# Off-plan, escrow and jointly owned property: what the law says

> Sales of under-construction housing in Dubai are governed by four laws. Law No. 13/2008 (as amended by Laws No. 9/2009 and 19/2020) requires off-plan…

Page: https://continentalclub.ae/dld-broker-exam-practice/study-guide/offplan-escrow-jop-law/ · updated 2026-10-27 · Continental Club Property LLC, Dubai real estate brokerage, RERA ORN 31933

A study guide for the DLD broker exam. Not official DLD material; DLD does not publish the exam format — details are based on our brokers' experience. Updated: 14 Oct 2026. [All guides](/dld-broker-exam-practice/study-guide/) · [Glossary](/dubai-real-estate-glossary/)

**In brief:** Sales of under-construction housing in Dubai are governed by four laws. Law No. 13/2008 (as amended by Laws No. 9/2009 and 19/2020) requires off-plan transactions to be entered in the Interim Register (Oqood) — without an entry, the transaction is invalid — and determines how much a developer may retain if a purchaser stops paying. Law No. 8/2007 requires purchasers’ money to be held in the project’s escrow account and 5% to be retained for another year after units are registered. Law No. 6/2019 sets developer warranties (10 years for structural elements, 1 year for MEP systems) and service charge rules. Law No. 7/2006 determines who may own and under which rights. Agency practice and timelines are covered in Off-plan or secondary market: entry threshold, timelines and risks, How to check a developer and escrow in 5 minutes, Off-plan assignment: procedure, Developer penalties and cancellation: how much is lost and whether it can be negotiated.

## Law No. 7/2006: who owns and what they own

- **Registration.** DLD is the sole authority registering real-property rights (Art. 6). Transactions must be entered in the register and **do not take effect without an entry** (Art. 9 as amended by Law No. 7/2019). The register and Title Deed have “absolute evidentiary effect” (Arts. 7, 22, 24). A transaction circumventing the law is void (Art. 26).
- **Who may own.** Ownership rights are available to UAE and GCC nationals and companies wholly owned by them, as well as public joint-stock companies. Foreigners — **only in areas designated by the Ruler** (Art. 4), and receive:
- **freehold** — ownership without a time limit;
- **usufruct or leasehold** — for a term **not exceeding 99 years**.
- The list of freehold areas in Regulation 3/2006 is outdated (it was expanded later); the exam principle is one: “only in designated areas”. The current list of areas must be **confirmed** with DLD.
- An inheritance transaction: the inheritance certificate is entered in the register (Art. 11); a beneficiary’s disposal without registration is ineffective against third parties. Fees for gifting and inheritance are covered in [DLD, trustee and other fees: table](/dld-broker-exam-practice/study-guide/dld-fees-table/) and Multiple Owners, Gifting, and Inheritance of Property in Dubai.

## Law No. 13/2008: Oqood and the Interim Register

**Main rule.** Any sale and other disposal of off-plan property is entered in the Interim Register; **without an entry — void** (Art. 3(1)). In the exam, the off-plan registration system is **Oqood**.

**Developer’s registration deadline.** In the question bank: the developer must register the transaction with DLD (Oqood) **within 60 days**. Such a deadline was **not found** in downloaded texts of Law No. 13/2008 (the original and the 2009/2020 amendments) — “60 days” in the law relates only to the transitional period. For the exam, learn 60 days; in practice, check the current DLD regulations.

| Provision | What the law says |
| --- | --- |
| Art. 4 | The developer may not commence and sell off-plan before obtaining the land and permits |
| Art. 7 | The developer may not charge fees for sale and resale, other than approved administrative fees |
| Art. 8 | After the completion certificate, the developer enters the project in the Property Register and registers units in purchasers’ names |
| Art. 9 | The developer works only with a broker certified under Bylaw 85/2006 and registers the contract with DLD |
| Art. 10 | A private off-plan contract for an unapproved project is “null and void” |
| Art. 12 | The area changed: if it increased after handover — no additional payment; if it decreased — compensation (unless negligibly small) |

**Area and the ±5% tolerance.** Exam: upon handover of a unit larger than stated in the contract, the rule applies that “an increase or decrease of 5% is considered by law”; the developer does not charge extra above this. The value “5%” is **not** in the text of Art. 12 of Law No. 13/2008 — it only refers to compensation for a decrease. Official clarification is provided by the DLD FAQ (the “Title Deed Services” section): if the unit area is smaller than agreed in the contract, “the developer is obliged to compensate the purchaser … for the decrease that exceeds (5%) of the net area of the unit”; if it is larger, the developer may not demand payment for the increase unless otherwise expressly agreed in the contract. In summary: under the DLD FAQ, compensation is due for a decrease exceeding 5% of the net area. Remember the 5% tolerance for the exam, but in a dispute review the SPA and the RERA/DLD decision. Where the area is **materially** smaller, the purchaser may file a civil claim for termination and repayment of the price.

