Investor Rights When an Off-Plan Property Project Is Cancelled in Dubai

Dubai’s off-plan property market offers investors access to new developments, staged payment plans and the opportunity to purchase before completion. However, serious concerns arise when construction stops, the developer becomes unresponsive or the project is placed under regulatory review.

For most purchasers, the central question is:

What rights do I have if the project is cancelled, and will I recover all the money I paid?

Dubai law gives purchasers important protections when an off-plan project is formally cancelled. These include the right to the return of their payments, verification of their claim through an independent financial audit, access to the project’s escrow funds and, where necessary, recourse through the Special Tribunal for Unfinished and Cancelled Real Property Projects.

Those rights must nevertheless be exercised carefully. A stalled development is not automatically a cancelled project, and a legal right to a refund does not always mean that the money will be recovered immediately.

The First Question: Has the Project Actually Been Cancelled?

An investor should begin by establishing the project’s official regulatory status.

A project is not necessarily cancelled merely because:

• Construction has stopped.
• The completion date has passed.
• The developer is no longer responding.
• No workers are visible at the site.
• The developer has financial difficulties.
• A broker says the development has been abandoned.
• Investors have been offered units in another project.

Dubai Land Department distinguishes between a project that is under cancellation and one that has been formally cancelled. A project under cancellation must still pass through regulatory procedures, which may include a developer grievance and further consideration before a final cancellation decision is reached.

This distinction is crucial because the statutory refund and liquidation process generally arises after a final cancellation decision has been issued.

Investors can check the project through the Project Status (Mashrooi) service in the Dubai REST application. The official service allows searches by project name or project number and provides project, developer, inspection and escrow-account information.

The Investor’s Right to a Refund

Where an off-plan project is cancelled pursuant to a final reasoned decision of the Real Estate Regulatory Agency, the developer must refund the payments made by purchasers in accordance with the applicable escrow-account procedures.

The current wording of Article 11 of Law No. 13 of 2008, as amended by Law No. 19 of 2020, expressly requires the developer to refund all purchaser payments where the project is cancelled by RERA or where construction was not commenced for reasons outside the developer’s control and without negligence or omission.

This right should be distinguished from the rules that apply when an individual purchaser defaults under an off-plan sale agreement.

In a purchaser-default case, the developer may be entitled to retain statutory amounts depending on the project’s construction progress and the procedure followed. In a formal project-cancellation case, the legal starting point is different: the purchaser is entitled to the return of the payments made for the cancelled development.

A developer should not automatically apply purchaser-default deductions merely because the project has been cancelled.

Does “Refund All Payments” Guarantee Immediate Full Recovery?

Not necessarily.

There is an important difference between:

Legal entitlement — the amount the purchaser is legally entitled to claim.

Practical recovery — the amount that can immediately be paid from the escrow account or recovered from the developer’s assets.

Dubai Land Department explains that, following cancellation, the liquidation function retrieves available funds from the project escrow account and distributes them to eligible beneficiaries. Depending on the amount available, the distribution may be made in full or proportionately.

For example, an investor may have paid AED 800,000 and be legally entitled to recover that amount. If the available escrow funds are temporarily insufficient to pay every verified purchaser in full, the initial distribution may be lower. The investor may then have a claim for the outstanding balance against the developer or other assets available through the liquidation process.

The project’s financial position, therefore, matters considerably.

What Happens to the Escrow Account?

Dubai’s escrow-account framework is intended to protect money paid by purchasers of off-plan property and regulate how those funds are used during construction.

After RERA cancels a project, the regulatory process includes:

1. Preparing a technical report stating the reasons for cancellation.
2. Notifying the developer of the cancellation decision.
3. Appointing a certified auditor at the developer’s expense.
4. Auditing the project’s financial position.
5. Verifying payments made by purchasers.
6. Confirming amounts deposited into the escrow account.
7. Establishing how project funds have been spent.
8. Requesting the escrow agent or developer to refund the persons entitled to the money.

Article 25 of Executive Council Resolution No. 6 of 2010 provides that the escrow agent—or the developer where payments were made outside the escrow account—is to be requested to refund the relevant amounts no later than 14 days from the date of cancellation.

The 14-day provision should not be understood as an unconditional promise that every investor will receive the entire refund within two weeks. Payment may be delayed by the audit, disputed claims, incomplete documents, insufficient funds or the need for judicial enforcement.

What If the Escrow Account Does Not Contain Enough Money?

If the escrow funds are insufficient, the developer remains responsible for the shortfall.

Article 26 of Executive Council Resolution No. 6 of 2010 requires the developer to refund the amounts owed to purchasers no later than 60 days from the cancellation decision, unless RERA extends the period for valid reasons.

If the developer fails to pay within the applicable period, RERA must take the necessary measures to protect purchasers, including referring the matter to the competent judicial authorities.

