Construction delays for off-plan properties in Dubai are the situations where the developer fails to complete and deliver the property to the buyer by the agreed date as per the sale and purchase agreement. Off-plan properties are properties that are still under construction or not yet completed, and buyers purchase them based on the developer’s promises and plans.
Buying an off-plan property can offer many advantages, such as lower prices, flexible payment plans, higher returns and more choices. However, buying an off-plan property also involves some risks and challenges, such as delays, quality issues, market fluctuations and legal complications. Therefore, buyers need to be well-informed and prepared before they sign a contract for an off-plan property in Dubai.
In this article, we will guide you through how to handle a delayed handover of your off-plan property, and answer some of the most common questions that buyers have about construction delays.
What Is A Construction Delay?
A construction delay is when the developer does not finish and hand over the property to the buyer by the anticipated completion date as set out in the sale and purchase agreement.
The anticipated completion date is usually an estimated date that is subject to change depending on various factors, such as market conditions, supply chain issues, regulatory approvals, force majeure events and other unforeseen circumstances. However, some developers may also intentionally delay the completion of their projects due to cash flow problems, mismanagement or fraud.
Two Types Of Construction Delays
A construction delay can be classified into two types: excusable delay and non-excusable delay. An excusable delay is when the developer is not responsible for the delay and has a valid reason to extend the completion date without any penalty or liability.
- For example, if there is a natural disaster, a war, a pandemic or a change in law that affects the construction process, the developer can claim an excusable delay.
- A non-excusable delay is when the developer is responsible for the delay and has no valid reason to extend the completion date without any penalty or liability.
- For example, if there is a lack of funds, a poor planning, a breach of contract or a negligence that affects the construction process, the developer cannot claim a non-excusable delay.
Why Do Off-Plan Completion Dates Get Delayed?
There are many possible reasons why off-plan completion dates get delayed in Dubai. Some of the common causes are:
- Lack of funds: The developer may face cash flow issues due to low sales, high costs, bad debts or other financial difficulties that prevent them from paying their contractors, suppliers or workers on time.
- Lack of materials: The developer may face supply chain issues due to shortages, delays or disruptions in the delivery of materials, equipment or machinery that are essential for the construction process.
- Lack of permits: The developer may face regulatory issues due to changes, delays or rejections in obtaining the necessary permits, approvals or licenses from the relevant authorities that are required for the construction process.
- Lack of quality: The developer may face quality issues due to defects, errors or faults in the design, engineering or execution of the project that affect its safety, functionality or aesthetics.
- Lack of management: The developer may face mismanagement issues due to poor planning, coordination or supervision of the project that affect its progress, efficiency or performance.
- Lack of integrity: The developer may face fraud issues due to dishonesty, deception or corruption in their dealings with their stakeholders that affect their credibility, reputation or trustworthiness.
What Problems Can Off-Plan Delays Cause?
A delayed handover of your off-plan property can cause various problems for you as a buyer. Some of these problems are:
1. Loss of income
If you are buying an off-plan property for investment purposes, you may lose potential rental income or capital appreciation due to the delay in receiving your property. You may also have to pay extra interest or fees on your mortgage or finance if you have taken any loan or finance to buy your property.
2. Loss of opportunity
If you are buying an off-plan property for end-use purposes, you may lose the opportunity to move into your new home or enjoy its amenities and facilities due to the delay in receiving your property. You may also have to incur additional expenses on renting another property or extending your current lease until you receive your property.
3. Loss of trust
If you are buying an off-plan property from a developer, you may lose trust and confidence in their ability and commitment to deliver your property as per the agreed terms and conditions due to the delay in receiving your property. You may also have to deal with stress, frustration and uncertainty about the status and outcome of your property purchase.
What To Do When Your Off-Plan Property Has A Delayed Handover?
If you are facing a delayed handover of your off-plan property, you need to follow these steps:
Step 1: Visit The Site Of Your Property And Check The Actual Date Of Completion
The first step is to visit the site of your property and check the actual date of completion. You need to see the physical state and progress of the construction works and compare it with the expected date of completion as per the sale and purchase agreement.
You also need to contact the developer and ask them for an updated completion date and a valid reason for the delay. You need to verify the information provided by the developer with the Real Estate Regulatory Agency (RERA), which monitors and regulates the off-plan projects in Dubai. You can check RERA’s audit report on the project’s status and performance on the Dubai Land Department’s website.
Step 2: Speak About A Solution To The Developer
The second step is to speak about a solution to the developer. You need to negotiate with the developer and try to reach an amicable settlement that is acceptable to both parties.
You may ask the developer for compensation, such as a discount, a refund, an upgrade, a waiver or an alternative unit, depending on the extent and nature of the delay. You may also ask the developer for a revised payment plan that matches the new completion date. You need to document any agreement or arrangement that you make with the developer in writing and get it signed by both parties.
