In recent months, it has been highlighted that for a number of new launches by private sector developers, the “Oqood” contract has not been registered. This has served in many cases as a marketing tool in order to facilitate speculation and entice the customer.
This issue needs to be highlighted both for the investor/end user as well as the developer for the gravity that it carries.
In 2008, Dubai imposed Law Number 13, which laid out a number of responsibilities for the developer to adhere to. Article 3 of the said Law is clear when it states: “Any disposition that occurs in respect of any real property unit sold off plan will be entered in the Interim Property Register, and any sale or any other legal disposition that transfers or restricts ownership will be void unless entered in the Register”.
In a number of cases, the local courts have ruled repeatedly that failure on part of the developer to register the contracts in an expeditious manner not only renders the contract null and void, but that the entire amounts be refunded to the investor along with penalties of a grievous nature. In particular, the Dubai Court of Cassation has predominantly ruled in favor of investors even when the developer has appealed.
It has only been in certain select cases where the buyer has not fulfilled his initial purchase conditions and considerations of the contract did the courts consider an exception.
Given this clarity, it is somewhat puzzling that investors and purchasers of the real estate are not getting their Oqood contracts from the developer in certain cases. In point of fact, to quell the speculation, Law number 13 stipulates that for all developers who had issued contracts before the passage of the law, they had 60 days to register the same contracts in the Interim Property Register.
This highlighted the expediency with which the courts wanted the issue to be resolved and made transparent. For the most part, this has now transpired, with Dubai’s Rera (Real Estate Regulatory Agency) becoming a model for other countries to replicate. India has already established its own version of Rera, and there are moves underway for other countries in Asia and the Far East to follow suit.
It is under this ambit that recent reports of developers violating the laws has become somewhat concerning. Investors and end users have a right to insist for their Oqood contracts and it is under the responsibility of the developer to assure that this has been done. To be sure, this is very different from developers waiving the fees of registration.
This is done as a marketing tool which is well within their rights to do so. However under no condition are the said developers exempt from registering the contract because of this waiver of fees that has been granted.
It is the registration of such contracts that ensure all rights of the investor are protected in the event of project cancellation, a factor that became common place in the financial crisis between 2008-11. in many cases some of the fallout is still being dealt with today.
Given that all of the contracts have been mandated to be registered, the level of transparency in the industry has gone up manifold. This makes it not only easier for institutional investors to understand what is going on in the markets, but also for the individual buyer to ascertain his or her rights and where they stand vis-a-vis each and every contractual issue and every real estate project.
In terms of transparency, it has been an admirable achievement that has taken place in such a short period of time. All the more reason why investors need to be proactive and vigilant in terms of their rights, and not be lured by some of the developer antics in surrendering the rights that are guaranteed to them under the law.
This vigilance will ensure the protection of rights of the investor and the stability of the market in the medium term.