Ask-a-lawyer: Law 9 regulations and the Mizin case

I sat down with

, the head of the property practice at

Hadef & Partners

, this week and talked about Law No. 9 of 2009. Read the actual law

.

This is not a straightforward Q-and-A, but I'll post some of the interesting things he had to say about property in Dubai. We talked about the forthcoming regulations that are connected to Law 13, Law 8 and Law 9 and the role they will play in the sector.

We also talked a bit about the famous Mizin case, which has inspired numerous lawsuits, and what impact the Land Department's potential rescheduling of the registration date will have on those cases.

Read the answers after the jump ...

Some quotes and paraphrased thoughts from Mr Lunjevich:

On Law 9

:

"When you first read it, it appears very developer focused. When you start applying it to factual situations, there are a lot of different scenarios."

-- First of all, developers can only cancel someone's contract with the permission of the Land Department. Before it was more unilateral, so this brings more power to the investor.

-- The law itself is a big change for the market, but it is important to see the regulations that relate to the law and other property laws to get a full sense of what is going to happen. Those regulations are not out yet, but they include things like giving the Real Estate Regulatory Agency the authority to cancel a project if it does not follow the law.

-- Mr Lunjevich thinks that the regulations will address situations that fall in between black-and-white cases, like when a buyer has paid 80 per cent of the price of an apartment but defaults on the remaining 20 per cent after completion. He believes this buyer should still get title to the apartment and then owe the remaining amount to the developer. Until they pay the debt, they could not sell the unit or get mortgage finance.

On the changing market:

"What I see is a cycle happening. At first, we saw developers very confident that they could get high prices for their projects, and for this reason, they were very unwilling to renegotiate with buyers. Since then, developers came to the conclusion that there is a finite pool of investors and they had to do the best they can with the investors they have. This has led to price cuts and similar things in the last few months. I foresee this going on for six to nine months. In 12 to 18 months, Dubai will get rid of the bad investors and the bad projects."

"People got caught up in the euphoria of the never ending boom. Some people jumped on the boom wagon too late and it is devastating their financial position."

"We need to get down to the cold hard reality of ambitious projects not being built and people losing a lot of money."

On what his clients are doing if they want out of their contracts:

-- Checking their developer's compliance with the laws that discuss escrow accounts, registration of units and other topics. If the company failed to comply, it could be a good leverage point in a lawsuit or in negotiations.

-- Clients are also stress-testing their contracts by doing things like asking for a termination and seeing how the developer responds. The more information a buyer has about the developer, the better poised they are to get their money back.

On the Mizin case (where a buyer was refunded all payments and interest because the developer failed to register units with the Land Department):

-- Hundreds if not a thousand cases have been filed with the courts based on the results of the Mizin case. The average court fees are about Dh30,000, so this is a significant legal movement.

-- All these cases are being threatened, however, by public comments by the Land Department recently that it would like to extend the registration deadline (which originally expired at the end of October 2008) to September of 2009.

-- "Now that the Land Department and Rera are elevated into this position of power, it's very important that they do not excercise these rights in place of the courts. The courts are the correct place for matters to be decided on proven facts."