What If A Buyer Fails To Pay Instalments For Property In Dubai?

Failed to pay installments

The real estate sector in Dubai has contributed a lot to boosting the UAE’s economy. It is a star performer and the reasons can be many such as a strong infrastructure, positive Return on Investment (ROI), new visa reforms, implementation of buyers’ protection laws and a dedicated regulatory authority. Due to the implementation of all these measures, the Dubai real estate market is considered stable and investors feel confident to park their savings there. From basic residential units to palatial apartment developments, many options are available in the Dubai realty market that buyers can choose from.

How to buy a property in Dubai?

When it comes to buying a property in Dubai, you can either buy a property on cash or a mortgage. Every buyer knows that cash-based purchases are convenient and cost-effective yet they may not know that the mortgage offers flexibility to the buyers, in form of instalments that allows the buyers to manage their finance.

What if, the buyer cannot continue paying the instalments?

Seeing the flexibility, you may be enticed to buy property on a mortgage but have you ever thought;

  1. What if you fail to pay the instalments?
  2. What will be the consequences?
  3. Will the developer agree to revise the deadline to adjust the remaining amount?
  4. Will the developer/seller terminate the contract?
  5. Does the developer have any legal right to terminate the contract, in case the buyer stops paying instalments?

Let’s find out answer to these queries…

If the potential buyer fails to pay the instalments, the developer has the right to terminate the purchase agreement.

Note: The purchase agreements are designed in a way that gives sellers the right to terminate the agreement in case of non-payment – without taking into consideration the reasons behind the non-payment. However, the way to terminate the contract differs between the ready property and the off-plan unit.

What is a Sale and Purchase Agreement (SPA)?

The Sale and Purchase Agreement (SPA) is a legal contract that contains all the information about both parties, along with all terms and conditions. Besides having the names of the buyer and seller, it also records the date of the initial agreement, payment terms, and the final closing date of the contract.

What if the buyer fails to fulfil the contractual obligations?

The rules and procedures that must be followed when a buyer fails to fulfil his/her contractual obligations under an off-plan sale agreement concluded with a developer are outlined in paragraph (a) of Article (11) of Law No (19) of 2017, Amending Law No (13) of 2008, Regulating the Interim Real Property Register in the Emirate of Dubai.

The article outlines the steps that both the DLD (Dubai Land Department) and the developer will take if the buyer fails to meet his or her contractual responsibilities, including failing to pay the Real Property Unit’s price payments on time. The following actions will be taken:

  1. The developer/seller must notify the DLD (Dubai Land Department), when the buyer fails to pay the instalments.
  2. As soon as DLD receives the notification and confirms that the property buyer is in breach of contract, DLD must:
  3. Serve a thirty (30) day notice to the buyer, compelling him to fulfil the developer’s contractual duties. The notification must be in writing, dated, and delivered to the buyer in person or by registered mail, with acknowledgement of receipt, email, or any other method prescribed by the DLD; and
  4. Mediate an amicable settlement between the developer and the buyer, if possible.
  5. If the notice period specified in subparagraph (a)(2)(A) of this Article expires without the buyer fulfilling his/her contractual duties or reaching an agreement with the developer, the DLD will issue an official document in the developer’s favour verifying the following:
  6. The developer’s compliance to the procedure outlined in the paragraph (a) of this article; and
  7. The percentage of completion of the Real Property Unit subject to the Off-Plan Sale Agreement, as computed in accordance with RERA’s relevant norms and guidelines (Real Estate Regulatory Authority).
  8. Upon receiving the official document referred to in paragraph (a)(3) of this Article and based on the percentage of completion, the developer may take any of the following actions against the buyer without resorting to the courts or arbitration:
  9. If the percentage of completion of the Real Property Unit is greater than 80%, the Developer may:
  10. Keep the Off-Plan Sale arrangement with the buyer in place.
  11. Request that DLD sell the Real Property Unit and hold the buyer responsible for the sale’s costs; or
  12. If the percentage of completion of the Real Property Unit is between sixty percent (60%) and eighty percent (80%), the Developer may unilaterally cancel the agreement and keep up to forty percent (40%) of the Real Property Unit’s value specified in the Off-plan Sale agreement.
  13. Where the Developer has taken possession of the construction site and begun construction works in accordance with the designs approved by the Competent Entities, and the percentage of completion of the Real Property Unit is less than sixty percent (60%), the Developer may unilaterally terminate the Off-plan Sale agreement and retain up to twenty-five percent (25%) of the value of the Real Property Unit.

Paragraph (c): This Article’s standards and procedures do not apply to land sale agreements that do not include an Off-Plan Sale. The land sales will continue to be governed by the terms of the land sale agreements concluded by the parties thereto.

Paragraph (f): The rules and procedures stipulated in this Article will not preclude the buyer from having recourse to courts or arbitration where the developer abuses any of his powers under this Article.


Failed to pay installments



If you have bought a property in Dubai and you are capable of paying what you have committed to the developer/seller, you must continue paying for the said property. Otherwise, the developer may involve you in legal matters in order to get his payment. For all such and several other matters, you can contact HFRE at +971 4876 2473 with your queries or write us at info@hfre.ae and one of our team members will get back to you with a sound solution.

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