## Law No. 13/2008, Art. 11 (as amended by Law No. 19/2020): the purchaser stopped paying

The scheme under Law No. 9/2009 previously applied (including retention of 30% where works had not commenced); from 24.11.2020, Art. 11 in that version was **replaced** and applies to contracts before and after the effective date. Procedure:

1. The developer notifies DLD; DLD gives the purchaser **30 days** and attempts to reconcile the parties.
2. If the purchaser does not remedy the default and does not reach an agreement, DLD issues the developer with a document confirming compliance with the procedure and the **percentage of completion** of the project (under RERA rules).
3. The developer then acts **without court proceedings and arbitration**, depending on the completion level:

| Project completion | What the developer may do | Return of the balance |
| --- | --- | --- |
| more than 80% | maintain the contract, **retain all amounts paid** and claim the balance; or request DLD to sell the unit at auction (costs borne by the purchaser); or terminate and retain **up to 40%** of the unit value | within 1 year from termination or within 60 days after resale — whichever is earlier |
| 60–80% | terminate and retain **up to 40%** | the same |
| less than 60% (works commenced, site occupied, according to approved plans) | terminate and retain **up to 25%** | the same |
| works have not commenced for reasons beyond control or the project is cancelled by RERA decision | return **100%** of payments under Law No. 8/2007 | under escrow rules |

Important: retention is “**up to**” the stated percentage, not automatic. The rules are matters of public policy; the purchaser is not deprived of the right to go to court or arbitration (Art. 11(f), (g) as amended in 2020). Exam: the statement “the developer may not terminate and retain money upon the purchaser’s non-payment” is **Incorrect**.

A summary with retention and penalty practice is available in Developer penalties and cancellation: how much is lost and whether it can be negotiated. The practical statement in Multiple Owners, Gifting, and Inheritance of Property in Dubai that “the developer may take back the property after three unpaid instalments” appears differently in the law: first notice and 30 days through DLD, then measures under the table above.

## Law No. 8/2007: escrow

- **Purchasers’ money — only into the project’s escrow account**; a separate account for each project (Art. 9). It may not be subject to enforcement in favour of the developer’s creditors. Loan funds for the project are also deposited into escrow (Art. 13).
- Exam: escrow is an arrangement under which a bank receives and disburses money, and disbursement is approved by DLD and the bank. Details on verification are available in How to check a developer and escrow in 5 minutes.
- **Retention of 5%** (Art. 14). The escrow agent retains 5% of the total account amount after receipt of the completion certificate and returns it to the developer **1 year** after units are registered in purchasers’ names.
- **Emergency situation** (Art. 15): if the project is not completed, the escrow agent, in coordination with DLD, takes measures to complete the project or return money to depositors.
- **Liability** (Art. 16). Imprisonment and/or a fine of **not less than 100,000 AED** for development without a licence, false documents, fraudulent sales, misappropriation of funds and (clause 7) **a developer working with a broker not entered in the broker register**. Additional RERA fines are covered in [DLD, trustee and other fees: table](/dld-broker-exam-practice/study-guide/dld-fees-table/).
- **Removal from the developer register** (Art. 17): bankruptcy, failure to commence construction within 6 months after the sales permit, licence withdrawal.
- Off-plan advertising and exhibitions are permitted only with written approval (Art. 5; this function is now performed by RERA under Law No. 4/2019, Art. 5(11)).

**Cancelled and delayed projects.** To recover money for a cancelled project, use Dubai REST — the **cancelled project committee** service, rather than a “refund request for terminated contracts”. Legal routes for an investor in a cancelled or delayed project are court, DIAC (arbitration) and DLD, all options are correct. A complaint against a developer is made through the DLD violations system (RVS), rather than by email to info@ or support@.

Other exam facts: a sub developer is a person who, under an agreement with the master developer, assumes part of the project; the developer learns that an off-plan unit has been sold to a new owner because **it issues the NOC itself**; the first sale of housing by a developer is subject to VAT at **0%**.

## Law No. 6/2019: jointly owned property

The Law replaced Law No. 27/2007 and has been in force since 18.11.2019. It regulates buildings where units are owned by different owners; the Owners Association was replaced by the Management Entity (Art. 49).

