The Dubai Land Department have recently released a draft text for the long awaited 'Investor Protection Law' for comment (the Draft Investor Law).
The Draft Investor Law, in part, is a restatement of much of the existing real estate focused legislation currently in place in Dubai. However, in the event that the Draft Investor Law is passed in its current form it contains a number of provisions of significant interest to both potential investors, and developers, alike.
The following are some examples of the proposed changes:
- Much of the text deals with obligations on developers to provide accurate information to investors from the outset of a transaction. Notably, the Draft Investor Law expressly states that a contract may be considered null and void where information is withheld which 'may damage the interests of the investor'. The burden on developers for the provision of accurate data is potentially markedly increased.
- The Draft Investor Law provides a statutory 'cooling off' period for investors in relation to the purchase of real estate. Further, there are time limits imposed on developers with respect to the provision of formal sale and purchase agreements to investors.
- Investors may no longer sell, or market, properties which are held solely under reservation agreements, rather, they must have registered their sale and purchase agreement with the Dubai Land Department before they sell to a purchaser.
- The period which a developer may extend the contractual delivery date of a property under construction is to be reduced to a proposed maximum of eight months.
- Notably, the Draft Investor Law provides that sale and purchase contracts should be in Arabic and English, and where the two texts differ the Arabic terms are to prevail.
A number of the proposed changes will, no doubt, be controversial within the market, and it is likely that the Draft Investor Law will see amendment before it is enacted as law. Clyde & Co LLP has provided comments to the Dubai Land Department in relation to the current draft.