Buying a property before it is built means paying for something you cannot see yet. That is where Dubai’s escrow system becomes important. Under Dubai’s regulations, developers selling off-plan units must open a separate escrow account for each project. Payments from buyers and project financiers are deposited into this account.
But what does this actually protect?
Your payment is linked to the project An escrow account is set up specifically for real estate development. The funds are intended for the construction and development of that project. Each project must have its own escrow account. This helps separate the money for one development from another. DLD also states that the account is exclusively dedicated to implementing the project.
This gives buyers an added layer of protection when purchasing off-plan property.
There is oversight
The escrow account is not simply a normal bank account controlled by the developer. It is managed by an approved escrow trustee. DLD and its Real Estate Regulatory Agency (RERA) have oversight of the system.
DLD also has processes for reviewing requests to activate disbursements from project escrow accounts. These include checks on the project’s financial and technical position.
Buyers can also use the Dubai REST app to view information on registered off-plan projects. This can include the project’s completion percentage and escrow number.
What escrow does not mean
An escrow account does not mean that an off-plan purchase is risk free. It does not guarantee a property’s future value. It also does not mean every project will be completed exactly on schedule.
What it does is create a regulated structure for handling buyer and project funds. DLD describes the purpose of the escrow system as regulating construction and off-plan sales while protecting buyers’ rights.
For anyone considering an off-plan property in Dubai, checking the project’s registration and escrow details should therefore be part of the buying process. THe protection starts with knowing where your money is going.