Developer ordered to return Dhs746,000 to buyer plus Dhs250,000 in compensation

An investor bought a real estate unit in a Dubai Marina project for Dhs746,000 and paid the full amount. He, however, was unable to take possession of the unit because its ownership had been transferred to another buyer although he had already obtained a final, binding court judgment affirming the validity and enforceability of his sales contract and ordering the developer to hand over the property.

Dubai Real Estate Court ruled that the contract be rescinded and ordered the real estate developer to refund Dhs746,000 and pay the investor Dhs250,000 in compensation with late-payment interest.

The case dated back to August 2006 when the buyer contracted with a previous developer of the project to purchase a residential unit. The buyer paid part of the price to the developer and then completed the remaining payments through the project’s escrow account in three installments in 2023.

After the previous developer ceased work on the project, another real estate developer acquired the project pursuant to a 2021 court ruling, taking over the rights and obligations and undertaking the completion of the development.

The developer, however, took steps to cancel the registration of the unit in the buyer’s name and re-register it in its own name. This led the buyer to file a lawsuit seeking a judgment to validate the sale agreement and force the developer to hand the unit over to him.

In December 2024, a judgment was issued confirming the validity and enforceability of the contract, declaring the cancellation of the registration as void, ordering the developer to hand over the unit and dismissing the developer’s counterclaim.

This judgment was upheld on appeal and a subsequent challenge before the Court of Cassation was rejected in May 2025. However, when enforcement proceedings were initiated, a statement from the Land Department revealed that the developer had sold the unit to another party in September 2023 and that ownership had subsequently been transferred to yet another developer, rendering the handover of the unit to the original buyer impossible.

In his new lawsuit, the buyer requested to be provided with an alternative unit—matching the original in specifications, size, and location—or, alternatively, a full refund of the purchase price plus Dhs1 million in compensation.

He also requested that the company’s manager and the current developer be held jointly and severally liable, alleging fraud and collusion in the disposal of the unit.

The court rejected the request for the buyer to be provided with an alternative unit, as there was no agreement obligating the developer to do so.

Furthermore, it found insufficient evidence of a fictitious sale, fraud, collusion or personal involvement by the company’s manager in the transaction with the intent to harm the buyer.

However, the court concluded that the sale of the unit to a third party and its subsequent registration in that party’s name rendered the fulfillment of the original obligation impossible and consequently, the contract must be rescinded and the amounts paid must be refunded.

The court upheld the total payments established in the expert report amounting to Dhs746,000 and ordered the real estate developer to refund this sum along with 5 per cent annual interest from the date the legal claim was filed until full payment is made.

The court also awarded the buyer Dhs250,000 as compensation for the material and moral harms he had befallen as a result of being deprived of the right to take possession of and utilis  e the unit plus 5 per cent annual interest from the date the judgment becomes final. All other claims were dismissed.