Homefront: ‘Can I cancel a property contract because of a delayed project handover?

The investor has paid 30% of the property value but wants to be compensated for a five-year delay

The investor was initially promised handover of his property in April 2016, but it was extensively delayed and finally handed over only in March 2020. Photo: Antonie Robertson / The National
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I had booked an apartment in Dubai in March 2015. As per the sales and purchase agreement, I then paid 30 per cent (Dh251,107) of the total property value worth Dh837,023 along with 4 per cent Dubai Land Department charges.

Handover was scheduled for April 2016 but it was extended by one year through a notice from the developer. I didn’t hear anything from the developer until the end of 2019 when they started sending status reports related to building completion. I received the handover notice in March 2020, but could not visit the UAE due to Covid-19 travel restrictions. I am stuck in Saudi Arabia now.

Last week, I filed a complaint with the DLD requesting for contract termination because of the handover delay. I want to know what my options are in terms of compensation. I should be paid four years' worth of rent as well as interest for the handover delay. M.A., Saudi Arabia

Despite the delays, as a project gets closer to completion, it becomes more and more difficult for an investor to claim for a cancellation of the sale and purchase agreement (SPA) and a refund of the payments made, especially because you have not completed your side of the payments by paying just 30 per cent of the sales value from March 2015 to date.

I am not aware of your schedule regarding the payment plan, so am not sure whether you were on a 30/70 or another progressive payment plan as per the SPA. Either way, you probably still owe payments.

Now, as the final milestone of handover has been reached by the developer and they have communicated this to you, the chances of cancelling the SPA and getting a refund are very, very slim.

What you can do, instead, is make the 100 per cent payment and then claim for the loss of income and interest, which has been sustained due to the delay in handover.

As a project gets closer to completion, it becomes more and more difficult for an investor to claim for a cancellation of the SPA

This would be an initial opinion, but I would urge you to seek further advice in order to see what costs and timeframes are involved if you still decide to go forward with litigation. The points to consider would be based on several factors such as the progress of the project, the contents of the SPA and all the terms and provisions attached to this specific project.

Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for more than 35 years in London and Dubai. The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario.volpi@engelvoelkers.com