, Staff Reporter
Published: May 16, 2009, 23:35

Dubai: The new amendment to Article 11 of Law No 13 (2008), in the form of Law No 9 (2009), is likely to calm nerves as it offers buyers who can no longer afford to pay installments on their properties a concrete and legal way out of binding contracts.

While Law No 9 (2009) has been approved, three regulations which will provide further criteria and information regarding cancellations, will not become official until published in the government gazette.

Analysts have welcomed Law No 9, saying it will provide some much-needed respite to beleaguered investors. "This recent announcement, if it is approved and becomes official, might help to provide some disgruntled investors with some respite.

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However, what remains to be seen is how the process of deciding [whether] a project should be cancelled will be undertaken, ie, will it be the result of a dialogue between investors and the Land Department?

If this is the case, it might help those who have invested in projects which now seem less likely to go ahead to get their money back, which would help with overall confidence of the sector," Sana Kapadia, vice-president of equity research at EFG-Hermes, said.

The three regulations awaiting approval state that 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 contracts must do so in court, the Investors Group has expressed a wish to be able to complete procedures at the Land Department and this is being studied.

"There have been some issues with laws in the past where the laws are passed but the outcomes of the laws never really come into play. Now, with these regulations, investors can see the effects, with compensation being given out," Matthew Green, head of research and consultancy for the UAE region at CB Richard Ellis, said.

Law No 9 relates specifically to cancellations of all off-plan sale contracts regardless of when the contract was signed, making the amendment retroactive. This law provides strict criteria for the amount of money a buyer can get back.

There has been slight confusion about whether the percentages given refer to the amount paid by the buyer or the purchase price. Only when construction of a project has not begun, does the buyer forfeit 30 per cent of the amount already paid.

"Where construction of the project has not yet commenced for reasons beyond the developer's control, without negligence or omission on the developer's part, the developer may revoke the contract and retain an amount equal to 30 per cent of all monies paid by the purchaser," Law No 9 states.

For all other circumstances, the percentage retained by the developer in line with construction progress, is of the purchase price.

Where the developer has completed construction of at least 80 per cent of the project, the developer may keep all the money already paid by the buyer and request that the buyer settle the remaining amounts.

Where the developer has completed at least 60 per cent of the project, the developer may keep 40 per cent of the purchase price.

Where construction is less than 60 per cent, the developer may keep 25 per cent of the purchase price.

However, if a project is cancelled by Rera (Real Estate Regulatory Authority), the buyer will get back all money paid.

"Also, following through on this law assumes that all funds deposited by investors are in a registered escrow account and will thus be handy to refund to customers should the project get cancelled," Kapadia added.

While Arra (Ajman Real Estate Regulatory Agency) and Dubai's Rera are set to share a database, Ajman is not following Law No 9 in cases of cancellation.

"By the looks of it, it sounds great, applying criteria based on completion of projects. We are regulators but we cannot overlook the contractual obligations of both sides," said Omar Barghouthi, director general of Arra.

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