Dubai orders buyer to pay Dhs1.68 million to seller over failed property deal

Dubai Real Estate Court has issued a verdict obligating the buyer of a real estate unit to pay the seller Dhs1.68 million accounting for 80 per cent of the down payment amounting to Dhs2.1 million held by the real estate brokerage company under a cheque deposit.

The court also obligated the buyer to pay a 5 per cent annual legal interest from the date of the lawsuit until full payment, as compensation for the delay in fulfilling the obligation to purchase the property.

Earlier, the seller of a real estate unit filed a lawsuit in which he requested the court to annul the sale contract, which stipulated that if the buyer withdrew after signing the agreement, he must pay a penalty of 10 per cent of the total value of the transaction, 80 per cent of which would go to the seller and 20 per cent to the broker.

According to the official documents, the 809.11 square meter unit was valued at Dhs21 million. Under the contract concluded in January 2025, the buyer committed to paying a down payment of Dhs2.1 million in the form of a cheque deposit to be held by the seller’s broker. The remaining Dhs18.9 million was to be paid upon registering the property in the buyer’s name or through a secured payment method approved by the Land Department.

The contract stipulated that its term would expire in mid-March 2025, but the buyer failed to pay the remaining amount or complete the transaction within the specified period, despite being formally notified before the expiry date.

This prompted the seller to file a lawsuit demanding the contract’s expiration to be substantiated and he be given his share of the down payment and legal interest.

Based on the clause relating to the penalty for buyer withdrawal, the court ruled that Dhs1.68 million, accounting for 80 per cent of the down payment was entitled to the seller. The real estate brokerage company had not requested its 20 per cent share and therefore was not given to it.

According to Dr. Alaa Nasr, seller’s legal representative, the Civil Transactions Law stipulates that paying a down payment is evidence that the contract has become final and cannot be withdrawn from unless the agreement or custom stipulates otherwise. If the contracting parties agree that the down payment is a penalty for withdrawing from the contract, each of them has the right to withdraw, he said.

Thus, if the one who has paid the down payment withdraws, he loses it, and if the one who received it withdraws, he must return it plus an equivalent amount, he added.