Landmark Decision for Property Investors in Dubai: Cancellation of Booking Form, Refund of 10% Deposit and Payment of Compensation
Background & Facts
On 15 February 2024, our client executed a booking form with a prominent Dubai-based developer for the reservation of a real estate unit. In accordance with the terms, our client paid a total of AED 601,546 as a reservation fee, in addition to AED 121,493 towards the Dubai Land Department (DLD) registration fee.
Our client awaited the issuance of the Sale and Purchase Agreement (SPA) from the developer, which was only provided after a delay of four (4) months. Upon review, it became evident that the SPA was heavily one-sided and overwhelmingly favored the developer. All attempts by our client to request revisions to certain clauses were unsuccessful, ultimately prompting our client to instruct us to initiate legal proceedings.
Legal Proceedings & Arguments
On 13 December 2024, we filed a claim on behalf of our client seeking the cancelation of the booking form and recover the full amount paid, totaling AED 723,039/-, along with 5% legal interest. Additionally, the claim included a request for compensation in the amount of AED 100,000/- for damage suffered by our client as a result of the developer’s unlawful conduct.
Developer’s Arguments
- Both parties agreed in the Booking form that the down payment will not be refunded in the event of cancellation.
- The purchaser (our client) has failed to fulfill his obligations by refraining from making payment for the subsequent installments according to the booking form and refusing to sign the SPA.
Our Arguments
- Our client fulfilled his obligations by paying the down payment and DLD’s fees and was awaiting to sign the SPA.
- Our client is entitled to request amendments to the SPA prior to execution. In the absence of mutual agreement on its terms, he retains the legal right to withdraw from the transaction.
- The Developer’s unreasonable rejection to revise the SPA terms prevented the transaction from being completed, thereby causing material harm to our client. Accordingly, our client is entitled to compensation in the amount of AED 100,000/- for the damage sustained.
Judgment & Enforcement
On 19th February 2025, the Dubai Courts issued their ruling:
- The booking form is invalid.
- The refund of the full amount paid of AED 723,039/-, plus legal interest at 5% per annum from the date of the legal claim until payment.
- The developer is required to pay compensation to our client in the amount of AED 50,000/- plus legal interest at 5%.
- The developer is required to pay the court fees and expenses paid by our client.
The judgment was issued based on sound legal reasoning and in full accordance with UAE Real Estate laws. It was considered final and enforceable, leaving no valid grounds for appeal by the developer.
On 12 May 2025, we successfully obtained an enforcement order from the Dubai Courts against the developer.
About Motei & Associates
We advise on the full spectrum of the real estate transactions involving sale and purchase of property, off plan projects, mortgaging, transfer of ownership, and landlord and tenant relationships. Our real estate litigators have handled a wide variety of disputes involving sale and purchase agreements, delayed handover, cancelled projects, and discrepancies in saleable area and rental disputes. For info about our Real Estate Practice, please visit: https://motei.com/real-estate/
If you have any inquiries or need help with a real estate matter or a dispute, please reach out through our Get in Touch form on our website at: https://motei.com/contact/
