Dubai court terminates Dhs1.03 million property sale over unpaid installments

The Real Estate Court in Dubai terminated a sale contract for a residential unit valued at Dhs1.03 million, after the buyer failed to pay the agreed installments, and ordered him to vacate the unit and hand it over to the selling company, in addition to paying Dhs78,000 annually for its use from the date of receipt until actual delivery.

In detail, a company filed a lawsuit against a purchaser of a residential unit, explaining that it sold him the unit in Dubai according to an agreed payment schedule, and that he received it under a handover certificate, but failed to pay the full price.

The plaintiff company stated that the purchaser paid Dhs658,000, while the account statement showed a debt of Dhs527,000 until 10 April 2026, which included overdue installments, late penalties, service fees, electricity, and water.

The company also added that it sent a notice to pay the dues, but they did not respond, so it requested the termination of the contract, vacating the unit, and returning it to the plaintiff company.

The plaintiff company also requested to retain 40% of the contract value, Dhs413,000 as compensation, in addition to obligating the purchaser to pay Dhs288,000 for the period of using the unit until April 2026, and any new amounts at a rate of Dhs8,000 per month until it is handed over.

The purchaser did not appear before the court despite being legally notified, while the company submitted the sale contract, the handover certificate, the debt statement, and the notice.

The court affirmed that the company fulfilled its obligations and delivered the unit, while the buyer refrained from paying the due installments and did not provide evidence of payment, which justifies the termination of the contract.

It rejected the plaintiff company's request to retain 40% of the contract value as compensation, explaining that the termination of the contract results in the nullification of the penalty clause, and also refused to obligate the purchaser to pay registration cancellation fees due to lack of proof that the unit was registered in his name.

The court also considered that the purchaser's continued possession of the unit after the termination of the contract became without legal basis, and therefore its owner was entitled to a use allowance until it was handed over.

The court estimated the rent at Dhs78,000 per year and subsequently ruled to terminate the sale contract, ordering the purchaser to hand over the unit vacant and pay Dhs78,000 for each year starting from July 2023 until actual delivery, in addition to fees, expenses, and attorney fees.