When a Dubai Off-Plan Project Is Cancelled
The Escrow Account, the Tribunal and How Refunds Work
Most off-plan guidance covers what happens when a buyer stops paying. Far less is written about the opposite case — when the regulator cancels the project itself. Dubai has a dedicated law and a dedicated court for exactly that situation. Here is what the legislation actually says, taken from the emirate’s own legal portal.
Two Cancellations That Are Nothing Alike
The word “cancellation” does two completely different jobs in Dubai off-plan property, and confusing them is expensive. In the first, the buyer stops paying and the developer terminates the sale agreement. In the second, the regulator cancels the project, and the developer is required to give the money back.
Both sit in the same provision: Article 11 of Law No. (19) of 2017, which amended Law No. (13) of 2008 regulating the Interim Real Property Register in the Emirate of Dubai. The explanatory notes published on the Dubai Government Legal Affairs Department legislation portal set out the mechanics of each.
Where a purchaser defaults, the developer notifies the Dubai Land Department, which then serves a thirty (30) days’ notice on the purchaser requiring them to fulfil their contractual obligations. If the default is not cured, what the developer may do next turns on how far the project has been built — and RERA, not the developer, determines the percentage of completion, using standards and rules adopted by RERA.
Where instead RERA cancels the project, the position reverses entirely. Article 11 requires the developer to refund all payments made by the purchasers, in accordance with the procedures and rules stipulated in Law No. (8) of 2007 concerning real estate development trust accounts — the escrow law. The money that funds that refund is, by design, the money sitting in the project escrow account.
The Legal Framework at a Glance
Primary sources, named below
What the Law Allows, by Construction Stage
Where a purchaser defaults, the developer’s options are graded by how far the project has progressed. The final row is the different case entirely: cancellation by the regulator.
| Situation | What the Developer May Do | Maximum Retained | Refund of Excess |
|---|---|---|---|
| Above 80% complete | Maintain the agreement and claim the remaining balance; or request sale by public auction; or unilaterally terminate. | Up to 40% of unit value | Within 1 year of termination, or 60 days after resale, whichever is earlier |
| Between 60% and 80% complete | Unilaterally terminate the off-plan sale agreement. | Up to 40% of unit value | Within 1 year of termination, or 60 days after resale, whichever is earlier |
| Below 60% complete, work commenced | Unilaterally terminate the off-plan sale agreement. | Up to 25% of unit value | Within 1 year of termination, or 60 days after resale, whichever is earlier |
| Work not commenced, for reasons beyond the developer’s control | Terminate the off-plan sale agreement. | Up to 30% of amounts paid | Within 60 days |
| Project cancelled by RERA | The developer must refund all payments made by purchasers, under the Law No. 8 of 2007 escrow procedures. | Nothing retained | Per the Law 8/2007 procedures and rules |
Source: Explanatory Notes on Article (11) of Law No. (19) of 2017 amending Law No. (13) of 2008, published on the Dubai Government Legal Affairs Department legislation portal (dlp.dubai.gov.ae), retrieved September 2026. Percentages of completion are determined by RERA using standards and rules adopted by RERA. This table summarises the published notes and is not a substitute for the legislation itself or for legal advice.
Six Things Decree No. 33 of 2020 Establishes
Dubai did not leave cancelled projects to the ordinary courts. It built a dedicated tribunal with its own jurisdiction and its own powers over escrow money.
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Who Ended the Contract Decides Who Keeps the Money
The same article of the same law produces three very different financial outcomes depending on who caused the termination and how far the building had progressed.
You Default, Build Is Advanced
Where the project is 60% complete or more and the purchaser defaults, Article 11 permits the developer to terminate unilaterally and retain up to 40% of the unit value. Above 80% the developer may instead keep the contract alive and claim the balance, or seek a sale by public auction.
You Default, Build Is Early
Below 60% completion, where work has commenced, the retention ceiling falls to 25% of the unit value. Where work has not commenced at all for reasons beyond the developer control, the ceiling is 30% of the amounts paid, with the excess refunded within 60 days.
RERA Cancels the Project
If the regulator cancels the project, the developer must refund all payments made by purchasers under the Law No. 8 of 2007 escrow procedures. The Tribunal may order the escrow agent or the developer to refund what is held in the escrow account.
Часто задаваемые вопросы
The questions off-plan buyers ask most often about cancellation, refunds and the Dubai Special Tribunal.
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