Dubai court orders buyer to pay Dhs7.52m of deposit to sellers after backing out of a real estate deal

Dubai Real Estate Court obligated a buyer to pay two sellers Dhs7.52 million, accounting for 80 per cent of the deposit, plus interest at 5 per cent annually from the date of the claim until full payment.

The two sellers filed a lawsuit at Dubai Real Estate Court against a buyer and a real estate brokerage company in which they requested the court to obligate the buyer to pay a deposit of Dhs9.4 million after he backed out of completing a deal to purchase a unit in a project worth Dhs47 million.

Earlier, the plaintiffs, who owned a property in a project in the Business Bay area, entered in last May into a sales contract with the first defendant for a total value of Dhs47 million.

The agreement stipulated that a down payment of Dhs9.4 million be paid upon signing the contract and the remaining Dhs37.6 million upon registration and transfer of ownership of the property by June 2026.

The buyer issued a cheque for the deposit amount of Dhs9.4 million and deposited it with the real estate brokerage company, which confirmed before the court that it had kept the cheque as a trustee of it and was ready to hand it over to the party the court proves to be entitled to it.

The lawsuit papers showed that the sellers had prepared the necessary documents to complete the ownership transfer procedures, but the buyer neither paid the remaining price nor completed the purchase process on the specified date.

Furthermore, no written agreement was proven between the two parties to extend the date, even though the contract stipulated that any amendment to the terms or dates must be in writing.

The court stated that the contract explicitly stipulated the seller’s right to terminate it and retain the deposit if the buyer failed to pay the full price or complete the sale by the agreed date due to reasons attributable to the buyer.

The additional terms also stipulated that 80 per cent of the deposit would go to the sellers and 20 per cent to the real estate brokerage firm, it added.

The court concluded that the buyer had breached his obligations and reneged on the deal, thus entitling the sellers to 80 per cent of the deposit or Dhs7.52 million, not the full amount of the cheque, as stipulated in the contract.

The court also ruled that the buyer pay legal interest of 5 per cent from the date of the lawsuit until full payment and ordered him to pay the incurred expenses and lawyer’s fees but dismissed all other claims.