Law No. 8 of 2006 – Trust Account Law
His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice President, Prime Minister of the U.A.E. and Ruler of Dubai, has issued Law No. (8) of 2006 concerning guarantee accounts of real estate developments in the emirate of Dubai.
The Law (8) on Guarantee Accounts or commonly known as Trust or Escrow Accounts applies to any company or individuals receiving ‘off plan” payments for property that is not yet completed. However, at this early stage only properties that are launched from the affectivity of this law will be subject to the law, according to the Dubai Land Department. Under the new law, people buying properties in Dubai off plan will make payments into special accounts managed by banks, instead of directly into property developers’ end. From now on developers launching new residential or commercial multi-storey buildings and compounds shall now apply to Dubai Land Department for a guarantee account by submitting the title deed of the plot being developed, approved architectural designs and lay outs, a letter of approval from the master developer and a trade license. Payments made by the buyers or financers towards properties will then be deposited to this guarantee accounts opened by the developers under the name of the property development in an approved bank. In order for the developers to gain access to the guarantee accounts, they have to apply for an approval from the trust account manager by producing certificates proving that the building work has reached the required stages. The trust account manager must then inform the Dubai Land Department for the application of the developer for an access to the trust account stating the sum amount applied and released to the developer. According to the Dubai Land Department, they will keep 10% of the project value on the account for one year after completion until all units are registered in the names of the buyers and title deeds are issued under the buyers’ name. Fines of no less than AED 200,000 is to be imposed upon violation of any requirements of this new law.