Off-plan has clear advantages, including lower entry prices and flexible payment plans. The question every buyer should ask, though, is who protects my money if the project is delayed? Dubai and Sharjah both have a legal framework for this, but it only works if you know how to use it. Here is a plain-English explanation.
1. Escrow accounts in Dubai
Dubai Law No. 8 of 2007 on escrow accounts for real estate development is the basis of off-plan protection:
- Each off-plan project has a dedicated escrow account with an approved bank.
- All buyer payments go into that account, not into the developer's general account.
- The developer can only withdraw money in line with verified construction progress, after engineering checks and regulatory approval.
- Escrow accounts are audited regularly.
In practice, your money pays for your building and not for the developer's other projects.
2. Project registration and advertising permits
Legal analyses of Dubai Law No. 13 of 2008 and its amendments say a developer may not sign SPAs or collect any payment before the project is registered with the Dubai Land Department (DLD). Marketing also needs RERA approval, and the permit number must appear on adverts.
3. Oqood: the interim register
Oqood is DLD's interim register, which records your off-plan unit in your name before completion. It matters because it:
- Officially records your interest in the unit
- Prevents the same unit being sold twice
- Converts into a title deed at handover
The Oqood registration fee is 4% of the unit price, the same rate as a transfer of a ready property.
4. When a buyer defaults
The law protects developers too. Legal analyses of Dubai Law No. 19 of 2017 describe a sliding scale based on project completion. If the project is 60–80% complete, the developer may keep up to 40% of the price. Below 60%, the cap is 25%. A formal 30-day notice must be served first. These rules have conditions and exceptions, so speak to a licensed lawyer in any dispute.
Sharjah: Executive Council Resolution No. 37 of 2024
In 2024 Sharjah issued Executive Council Resolution No. 37 of 2024 on regulating real estate development projects. According to published legal commentary:
- Project registration requires a feasibility study and proof of the developer's solvency.
- Developers must open a dedicated escrow account for each project, under an escrow agreement with a trustee approved by the department.
- Funds can only be released in proportion to certified construction progress.
This brings Sharjah closer to Dubai's model. Off-plan projects we cover in Sharjah include Masaar and Sharjah Sustainable City II.
Checklist before you pay a single dirham
- Verify project registration: through the Dubai REST app or DLD website in Dubai, or with the Real Estate Registration Department in Sharjah.
- Ask for the escrow account number and bank name, and check they match the SPA.
- Never transfer to a personal account, and never hand cash to an agent.
- Check that the broker is licensed and that the advert has a permit.
- Read the delay clauses, the expected handover date and any compensation terms in the SPA.
- Keep your Oqood certificate, or the Sharjah equivalent.
The same rules apply to major Dubai launches such as Palm Jebel Ali and DAMAC Islands 2. Always ask for the escrow details.
Frequently asked questions
Does escrow guarantee a refund if a project is cancelled?
Escrow stops funds being used outside the project. If a project is cancelled, the authorities handle buyers' rights under the law. Outcomes depend on the case, so get legal advice.
What is the difference between Oqood and a title deed?
Oqood is an interim registration for a unit under construction. The title deed is issued after completion and handover.
Does Sharjah require escrow accounts?
Yes. Executive Council Resolution No. 37 of 2024 requires a dedicated escrow account per project with an approved trustee.
How much is the Oqood fee?
4% of the unit price in Dubai, plus administrative fees.
Want us to check a project's registration and escrow details before you pay? Alroya Almomayaza Real Estate Brokers will go through the paperwork with you. WhatsApp: +971 58 558 9894.