Step 3: Track If It Is A RERA Cancelled Project
The third step is to track if it is a RERA cancelled project. A RERA cancelled project is an off-plan project that has been officially cancelled by RERA due to serious delays or violations by the developer.
RERA has the power and authority to cancel any off-plan project in Dubai that is proven to be uncompleted or non-viable. If your project has been cancelled by RERA, you need to contact RERA and follow their instructions on how to claim your rights and recover your money from the developer.
Step 4: Contact The Dubai Land Department
The fourth step is to contact the Dubai Land Department (DLD). DLD is the government entity that oversees and regulates all real estate transactions and disputes in Dubai. DLD has a dedicated department called Tanmia, which handles all issues related to delayed or cancelled off-plan projects in Dubai.
Tanmia can assist you in resolving your dispute with the developer through mediation, arbitration or litigation, depending on the case. Tanmia can also help you in finding alternative options or solutions for your off-plan property purchase.
Step 5: File A Claim
The fifth step is to file a claim. If you are unable to resolve your dispute with the developer through any of the above steps, you can file a claim against them in court or arbitration, depending on your sale and purchase agreement.
You can seek legal advice from a qualified lawyer who can represent you and protect your interests in the legal proceedings. You can claim for damages, such as loss of income, loss of opportunity, loss of trust, interest, fees or any other costs that you have incurred due to the delayed handover of your off-plan property.
How To Safeguard Yourself Against Delayed Property Handovers?
To safeguard yourself against delayed property handovers, you need to follow these tips:
1. Research The Developer
You need to research the developer of the off-plan project that you are interested in buying. You need to check their reputation, track record, financial stability and customer satisfaction. You need to avoid buying from unknown, inexperienced or unreliable developers who may not deliver on their promises or commitments.
2. Research Escrow Account Details
You need to research the escrow account details of the off-plan project that you are interested in buying. An escrow account is a special bank account that is opened by the developer to deposit all the payments received from the buyers of off-plan properties.
The escrow account is regulated and monitored by the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA) to ensure that the funds are used only for the construction and development of the project. You need to check that the developer has a valid escrow account for the project and that they provide you with a receipt for every payment you make into the escrow account.
3. Check If The Project Is Registered With RERA
You need to check if the project is registered with RERA, which is the authority that oversees and regulates all off-plan projects in Dubai. RERA issues a certificate of registration for every off-plan project that meets its standards and requirements, such as having a valid escrow account, a valid title deed, a valid sales and purchase agreement, a valid construction permit and a valid Oqood certificate.
An Oqood certificate is a document that records your ownership rights over your off-plan property in the interim property registry of DLD. You need to verify that the project has a valid RERA registration certificate and that you receive an Oqood certificate upon signing the contract with the developer.
4. Check If The Developer Has All The Permits
You need to check if the developer has all the permits and approvals required for the construction and completion of the project from the relevant authorities, such as DLD, RERA, Dubai Municipality, Dubai Electricity and Water Authority, Civil Defence and others. You need to ensure that the developer has obtained all the necessary permits before starting the construction works and that they renew them regularly until they finish the project. You also need to ensure that the developer complies with all the rules and regulations of each authority regarding safety, quality, environment and other aspects.
5. Check Your Contract For Relevant Clauses
You need to check your contract for relevant clauses that protect your rights and interests as a buyer of an off-plan property in case of any delays or disputes with the developer. You need to read and understand all the terms and conditions of your sale and purchase agreement before signing it and make sure that it includes clauses such as:
- The anticipated completion date of the project and any extension rights or penalties for delays.
- The payment plan and schedule for your off-plan property purchase and any interest or fees for late payments.
- The specifications and features of your off-plan property unit and any changes or variations allowed or not allowed.
- The handover process and procedures for your off-plan property unit and any documents or fees required.
- The warranty period and scope for your off-plan property unit and any defects or issues covered or not covered.
- The dispute resolution mechanism for your off-plan property purchase and any arbitration or litigation options available or not available.
Frequently Asked Questions
What Is The Average Delay Time For Off-plan Property Handover In Dubai?
The average delay time for off-plan property handover in Dubai varies depending on the project, the developer and the market conditions.
However, according to some reports and studies, the average delay time for off-plan property handover in Dubai is around six to nine months. This means that most off-plan projects in Dubai are delivered within a year of their expected completion date. However, some projects may experience longer or shorter delays depending on various factors.
How Long Is The Grace Period Developers May Take With Handover Delays?
According to the Sales and Purchase Agreement (SPA), project developers are usually allowed a grace period of one year from the date of handover. You can pursue legal action after the grace period comes to an end.