Case Explained:This article breaks down the legal background, charges, and implications of Case Explained: Dubai Court Orders Developer to Refund Dh185,000 to Investor Over Construction Delays – Legal Perspective
The court also awarded legal interest of 5 per cent from the date the lawsuit was filed until full payment is made, after cutting the developer’s retention entitlement from 40 per cent to 10 per cent of the value of an off-plan unit.
Project delayed for years
The dispute dates back to 2017, when the investor purchased three units in a residential development, including one valued at about Dh463,000. The unit was scheduled for handover by the end of 2018, with a contractual extension allowing completion until December 2019.
Court records show the investor paid around Dh231,000 nearly half the unit’s value in addition to registration fees before stopping further instalment payments.
However, reports from the Real Estate Regulatory Agency revealed that construction progress had reached only 15.17 per cent by January 2019. The project was eventually completed in February 2023, more than three years after the final agreed deadline.
Contract terminated
In 2023, the developer requested payment of outstanding instalments. When the investor failed to pay, 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 dispute the legality of the termination but filed a lawsuit seeking a reduction in the penalty percentage, arguing that the developer’s significant delay amounted to a breach of contractual obligations and that his funds had remained with the company for years.
Court reduces retention
The developer maintained it was entitled to retain the full 40 per cent allowed under the law and said it had issued a manager’s cheque covering part of the amount.
The court ruled that while developers may retain a percentage of payments in termination cases, judges have discretion to determine a fair amount depending on the circumstances.
Finding that the prolonged delay constituted a serious breach, the court said retaining the maximum percentage would be unjust, particularly as the developer had regained ownership of the property and benefited from the payments since 2017.
The court therefore limited the retention to 10 per cent of the unit value and ordered the developer to refund the remaining balance, along with legal interest, court expenses and lawyer’s fees.