Off-Plan

Escrow Accounts for Off-Plan Projects (Law 8 of 2007)

Law No. 8 of 2007 ring-fences off-plan buyers' money: every project selling off-plan has its own escrow account with an accredited bank, used only to build that project and closed to the developer's creditors. The exam tests who holds the money, what it can be used for, the 5% retention after completion, refunds when RERA cancels a project, and the criminal penalties.

Laws and legislation6 min read7 sections

Must-know for the exam

A developer wishing to sell off-plan must apply to DLD to open an escrow account, with eight listed documents including an auditor-certified cost and revenue statement (Art. 6).
The account is opened in the project's name under a written developer-escrow agent agreement, copied to DLD (Arts. 7, 9(1)).
Escrow money is for building that project only; one account per project; no attachment by the developer's creditors (Art. 9).
Purchasers' payments and project financing, including a mortgage loan, must be paid into the escrow account (Arts. 2, 13).
Retention: 5% of the account's total value from the completion certificate, released one year after units are registered to buyers (Art. 14; in force 12 Oct 2026).
Brokers deposit full sale proceeds into escrow; no own account, no commission deducted; contrary agreement void (ECR 6/2010 Art. 12).
RERA cancellation: all payments refunded; escrow agent refunds within 14 days; developer pays any shortfall within 60 days unless RERA extends (ECR 6/2010 Arts. 25-26).
Offences such as unlicensed development, fraud or appropriating project money: jail and a fine of at least AED 100,000, or either (Art. 16; in force 12 Oct 2026).
Struck off the developer register for bankruptcy, licence revocation, Art. 16(2)-(5) offences, or not starting work six months after permission to sell (Art. 17).
RERA regulates and audits escrow accounts and approves the banks that manage them (Law No. 4 of 2019, Art. 5(1)).

On this page · 7 sections

Traps that cost marks

Taking 5% of construction cost or sales value instead of the escrow account's total value.
Running the one-year period from the completion certificate instead of from unit registration.
Netting the commission off the buyer's payment before depositing it.
Treating the escrow account as an ordinary developer bank account open to creditors.
Treating a developer's escrow accounts as a single pool across projects.
Using the escrow agent's 14-day deadline for the developer's shortfall.
Forgetting payments made outside escrow, or counting them twice.
Reading AED 100,000 as a maximum rather than a minimum.

Why it matters on the exam

Every off-plan sale a broker handles depends on the escrow account: buyers must pay into it, brokers must not divert or net it, and the account decides what buyers get back if a project fails. Questions mix recall of the rules with short calculations on the 5% retention and refund deadlines.

•The escrow law speaks of the 'Department' (DLD); RERA, DLD's regulatory arm, now regulates and audits escrow accounts under Law No. 4 of 2019.
•Know the two trigger events for the retention: completion certificate (retention starts) and unit registration (one-year release clock starts).
•AED 100,000 is the minimum fine for Article 16 offences, not a maximum.

Opening and running the account

Article 3 applies the law to developers (master or sub-developers) who sell units off-plan and receive payments from purchasers or financers. A developer must be on DLD's Register of Real Estate Developers and licensed (Art. 4), and needs DLD's written authorisation to advertise off-plan units in local or international media or at exhibitions (Art. 5).

Rule	What it says	Article
Application	Chamber certificate, trade licence, title deed, master/sub-developer contract, approved initial designs, auditor-certified cost and revenue statement, undertaking to start work, standard sale contract	Law 8/2007 Art. 6
Agreement	Written agreement with the escrow agent; account in the project's name; copy to DLD

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