Ask the Law - Residential : March 2011
Every month, Property Magazine invite readers to have their legal questions answered by one of our experts.
This month, Jerry Parks tackles the task.
What happens when a home owner's visa expires
Q We own a villa here in Dubai, can you please tell me what happens when our residency visa expires. We purchased our villa from Emaar Properties and they will not renew our visa when it expires and won’t give me an answer to this question and I don’t know why.
A At the time you purchased your villa, the law allowed owners of freehold property to apply for three-year residency visas based on their ownership of the property. Previously such visas had been dependent on employment or investment in business. Read more
Ijara mortgages and delayed property
Q I took an Ijara mortgage (Sharia based) from an Islamic bank to finance my property. I signed an Ijara contract with the bank and a tripartite agreement with the bank and developer. As per this, the bank is the owner of the property, leasing the property to me for the period of the loan repayment at a variable rental rate (linked to EIBOR). The property was not delivered on time and may take many more months — almost a 24-month delay. My question is, am I liable to pay (profit) the bank for the delayed period? There is a provision in the agreement that if the property is not delivered on the agreed date, the agreement can be cancelled. Can this be enforced? If I have to enforce Sharia, who should I contact?
A It is difficult to be specific in my answers without first having had sight of the Ijara contract ("IC") in question, but I can give general guidance. I would expect your bank to have made provision for construction delays in the IC and to have addressed the issue of payments during any delay period. Usually in these circumstances the documentation provides that payments should be made during the delay period. Read more
Getting a refund on unfinished property
Q I am in a serious predicament and could do with guidance. Briefly, in November 2007, I booked a villa on the Jumeirah Golf Estates. To date I have paid Dh6 million which is about 80 per cent of the price. The completion was due in December 2009 but it never happened and the developer used the extension clause to the maximum 12 months. Now they have used force majeure clause. My family and I have been in rental accommodation since January 2008 which has so far cost us over Dh500,000. We have now lost total interest in the project and do not trust the developer. I gave them notice for a refund but they just refused. The contract is one sided and does nothing for the buyers, how can I deal with such a situation?
A Your predicament is not uncommon. We understand there are around 700 investors in the Jumeirah Golf Estates development (JGE) who have all contracted on broadly similar documentation, whether they have purchased directly from Jumeirah Golf Estates LLC or from sub-developers. Read more
Compensation for delayed units
Q After two years of delay my developer is ready to deliver my units for which they have obtained a completion certificate. As per the SPA, the units are classified as shell and core which means the developer will deliver only the floors without any wall partitions. The SPA also mentions an area variation of three per cent, while according to Rera it is classified as five per cent. The SPA was executed prior to the enactment of the Rera rule. So, can I ask for compensation for the delayed period? The SPA promises delay compensation as EIBOR interest on any instalments paid after the promised date of delivery or extended date of delivery until the actual completion date. So how will the compensation work out? Can I ask for a wall partition between units and if they reject this can I ask for a full refund with interest and incidental charge, if not what are my rights?
A Although, handover has been delayed, you should carefully check the wording of the Sale and Purchase Agreement (SPA) when considering terminating or claiming compensation. Most SPAs contain provisions giving developers a grace period after the anticipated completion date. Also, most SPAs excuse delay where it has been caused by an event of force majeure. If the reason given for the delay is within the force majeure definition, then it is likely that you will be unable to terminate or claim any compensation for the delay. Read more
Lawyers Jerry Parks
These questions were first published in Property Magazine and are reproduced with the kind permission of the editors.