DLD’s current published guidance similarly states that the developer is requested to return investor payments within 60 days after cancellation. Where the developer does not comply, the matter may be referred for judicial action to protect investors’ rights.

Actual recovery may then depend upon:

• The remaining escrow balance.
• The developer’s bank accounts.
• The project land and related assets.
• Unsold units.
• Receivables owed to the developer.
• Existing mortgages or security interests.
• Other creditor claims.
• The costs of liquidation.
• The accuracy of the project’s financial records.

Investors should not assume that an empty or insufficient escrow account ends the developer’s liability. It may, however, make collection more complex.

The Right to Have Your Payments Properly Verified

A purchaser has the right to have the claim assessed using proper financial and documentary evidence.

The appointed auditor may examine:

• Payments deposited into the project escrow account.
• Payments made directly to the developer.
• Amounts spent on construction.
• Payments to contractors and consultants.
• The balance remaining in the escrow account.
• The identity and payment history of each purchaser.

The Special Tribunal also has the power to appoint auditors, at the developer’s expense, to verify payments made by purchasers, deposits into the escrow account and amounts expended on the project.

An investor should not rely entirely on the developer’s internal statement of account. The investor should independently prepare a clear payment schedule supported by bank and contractual documents.

The Right to Register and Update the Investor’s Claim

Investors should ensure that their contact, unit and payment details are accurately registered.

DLD provides an Incomplete and Cancelled Projects Committee service through the Dubai REST application. The published user guide directs purchasers to:

1. Open Dubai REST.
2. Select “Incomplete and Cancelled Projects Committee” from the services menu.
3. Search for the relevant project.
4. Open the buyer-information request.
5. Enter or update personal details.
6. Enter the property’s purchase date, purchase price and paid amount.
7. Upload the required supporting documents.

This step is particularly important for purchasers who:

• Have changed their phone number or email address.
• Live outside the UAE.
• Did not receive communications from the developer.
• Purchased through an assignment.
• Paid through a mortgage.
• Made payments that do not appear in the developer’s statement.
• Have not received an Oqood registration certificate.
• Purchased jointly with another person or company.

An investor should not assume that the authorities automatically possess a complete and accurate transaction file.

Documents Every Investor Should Preserve

A successful refund claim depends heavily on evidence.

The investor should retain:

Contractual documents

• Reservation form.
• Sale and purchase agreement.
• Addenda and variation agreements.
• Revised payment plans.
• Unit-transfer or assignment documents.
• Settlement agreements.
• Termination or cancellation notices.

Registration documents

• Oqood or Interim Real Property Register certificate.
• DLD registration receipts.
• Unit-registration details.
• Assignment or amendment records.

Payment evidence

• Developer receipts.
• Bank-transfer confirmations.
• Account statements.
• Credit-card records.
• Mortgage-disbursement statements.
• Cheque copies.
• Acknowledgements issued by the developer.
• Evidence identifying the beneficiary account.

Communications

• Emails.
• Letters.
• WhatsApp messages.
• Payment demands.
• Construction updates.
• Handover notices.
• Representations concerning refunds or transfers.

Every payment should ideally be matched with:

• The date paid.
• The amount.
• The currency.
• The beneficiary.
• The bank account.
• The unit number.
• The relevant contractual instalment.
• The supporting receipt.

This is especially important where money was paid to a marketing company, broker, related company or account other than the registered project escrow account.

The Special Tribunal for Unfinished and Cancelled Projects

Decree No. 33 of 2020 established the Special Tribunal for Unfinished and Cancelled Real Property Projects in Dubai.

The Tribunal has jurisdiction over claims and applications relating to unfinished projects, cancelled projects and the liquidation of cancelled projects. It may also determine investor and purchaser rights, deal with execution proceedings and make decisions concerning the potential transfer of an unfinished project to another developer.

Its powers include:

• Issuing interim and preliminary orders.
• Proposing mediation and conciliation.
• Appointing auditors.
• Reviewing the financial position of a project.
• Verifying purchaser payments.
• Directing the escrow agent or developer to refund money.
• Liquidating a formally cancelled project.
• Settling rights after deducting liquidation expenses.
• Addressing related execution proceedings.

The Tribunal’s awards, orders and decisions are definitive and are not subject to ordinary appeal procedures. They are executed through the Execution Court at Dubai Courts.

Because of that finality, an investor’s claim should be properly prepared from the beginning. Missing payment evidence, incorrect figures or poorly drafted submissions can have serious consequences.

Does the Tribunal Have Exclusive Jurisdiction?

Where a dispute falls within the Tribunal’s statutory jurisdiction, other courts and judicial entities in Dubai may not consider the claim. Existing matters falling within its jurisdiction may also be referred to the Tribunal.

