The showroom is impressive, and the agent assures you, “Everyone signs these standard terms.”
You receive the SPA (Sale & Purchase Agreement), a lengthy document with clauses that may contain costly terms you might overlook.
If you’re buying property in Dubai or the UAE especially off-plan, this one document can make your purchase feel smooth… or turn it into a long, expensive headache.
This Legal Awareness guide is for investors and first-time buyers seeking to purchase with confidence and avoid penalties that may arise from one-sided SPAs.
Quick Navigation for this Article
- What an SPA really is (and why it’s not “just paperwork”)
- Clauses that may impose penalties on buyers
- Delays, “anticipated completion,” and force majeure wording
- Off-plan compliance and the importance of registration
- Escrow accounts: key information for buyers
- A 10-point interactive SPA red-flag checklist
- FAQs
What is an SPA (and why is it a big deal)?
The SPA (Sale & Purchase Agreement) is the contract between you and the developer/seller that sets out:
- payment plan + milestones
- handover / completion timelines
- penalties and default rules
- snagging and defects process
- fees, notices, and dispute resolution (courts/arbitration)
Marketing brochures are not legally binding for the developer; only the SPA is.
If issues arise later, such as delays, variations, cancellations, refunds, or penalties, the primary consideration is:
“What does the SPA say?”
Why investors are often caught off guard by ‘standard’ terms?
“Standard” doesn’t mean fair. It often means standard for the developer.
Many SPAs are drafted to:
- give the developer maximum flexibility, and
- shift risk and cost to the buyer, often through clauses that may be overlooked
High-pressure situations can make it easy to overlook important details.
The SPA Clauses That Can Cost Buyers Big Money
1) Buyer default penalties (the “30% problem”)
Some contracts (and legal frameworks around off-plan sales) allow the developer to deduct a significant amount if the buyer is in breach and the contract is revoked after notice.
Dubai Law No. 13 of 2008 provides that if a buyer breaches the terms and fails to remedy after notice, the developer may revoke and refund the purchase price, after deducting up to 30% of the payments made.
Why this matters:
If your SPA defines “default” broadly, such as including late payments, document delays, or administrative oversights, you may face severe consequences.
What a lawyer checks:
- What counts as “breach”?
- Is there a reasonable cure period?
- Is the deduction clause fair and compliant with legal requirements?
- Are notice requirements clearly defined, including acceptable methods such as email, courier, or online portal?
2) Completion dates that may not be definitive
Developers often use terms like:
- “anticipated completion date”
- “estimated handover”
- “subject to approvals”
- “subject to force majeure / beyond control”
If the SPA does not specify a clear longstop date, delays may extend indefinitely, resulting in ongoing costs and uncertainty.
What a property lawyer in Dubai looks for:
- Is the completion date binding or flexible?
- What events allow extension—and how long?
- Is compensation provided if delays exceed a specified threshold?
- Are you allowed to terminate if the delay becomes unreasonable?
3) “Variation” clauses (size, layout, materials)
Watch for clauses allowing changes to:
- unit area or layout
- views / amenities
- finishes and materials
- common areas (gyms, pools, parking allocation)
Dubai Law No. 13 of 2008 also speaks to unit area being deemed correct, and addresses compensation where there is a decrease (subject to conditions).
Your SPA should be reviewed to ensure that:
- changes aren’t unlimited, and
- your remedies are enforceable and not solely at the developer’s discretion
4) Fees that may arise after initial commitment
Common examples:
- admin fees on assignment/resale
- “registration assistance” fees
- variation fees
- service charges / community charges wording
- “documentation fees” with vague amounts
A contract review flags where:
- fees aren’t capped,
- fees aren’t clearly defined, or
- The developer can introduce new fees later.
5) Dispute resolution: arbitration clauses that may be overlooked
Arbitration is not inherently negative, but it is often:
- more expensive upfront, and
- less familiar to buyers than court processes.
The SPA may also define:
- governing law
- jurisdiction
- language of proceedings
- notice method (which can decide if you “missed” a deadline)
A lawyer review ensures you understand what you’re signing up for before a dispute exists.
