Real estate transaction in Dubai nullified, seller awarded Dh250,000 in compensation by court
In a recent ruling, the Dubai Real Estate Court has sided with a local company in a dispute over a defaulted residential property sale. The court's decision not only upholds the contract's binding nature but also sets a compensation amount for the seller.
The case, which originated from a 2019 agreement where a residential unit was sold for Dh2.386 million, saw the buyer defaulting on payments after the unit was registered in their name in December of the same year. As a result, the court ordered the re-registration of the unit under the selling company's name.
Dr. Alaa Nasr, the company's legal representative, cited federal civil law in the court case. He explained that the provisions of federal civil law allow a seller to retain ownership of the property even after it has been handed over, until full payment is made. This is a crucial point, as it ensures that sellers are protected in such scenarios.
The contract, which required a 10 percent down payment with the remainder to be paid in 21 dated instalments, was upheld by the court. The court's ruling was based on the provisions of federal civil law, emphasising that both parties have obligations under the agreement.
The court's ruling does not pertain to any new freehold project launched in the Jebel Ali Free Zone area.
The seller is now entitled to Dh250,000 in compensation, as determined by the court. This amount is to cover damages and lost profits incurred due to the buyer's default. It's important to note that the penalty clause in the contract, though void upon termination, does not affect the seller's right to compensation.
This case serves as a reminder of the legal consequences for buyers who fail to meet contractual obligations, including delayed payments, in a Dubai residential sale contract. Such actions can lead to forfeiture of deposits, financial penalties, and legal action such as enforcement proceedings to recover owed amounts or cancellation of the contract.
In Dubai, the Dubai Land Department’s Form F, which formalizes property sales, explicitly details these consequences to protect both buyer and seller in case of default. If a buyer delays payment or otherwise defaults, the seller can initiate contractual remedies, which may involve forfeiting the buyer’s deposit and pursuing further financial compensation.
For mortgage-backed purchases, enforcement procedures under Dubai’s Mortgage Law require the lender to issue a 30-day notice before judicial execution steps such as property attachment and public auction may be initiated to satisfy debts.
In cases of contractual disputes, parties can file complaints or petitions with Dubai authorities or courts. For instance, in case of payment default, a payment writ can be requested after notifying the debtor. Additionally, parties can apply to the Urgent Matters Judge for delaying payment requests.
In summary, failure to meet payment or other obligations typically leads to financial penalties, possible loss of deposits, contractual cancellation, and legal enforcement actions, all structured within Dubai’s legal and regulatory frameworks to ensure property transaction compliance and protect the seller's rights.
- In light of the case, selling in real estate can come with risks, as buyers may default on payments, leading to financial losses for the sellers.
- A healthy business practice could involve seeking legal advice and understanding the provisions of federal civil law, which offers protection to sellers in the event of a defaulted payment.
- News outlets and finance experts often analyze market trends, including the implications of real-estate related court rulings on businesses and potential investors.
- The ruling serves as a significant milestone in setting precedents for real-estate related disputes and could affect future career decisions for lawyers specializing in property law.