- **Developer warranties** (Art. 40):
- **10 years** from the date of the completion certificate — defects in **structural** parts (Art. 40(a));
- **1 year** from handover of the unit — equipment and MEP systems: mechanical, electrical, plumbing, drainage (Art. 40(b)); if the owner refuses to accept the unit — from the date of the completion certificate;
- an agreement worsening these warranties is “null and void” (Art. 40(d)). Exam: — the developer’s obligation is both 1 year and 10 years (answer “all are correct”).
- **Service charges** (Service Charge) are charges for maintenance of common areas. The owner pays a share based on area (Art. 25); the developer pays for unsold units and for sold units if it assumed this obligation in the contract. If the owner leases out a unit, **the owner remains liable for paying the charges**, even if the tenant did not pay them (Art. 16). The rate history is available through the service charge index.
- **Exam calculation.** Annual charge = area × rate; balcony — according to the question condition (in the questions — 25% of the rate): 1,500 sq.ft × 15 + 200 × 15 × 25% = 22,500 + 750 = **23,250 AED**.
- **Lien for non-payment** (Art. 32). A lien is imposed on the unit; **the unit may not be sold or transferred until the debt is paid**. The requirement is to pay within 30 days, then enforcement is through an RDSC centre judge; an auction is possible. For a broker, this means: before the transaction, check that there are no service charge arrears (see Service Charge: what it consists of, reserve fund, what it depends on, NOC: what it is, timelines, refusal when selling at a loss, three levels of blocking, restricted status).
- **Management company (Management Entity).** Insures the building, with premiums included in service charges (Art. 41). Disputes under the law fall within the jurisdiction of RDSC (Art. 42).
- **Co-owner’s pre-emptive right** over a share (Art. 14): 30 days to consent, then the transaction is completed at DLD within 10 working days.
- The word **Mollak** is not in the text of the law: it is the DLD/RERA system for recording and approving service charges. The regulation on Mollak is not included in our sources; how the system works and what a broker should check are covered in the article Building management: management company, owners’ committee, Mollak, service charge account.
- Service Charge: what it consists of, reserve fund, what it depends on states that the management company may initiate a “police case or travel ban” for non-payment. Law No. 6/2019 contains no measures of this kind: it provides for a lien on the unit, a prohibition on disposal and judicial recovery/auction. If such measures are applied in practice, this is a separate procedure outside this law.

## Common mistakes

- Telling a client that an off-plan contract “is valid” without Oqood → under Art. 3 of Law No. 13/2008, it is void without an entry → check that the purchase is reflected in Oqood.
- Thinking that the developer always retains 40% → under Art. 11, it is “up to 40%” at completion from 60%; below 60% — up to 25%; where construction has not commenced — a 100% refund.
- Confusing warranties: 10 years — structural elements from the date of the completion certificate, 1 year — MEP systems from the handover date.
- Selling a unit with service charge debt → the lien under Art. 32 prohibits disposal.
- Thinking that a foreigner may buy anywhere → only in designated areas (Art. 4 of Law No. 7/2006).

## What to tell the client

“Money for off-plan is held in the escrow account of this specific project and is paid to the developer according to completion. The law also protects you: if the project is cancelled by RERA decision, payments are refunded in full. If you stop paying, the developer acts under the DLD procedure and within the percentages established by law”.

## Test yourself

**1. What happens to an off-plan transaction that is not entered in the Interim Register?** A) valid, but without a mortgage B) invalid (void) C) valid for 60 days D) valid after NOC

**Answer**

B. Law No. 13/2008, Art. 3(1): “void unless entered in that Register”. The registration system is Oqood.

**2. Project completion is 70%, the purchaser is not paying, DLD gave 30 days and they have expired. What may the developer do?** A) only file a court case B) terminate and retain up to 40% C) terminate and retain up to 25% D) return everything

**Answer**

B. Law No. 13/2008, Art. 11(a)(4)(B) as amended by Law No. 19/2020: at completion of 60–80% — termination and retention of up to 40%, with the balance returned within 1 year or 60 days after resale (whichever is earlier).

**3. Works have not commenced for reasons beyond the developer’s control. How much of the payments is returned to the purchaser?** A) 70% B) 75% C) 100% D) 60%

**Answer**

C. Law No. 13/2008, Art. 11(b) (2020 amendment): all payments are returned under the rules of Law No. 8/2007. The previous 30% retention (Law No. 9/2009) was repealed.

**4. What part of the escrow account does the agent retain after receiving the completion certificate and for what period?** A) 10%, 6 months B) 5%, 1 year after registration of units C) 5%, 10 years D) 2%, 1 year

**Answer**

B. Law No. 8/2007, Art. 14: 5% and payment to the developer one year after units are registered in purchasers’ names.

**5. In an apartment, 8 months after handover, a pipe inside the wall leaked. Who is liable and under which law?** A) no one B) the purchaser C) the developer, Law No. 6/2019, Art. 40(b) — 1 year for MEP systems D) the developer, 10 years

**Answer**

C. Plumbing and MEP systems — 1 year from handover of the unit. 10 years — structural defects only (Art. 40(a)).

**6. The owner does not pay the service charge. What may the management company do under Law No. 6/2019?** A) sell the unit immediately B) impose a lien: the unit may not be sold until the debt is paid C) evict the tenant D) cancel the Title Deed

**Answer**

B. Art. 32: a lien on the unit, a requirement to pay within 30 days, then enforcement through an RDSC judge and a possible auction.

## See also

- Off-plan or secondary market: entry threshold, timelines and risks
- Service Charge: what it consists of, reserve fund, what it depends on
- Off-plan assignment: procedure
- [DLD, trustee and other fees: table](/dld-broker-exam-practice/study-guide/dld-fees-table/)

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