Dubai Court Orders Dh185,000 Refund to Investor Over Prolonged Construction Delay

A Dubai real estate court has ordered a property developer to refund Dh185,000 to an investor, ruling that lengthy construction delays justified reducing the amount the company could retain after terminating the sales contract.

 

The court also awarded legal interest of 5 per cent from the date the lawsuit was filed until the full amount is paid. Judges reduced the developer’s retention entitlement from 40 per cent to 10 per cent of the value of the off-plan property.

 

The dispute dates back to 2017, when the investor purchased three units in a residential development, including one priced at about Dh463,000. Under the contract, the unit was scheduled for handover by the end of 2018, with a permitted extension pushing the final deadline to December 2019.

 

Court records show the investor paid about Dh231,000 — nearly half the value of the unit — along with registration fees, before halting further instalment payments.

 

However, reports from the Real Estate Regulatory Agency indicated that construction progress stood at only 15.17 per cent by January 2019. The project was eventually completed in February 2023, more than three years after the final contractual deadline.

 

In 2023, the developer requested payment of the outstanding instalments. When the investor failed to make the payments, the company initiated termination procedures under Dubai’s off-plan property law. The unit’s registration was cancelled in the investor’s name and returned to the developer, which retained the amounts already paid.

 

The investor did not challenge the legality of the termination but filed a lawsuit seeking a reduction in the penalty percentage. He argued that the developer’s substantial delay amounted to a breach of contractual obligations and that his money had remained with the company for several years.

 

The developer maintained that it was entitled to retain the full 40 per cent permitted under the law and said it had issued a manager’s cheque covering part of the amount.

 

The court ruled that although developers are legally allowed to retain a portion of payments in termination cases, judges have the discretion to determine a fair percentage depending on the circumstances.

 

Finding that the prolonged delay amounted to a significant breach, the court held that allowing the developer to retain the maximum percentage would be unfair, particularly as the company had regained ownership of the property and had benefited from the investor’s payments since 2017.

 

The court therefore limited the retention to 10 per cent of the unit’s value and ordered the developer to refund the remaining balance, along with legal interest, court costs and lawyer’s fees.

 

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