Decree No. 33 of 2020 expressly addresses the obligations of Dubai courts and judicial bodies in this regard.

However, jurisdiction must be assessed carefully. The correct forum may depend on whether:

• The project is formally cancelled.
• It remains merely delayed or under cancellation.
• The investor seeks contractual termination before formal cancellation.
• A liquidation file has already been opened.
• The claim relates to an unfinished project that may be transferred to another developer.
• An arbitration clause or award exists.
• The project is situated within the DIFC.

The Decree does not apply to projects situated within the boundaries of the Dubai International Financial Centre.

What If the Project Is Only “Under Cancellation”?

Where the project remains under cancellation, the final statutory cancellation process may not yet have started.

DLD confirms that a project at this stage has not yet been finally cancelled and may still pass through a grievance process and committee consideration.

The investor may not yet be able to rely on the formal cancelled-project refund mechanism. Depending on the contract and surrounding circumstances, the investor may need to consider:

• Negotiating a settlement.
• Seeking contractual termination.
• Applying for judicial relief.
• Continuing to monitor RERA’s regulatory process.
• Challenging unjustified payment demands.
• Preserving rights while the cancellation decision remains pending.

DLD’s published guidance states that, where a project has not been cancelled and an investor wants to terminate the contract and recover payments, the investor may need to approach the competent real-estate court because DLD does not itself terminate private contracts at an investor’s request.

Can the Investor Stop Paying Instalments?

Formal cancellation ordinarily changes the position because the project is no longer proceeding under the original completion arrangement.

Before final cancellation, however, investors should be careful about stopping payments unilaterally.

Where a payment is linked to a construction milestone, DLD states that an investor is entitled to know the current completion percentage and obtain confirmation from the project consultant approved by DLD. According to the published guidance, the investor will not be obliged to make a construction-linked payment unless it is confirmed that the agreed stage or percentage has been achieved.

The precise position will depend on:

• The wording of the payment schedule.
• Whether instalments are date-based or construction-based.
• The official completion percentage.
• Any consultant certification.
• Contractual extension provisions.
• Notices issued by the developer.
• Whether the investor is already in default.
• The project’s current regulatory status.

The safer course is usually to obtain legal advice and respond to the demand in writing rather than simply ignoring it.

Can the Investor Claim Interest or Compensation?

The statutory right to recover purchaser payments does not necessarily mean that interest, financing charges or additional damages will automatically be awarded.

An investor may seek compensation for matters such as:

• Financing costs.
• Proven consequential loss.
• Additional accommodation expenses.
• Loss caused by misrepresentation.
• Contractual penalties.
• Other legally recoverable damage.

Such claims require a separate legal assessment. The investor must establish a proper legal basis, causation and evidence of loss.

A claim for refund should therefore be distinguished from a wider damages claim.

What Happens to a Mortgage?

The cancellation of the real-estate project does not automatically extinguish a separate financing agreement between the investor and the bank.

The investor should notify the lender and obtain:

• A statement of amounts disbursed.
• Confirmation of payments made into the project escrow account.
• The outstanding loan balance.
• Details of any security registered over the unit.
• Confirmation of how a refund will be applied.
• The bank’s requirements for closing or restructuring the facility.

The sale agreement, mortgage agreement and any tripartite agreement must be reviewed together.

Where the bank funded part of the purchase price, it may have an interest in the refund proceeds.

The Right to Consider—but Not Be Forced Into—a Replacement Project

Instead of issuing a cash refund, a developer may offer:

• A replacement unit in another development.
• A transfer of all payments to a new project.
• A larger unit subject to an additional payment.
• A repayment plan.
• A reduced lump-sum settlement.
• A combination of property and cash.

The investor is not obliged to accept a commercially unattractive arrangement merely because it is presented as the only practical option.

Before accepting a replacement unit, the investor should verify:

• The new project’s DLD registration.
• The developer’s identity.
• The escrow account.
• Construction progress.
• Expected completion date.
• Market value of the new unit.
• Oqood registration.
• Whether additional payments are required.
• What happens to the original claim.
• Whether rights are released immediately or only after registration and performance.

The replacement agreement should clearly state how all payments made under the original contract will be credited.

Cancelled Projects May Sometimes Be Revived

Cancellation does not always lead immediately to final liquidation.

Before liquidation is completed, RERA may request the Tribunal to suspend the process so that the project can be reconsidered. This may allow the authorities to assess whether the project can be completed or whether related disputes can be settled.

A revival may involve:

• A replacement developer.
• New project financing.
• Restructured payment arrangements.
• A revised completion programme.
• Settlement with creditors and purchasers.
• Transfer of the development.

An investor should compare the likely return from liquidation with the risks and benefits of continuing in a revived development.

Be Careful With Settlement and Waiver Agreements

A settlement may produce a quicker and more certain recovery than extended liquidation. It may also deprive the investor of valuable rights if poorly drafted.

