Dubai court orders developer to return Dhs955,000 in addition to Dhs150,000 compensation to buyer

A real estate developer failed to carry out a project and hand a residential unit over to a buyer and consequently the latter filed a lawsuit before Dubai Real Estate Court, which obligated the company to return Dhs955,715 and pay him Dhs150,000 in compensation plus a legal interest at five per cent until full payment.

The court also obligated the defendant to pay the incurred charges, expenses and lawyer’s fees.

Earlier, an investor filed a lawsuit in which he stated that he had contracted in January 2023 to purchase a residential unit within a project under development in Dubai, adding that he had paid installments amounting to over Dhs1.7 million including fees.

The developer, however, did not commit to completing the project by the agreed date at the end of December 2023, he said.

The plaintiff pointed out that he refrained from paying more installments due to the company’s failure to sign the final sale and purchase agreement.

Further, the company surprised him with unilateral contract termination procedures through the Land Department, in which it cancelled the registration of the unit in his name and registered it again in its name, alleging that he had defaulted on payment, he said.

During the proceedings, the court found that the booking form signed by both parties constituted a fully completed sales contract and that governed the contractual relationship in the absence of a final sales and purchase agreement.

The court also found that it was the developer who breached its obligations due to its failure to complete the project on time, as the completion rate at the time of termination of the contract was only about 86 per cent, which gave the buyer the right to withhold the installments until the breach was redressed.

The court affirmed that the contract termination procedures taken by the developer based on the valid procedures document issued by the Land Department were invalid because they were issued despite the developer’s breach of its obligations. This should invalidate what the developer did when it cance0led the registration of the unit in the buyer’s name, the court added.

The developer was also found to have subsequently disposed of the unit and sold it to other buyers, which made the execution of the contract impossible and led to the legal termination of the contract, in which case, everything should return to the starting point before the contract was made.

Based on the above, the court ruled that the amounts paid by the buyer be repaid to him after deducting the administrative & registration fees and legal interest at five per cent from the date of the lawsuit until full payment.

As far as compensation was concerned, the court found that the buyer suffered material and moral harms as embodied in freezing his funds and losing the opportunity to purchase the property.

The court hereby awarded the plaintiff Dhs150,000 in compensation plus five per cent interest from the date the judgment became final. The court also ordered the defendant to pay the incurred fees and expenses plus a Dhs1,000 in lawyer’s fees.