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Arbitration for off-plan disputes

2015-09-15 10:29:56

- My developer is asking me to keep paying despite not much progress in the project I invested in. It is sending letters saying if I don't keep paying as per the contract terms and conditions, I will lose all the money I've put in so far. Is the Dubai arbitration centre the right place to file a complaint?

There are two issues here. First, should you have to pay if construction is behind schedule and second should any dispute on this point be referred to arbitration? The answers to both questions should lie in your contract.

If you have agreed a payment schedule linked to specific dates, then you should honour those instalments regardless of whether you consider the project to be falling behind schedule or not. To do otherwise places you at risk as the developer can forfeit all or part of your payments. The only exception would be if the Real Estate Regulatory Agency has approved a different payment plan linked to construction.

On the other hand, if you have agreed on a payment schedule linked to construction milestones, then you are entitled to withhold payments until those milestones have been achieved. If the delay ultimately extends beyond the long stop date set out in the contract, then you have a right to terminate it. You must not be in a position of breach yourself, otherwise you lose that right.

The appropriate body to which any dispute should be referred to should be stated in your contract. It will either say that disputes should be referred to the courts of Dubai or to arbitration (usually the Dubai International Arbitration Centre). You should proceed on whichever route has been agreed in the contract.

- I recently bought a three-bedroom villa in the Springs and want to completely redo its interiors. What is the procedure to get approvals for this?

Each developer has its own set of rules and regulations for approvals and it will be the developer that issues a no-objection certificate (NOC) for the work. In most cases these are very detailed and comprehensive. The certificate can usually be obtained from the master developer's office.

Once obtained, your requirements need to be submitted, with potential structural issues addressed and various paperwork such as passport copies, deed of sale, etc., submitted along with the deposit, which could either be refundable or not. All of this can be done by your chosen contractor, which should have a qualified engineer to check and submit the application on your behalf.

This work should be free of charge and included as part of the services the developer provides. It is always worth checking with the contractor how it will get permissions. Also, ask to speak to three or four previ ous clients of the contractor who requested similar work, and check if the standard of service and workmanship provided were satisfactory.

In a recent change to the rules for permissions, Dubai Municipality also has to issue an NOC for the work to be carried out. Without both NOCs, you will not be able to sell your property in the future.