Off-Plan Default in Dubai: What a Developer May Keep (Article 11)
Article 11 of Law No. 13 of 2008, as replaced by Law No. 19 of 2017, sets what a developer may do when an off-plan buyer stops paying. The developer cannot act alone at once: it must notify DLD, and DLD serves the buyer a 30-day notice to perform and may try to mediate a settlement.
If the buyer still does not pay
| Completion of the unit | What the developer may do |
|---|---|
| More than 80% | Keep the contract and claim the balance; ask DLD to sell the unit at auction; or terminate and keep up to 40% of the contract value |
| 60% to 80% | Terminate and keep up to 40% of the contract value |
| Under 60%, work started | Terminate and keep up to 25% of the contract value |
| Work not started, for reasons beyond the developer's control | Terminate and keep up to 30% of the amounts paid, refunding the rest within 60 days |
Where the developer terminates in the first three cases, it must refund anything above the amount it may keep within one year of termination or 60 days of reselling the unit, whichever is earlier. If RERA cancels the project, the developer must refund everything the buyers paid, under the escrow law. The rules do not apply to sales of land only.
Worked example
A unit's contract value is AED 2,000,000 and it is 72% complete. The buyer has paid AED 900,000.
72% is in the 60-80% tier: the developer may keep up to 40% of AED 2,000,000 = AED 800,000.
It must refund AED 900,000 - AED 800,000 = AED 100,000, within one year of termination or 60 days of resale, whichever is earlier.
Practise with the off-plan questions.
Frequently asked questions
How much can a Dubai developer keep if an off-plan buyer defaults?
Up to 40% of the contract value above 60% completion, up to 25% below 60% once work has started, and up to 30% of amounts paid if work never started (Law No. 13 of 2008, Art. 11, as replaced by Law No. 19 of 2017).
How long is the DLD notice to a defaulting off-plan buyer?
30 days, served by DLD after the developer notifies it.
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