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Should the developer register the off-plan property in the name of the purchaser?

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Staff Writer, TLR

Published on July 14, 2023, 17:41:00

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Buying off-plan real estate refers to buying unconstructed property, during the planning phase or in the early stages of construction, usually directly from a developer.
The main incentive for purchasing off-plan property is the potential for capital growth and return on investment; such properties are typically sold at a discount to raise capital during the planning and building- stage of the project. 
When purchasing directly from a developer, a buyer usually needs 10%-20% of the sale price upfront when signing the Sale and Purchase Agreement (SPA), the remainder is usually spread across flexible payment plans which often include post-handover payments allowing buyers to maximize their return on investment. These distinguishing features make the off-plan property an appealing investment opportunity, with the expectation that once delivered, the property will be worth more than the price paid, resulting in significant financial returns for the buyer. 
The off-plan property includes villas, apartment developments, and commercial buildings. Whether you buy an off-plan or a pre-built home, there are always risks involved, and any return on investment is at the mercy of the property market. 
According to the law, a developer must register the off-plan property in the name of the purchaser, in the initial property register once it is sold. The buyer has the right to cancel the SPA if the property is not registered. 

This initial registration is a must as per Article (3) of Law no. (13) of 2008 Regulating Initial Property Registration, in Dubai. It states that all actions on off-plan property units shall be registered in the initial property register. Sale and all other legal actions that transfer or restrict ownership and any right based thereon shall be deemed null and void unless registered.
Dubai Law No. 19/2017, Amending Dubai Law No. 13/2008 (Regulating the Interim Real Property Register in the Emirate of Dubai), will affect those purchasers who, having purchased a unit off plan, breach the SPA. The new law has provided further requirements and more detail to the procedures which a developer is required to follow to enforce the SPA or cancel it, depending upon the circumstances.
After completing the project, the initial registration is turned into final registration provided that the buyer had fulfilled the obligation of price payment as per Article 8 of the same law. The developer shall register completed projects upon receiving the completion certificate from the competent authorities, including the sold units in the name of the buyers who have fulfilled their contractual obligations.
The buyer has the right to cancel the SPA and requests the developer to return the money, in the absence of initial registration, if the developer breaches the obligations imposed on him by Article 3 of the same law on bilateral contracts. 

If one of the parties does not perform contractual obligations, the other party may, after serving a formal notification to the debtor, demand the performance of the contract or its rescission, as per Article 272 of the UAE Civil Transactions Law.

Although property market conditions are out of a buyer’s control, if a buyer undertakes the necessary due diligence and obtains legal advice about the contents of the sale documents (reservation agreement and/or SPA), buying off the plan can be a very favourable way to get onto the property ladder and to start or increase his property portfolio and maximize returns on investment.

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