The Dubai real estate skyline is constantly evolving, but for an investor, a delay in handing over a project can mean thousands of Dirhams in lost rental income or additional mortgage interest. Under UAE Law, specifically Federal Law No. 5 of 1985 (Civil Code) and Dubai Law No. 13 of 2008, buyers are protected against unreasonable developer delays.
Understanding the “Grace Period”
Most Sale and Purchase Agreements (SPAs) in Dubai include a “Grace Period,” typically lasting 6 to 12 months beyond the initial completion date. It is important to note that developers are generally not liable for compensation during this specific window. However, once the grace period expires, the buyer’s right to claim damages becomes legally active.
How is Compensation Calculated?
Compensation is not a “one size fits all” figure. It is usually determined by one of three methods:
- Contractual Penalties: Your SPA may explicitly state a penalty (e.g., 1% of the purchase price per month of delay).
- Rental Value Loss: If the contract is silent, the courts may award an amount equivalent to the average market rent the property would have generated during the delay period.
- Termination and Refund: In cases of extreme delay (often exceeding 24 months), you may have the right to terminate the contract and receive a full refund of all installments plus interest.
Force Majeure: The Developer’s Common Defense
Developers often cite “Force Majeure” (unforeseeable circumstances like global supply chain issues) to avoid penalties. However, the burden of proof lies with the developer. To successfully claim compensation, you must demonstrate that the delay has caused you a quantifiable financial loss.
How DY Legal Consultants Will Help
Challenging a major developer requires professional legal backing. Our team at DY Legal Consultants specializes in project delay litigation. We begin by conducting a forensic audit of your SPA to identify the most favorable compensation clauses.
Whether it involves negotiating a settlement for a “rent-free” period or filing a formal case at the Dubai Land Department (DLD), our Real Estate Lawyer in Dubai ensures you aren’t left paying for a developer’s inefficiency. We handle all filings with the RDC and help you recover the ROI you were promised.