Off-Plan Compliance in Dubai: Registration Is Not Optional
Dubai’s off-plan framework includes the Interim Property Register, and the law states that any sale or legal disposition that transfers or restricts ownership is void unless entered in that register.
Dubai Land Department’s own e-services describe the developer process to register units sold off-plan in the provisional register.
Buyer takeaway:
Don’t treat registration as a “backend developer step.” Ask:
- Is the project registered?
- Has the initial sale been registered properly?
- Are you getting the correct reference / documentation?
Escrow Accounts: Where your money should be going (and why it matters)
Dubai Land Department explains that a real estate escrow account is a project bank account where amounts collected from off-plan purchasers (or financiers) are deposited, aiming to regulate build processes and protect investors’ rights.
Dubai Law No. 8 of 2007 defines the escrow account and requires it for developers selling off-plan and receiving payments.
It also states the escrow account is opened in the name of the project and dedicated exclusively to construction, with protections against attachment for developer creditors.
Dubai Land Department also notes that project registration includes opening an escrow account as part of the process.
Key point for buyers:
A lawyer will help you confirm whether:
- escrow requirements are being followed, and
- SPA payment instructions align with compliant project processes.
The SPA Red-Flag Score (10 Questions)
Assign yourself 1 point for every ‘YES’ answer.
- Does the SPA say the completion date is “anticipated/estimated” with no longstop?
- Can the developer extend time for “any reason beyond control” with no clear limits?
- Are buyer penalties clearly higher than developer penalties?
- Is “buyer default” defined broadly (admin delays, minor technicalities)?
- Are fees not capped or not clearly listed in a schedule?
- Can the developer change layout/area/specs without meaningful remedies?
- Is the dispute clause arbitration-heavy with unclear cost allocation?
- Are snagging/defects timelines vague or overly short?
- Are notices deemed served in ways you might miss (portal only, outdated email, etc.)?
- Does the SPA restrict assignment/resale heavily (or adds large admin fees)?
Your result:
- 0–2: Low risk (still worth a review)
- 3–5: Medium risk — legal review and negotiation are recommended
- 6–10: High risk — do not sign without a comprehensive SPA legal review
To make this more practical for your website, consider adding:
“Comment ‘SPA’ and we’ll send you a buyer-friendly checklist.”
What a Property Lawyer in Dubai Does Before You Sign
A proper SPA review isn’t just reading. It’s risk-mapping.
DY Lawyers and Legal Consultants typically help with:
- SPA clause-by-clause review (penalties, delays, termination, fees)
- compliance checks for off-plan transactions and documentation
- negotiation support (what you can realistically change)
- clear written advice, such as: sign, do not sign, or sign with amendments
- protecting you from one-sided and arbitrary clauses
For investors, this process is essential contract risk management.
If you’re buying a home, it’s peace of mind in writing.
FAQs
Do I really need a lawyer to buy property in Dubai?
If you’re signing an SPA, you’re signing a binding contract that can include strict penalties and dispute procedures. A lawyer review helps you understand and reduce risk before you commit.
What happens if I miss an installment?
Depending on the SPA and legal process, consequences may include notices, penalties, and possible contract revocation. Dubai Law No. 13 of 2008 includes a notice mechanism and allows deduction up to a percentage in certain circumstances.
What is an escrow account in Dubai off-plan projects?
Dubai Land Department describes it as a project bank account where amounts collected from off-plan purchasers/financiers are deposited to protect investor rights and regulate construction.
Contact us Today
Have your SPA reviewed before signing?
DY Lawyers and Legal Consultants offers the best Property and Real Estate Lawyers in Dubai with contract legal services in Dubai, focusing on SPA review for property buyers. This ensures you understand your commitments before penalties or disputes arise.
Submit your SPA for review early. The best time to protect your interests is before signing.
Disclaimer
This article is for general information only and does not constitute legal advice. For advice tailored to your situation, consult a qualified lawyer.
