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Court ruling allows for more refunds for off-plan investors in Dubai

A landmark ruling by the Dubai Court of Cassation will reportedly allow off-plan property investors to claim full refund under certain conditions.

If a property purchaser’s sale and purchase agreement is terminated for non-payment and the property is re-sold by the developer without a court order, the purchaser can now file a claim to recover the amounts paid, reported Emirates 24/7.

The court found that following the Article 11 Cancellation Process was not enough to give the developer the right to repossess and to sell the unit, said law firm Hadef and Partners in a report titled “Terminating a contract for an off-plan”.

It said the developer would still needs to file a civil claim and to obtain a court order for the termination of the existing contract.

“The court took the view that the Article 11 Cancellation Process are simply a set of administrative guidelines or recommendations and they do not override the general requirement that a court should determine the matter and decide whether or not the contract is to be terminated due to the purchaser’s default,” Walid Azzam and Karim Mahmoud wrote in the report.

This general requirement is found in Article 267 of the Federal Law 5 of 1985 (“the Civil Code”), which provides that a contract can only be terminated “by mutual consent [of the parties], court order, or under a provision of the law”, said the report.

The Court of Cassation was reported to have said that if a developer re-sold a repossessed unit, the purchaser – even if he was in default – may be able to recover payments.

“Given the recent ruling, the developer’s actions in repossessing the unit and reselling it constitutes a unilateral termination of the contract, so making the developer liable to repay any amounts received from the defaulting purchaser,” the lawyers said.

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