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Nullity of The Real Estate's SPAs for Not Being Registered in DLD

17/5/2022

A landmark ruling by Dubai Courts nullifying the Sale and Purchase Agreement (SPA) of 30 units which are not registered with the Dubai Lands Department (DLD) in terms of the Law no. 13 of 2008 ie Regulating Initial Property Registration in the Emirate of Dubai.

All actions on off-plan sold property units  shall be registered in the initial property registrar. Sale and all other legal actions that transfer or restrict ownership and any right based thereon  shall be deemed null and void unless registered with the DLD registrar.

FACTS
 

On 30 December 2015, our client entered  into a Sale and Purchase Agreement (SPA) with one of the renowned developers  in Dubai, (Developer/Defendant) for the purchase consideration of AED 36  Million, of a 30-unit Hotel at the iconic World Islands project in Dubai, out  of which our client had already paid 20% of the amount. As per the SPA, the project  was to be completed by December 2017, an extension for 24 months was granted,  however until the end of December 2019, the project was still not completed,  and possession of the unit was not delivered to our client.

 

Following unsuccessful attempts to resolve  the matter amicably with Developer, our client decided to file a case before  the Dubai Courts to terminate the SPA and for the Developer to refund the  paid amount along with the interest.

 

Motei & Associates (M&A)  was retained to represent the client in his dispute against the Developer.

 
PARTIES’ ARGUMENTS
 
DEVELOPER’S ARGUMENTS:

 

The Developer primarily argued that our  client did not pay the registration fees, and it was because of this error  the units were not registered in the real estate registry of DLD. The Developer  further argued that it was due to Force Majeure events, the project  completion got delayed. These delays were on account of several factors.  First, since the project is built on an island at sea, therefore weather  fluctuations stopped the project at various intervals, as such the marine  tankers were unable to transport the laborers and materials to the project  site. Especially since this event is a natural event, it falls under the Force  Majeure clause of the SPA. Secondly, issuing the No Objection Certificate  (NOC) for construction of this project was delayed by the authorities,  thereby, causing further delay in completion of the unit.  

 

OUR ARGUMENTS:

 

We argued that the registering units in the  DLD are an obligation of the Developer according to the terms of Law No.  13 of 2008 Regulating Initial Property Registration in the Emirate of Dubai. Also, the invalidity of  the SPA is related to public order and must be judged under any  circumstances. There is a legal obligation of the Developer, before starting  the project or selling units, to obtain the NOCs and all the necessary  licenses, whether it is from the main Developer or from government agencies  Therefore, the delays occurred as a result of its own mistakes. We strongly  argued that a case of Force Majeure cannot be made out, as alleged by  the Developer. The delays accruing to weather fluctuations, as claimed by the  Defendant are not unexpected accidents, and it should have taken them into consideration  prior to determining the date of completion.

 

COURT RULING

 

The Court found for our client and ordered  the Nullity of the SPA and for the Developer to refund the paid amount of  (AED 7,200,000/-) plus 5% interest as of the date of filing the case until  full payment of said compensation is discharged, along with entire litigation  fee.

 

The judgment was passed by the Court of  Instance. However, aggrieved by this decision, the Defendant appealed before  the Court of Appeal, which rightly upheld this decision. Thereafter,  Defendant again challenged the judgment of the Court of Appeal to the Court  of Cassation. The Dubai Court of Cassation decided to uphold the judgment  passed by the First Court of Instance, making it final and enforceable  against Defendant.

 

 

For further details on the above case,  please contact us via WhatsApp +971 55 3536953 or by phone: +971 4  4355 5959 or via email at litigation@motei.com

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