Before signing, check:

• The exact amount acknowledged as paid.
• Whether the amount is full or partial settlement.
• The payment dates.
• The consequences of default.
• Whether security is provided.
• Whether post-dated cheques are issued.
• Whether the investor must withdraw an existing claim.
• Whether rights are waived immediately.
• Whether the original claim revives if the developer defaults.
• Which court or tribunal has jurisdiction.
• Whether related developer companies are bound.

Ideally, the release of the investor’s rights should become effective only after the full settlement amount has been received in cleared funds.

Do Not Use the Wrong Complaint Procedure

DLD’s real-estate violations complaint system deals with regulatory violations by real-estate companies. Its published terms expressly state that it does not determine claims concerning contract cancellation, reservation cancellation or financial compensation.

Submitting a regulatory complaint may be appropriate where a company has breached RERA requirements, but it is not automatically a substitute for:

• Registering a claim in the cancelled-project process.
• Filing before the competent Tribunal.
• Seeking contractual termination.
• Pursuing a monetary claim.
• Obtaining an enforceable judgment or order.

Investors should identify the remedy they actually need before selecting the procedure.

Immediate Action Plan for Investors

When a project is formally cancelled—or appears close to cancellation—the investor should take the following steps.

1. Verify the official status

Check the project through Dubai REST and retain a dated copy of the result.

2. Create a complete payment schedule

List every payment, recipient and supporting document.

3. Update buyer information

Use the Incomplete and Cancelled Projects Committee service where applicable.

4. Secure the evidence

Download emails, bank records and online portal documents before access is lost.

5. Confirm Oqood registration

Check that the purchaser, unit and purchase price were properly recorded.

6. Notify the mortgage bank

Obtain details of all amounts disbursed and outstanding obligations.

7. Review any settlement proposal

Do not sign a release, transfer or replacement-unit agreement without understanding its effect.

8. Identify the competent forum

Determine whether the matter belongs before the Special Tribunal, another court or a regulatory process.

9. Keep contact details current

Liquidation communications may be sent long after the original purchase.

10. Avoid relying on informal promises

Obtain important representations and repayment commitments in writing.

Frequently Asked Questions

Am I entitled to a full refund when RERA cancels the project?

The legislation requires the developer to refund all purchaser payments following formal RERA cancellation. However, the timing and practical recovery may depend on the available escrow funds, the developer’s assets and the liquidation process.

Can the developer deduct 30% or 40% from my refund?

Statutory retention percentages generally concern purchaser-default procedures. They should not automatically be applied to a project formally cancelled by RERA.

Will I receive the refund within 14 days?

The implementing legislation requires the escrow agent or developer to be requested to refund the relevant amounts within 14 days. This does not guarantee that every liquidation and payment dispute will be completed within that period.

What happens if there is not enough money in the escrow account?

The developer remains responsible for the shortfall and is generally required to refund it within 60 days, subject to a possible RERA extension. Failure may lead to referral to the competent judicial authorities.

Can all purchasers receive different percentages?

Initial distributions may differ or be made proportionately depending on the funds available and whether each claim has been verified.

Does a stopped project automatically give me the right to use the cancelled-project procedure?

No. The project must be formally cancelled before the specific statutory cancellation and liquidation process applies.

Can I personally sue the developer’s shareholders or managers?

A company ordinarily has a legal identity separate from its shareholders and managers. Personal claims require a recognised legal basis, such as fraud, a personal guarantee or another form of personal liability supported by evidence.

Are Tribunal decisions appealable?

The Tribunal’s awards, orders and decisions are definitive and are not subject to ordinary appeal procedures.

Conclusion

Investors in a formally cancelled Dubai off-plan project have substantial legal protections.

The principal right is the recovery of payments made under the off-plan sale agreement. That right is supported by the project escrow-account framework, independent financial auditing, regulatory supervision and the powers of the Special Tribunal for Unfinished and Cancelled Real Property Projects.

Nevertheless, investors should approach the process realistically.

The right to a refund does not always produce an immediate payment. Recovery may depend on the escrow balance, the developer’s assets, competing claims, liquidation costs and the investor’s ability to prove every payment.

The most effective investor response is therefore prompt and evidence-based:

Verify the project’s official status, register accurate buyer information, preserve all payment records, avoid premature waivers and identify the correct legal forum before commencing proceedings.

A well-documented investor is in a far stronger position than one who relies on marketing statements, informal assurances or incomplete payment records.

Legal notice: This article is provided for general informational purposes only and does not constitute legal advice. Every matter must be assessed using the relevant sale and purchase agreement, payment evidence, DLD records, project status and applicable legislation. Official English translations of Dubai legislation are provided for convenience; in the event of any inconsistency, the original Arabic text prevails.