Dubai court orders developer to refund buyer Dhs1.8m over failed property sale

Dubai court ordered a reservation agreement for a real estate unit within The Heart of Europe project to be rescinded and a real estate developer to refund the buyer Dhs1.805 million plus 5 per cent annual interest from the date the legal claim was filed until full payment is made. This followed the developer’s failure to fulfill its obligation to complete the sale and register the unit in the buyer’s name, despite the buyer having paid all amounts due.

Additionally, the developer was ordered to pay Dhs150,000 as compensation for the loss of investment benefits plus the incurred legal charges and expenses and Dhs1,000 for lawyer’s fees.

Earlier, a buyer filed a lawsuit seeking the recovery of amounts paid under a reservation agreement dated April 2025 for the purchase of a hotel unit within the second phase of The Heart of Europe project for Dhs1.651 million. The amount paid including fees, value-added tax and administrative charges totaled Dhs1.805 million.

The buyer stated that the developer failed to execute the final sale contract or register the unit in his name although he had fulfilled all financial obligations, adding that the developer offered to allocate an alternative unit in place of the one originally agreed upon but he rejected the offer.

He also sought compensation for being deprived of the anticipated investment return and the potential appreciation in the property’s value, citing an agreement that stipulated an annual investment return of 10 per cent for 10 years, subject to the terms set forth therein.

The court stated that the reservation agreement contained clear obligations including the execution of a sale and purchase agreement within seven days of the collection of the down payment and registration fees, while the unit would be reserved for the buyer and the developer would refrain from marketing it or otherwise disposing of it during the specified period.

The court explained that labeling the agreement a reservation should not negate its binding nature as long as the unit, the price and the obligations of both parties were specified.

The completion of the building did not exempt the developer from finalizing the sale, transferring ownership and registering it in the buyer's name, it said.

Moreover, the developer failed to provide evidence that the inability to complete the procedures was due to the buyer’s refusal to fulfill specific requirements, nor did it demonstrate that it had facilitated the final sale for the buyer in accordance with the agreed-upon terms, it added.

Offering an alternative unit would not make it incumbent on the buyer to accept it because changing the contractual location is not permissible by the will of either party alone and exchanging draft contracts and discussing their terms would not prove agreement to amend the contractual relationship, it said.

The court concluded that failure to complete the sale and registration although the full amounts were paid constituted a fundamental breach that would justify the cancellation of the agreement and the return of the amounts paid.

The court found that the developer’s failure to fulfill its obligations deprived the buyer of the investment benefit he had sought through the contract, particularly that the agreement stipulated an annual return of 10 per cent and that the company was aware the unit was purchased for investment purposes.

The court assessed the compensation due at Dhs150,000, taking into account the nature of the breached obligation and the benefit lost by the buyer. At the same time, the court declined to award additional compensation for any potential increase in the property’s market value, as no technical evidence was provided to prove that such an increase had actually occurred.