In a recent ruling, the Dubai Real Estate Court has mandated a real estate development company to refund AED 1,267,000 to two property buyers. The refund order comes after the company failed to deliver a plot of land designated for the construction of a residential villa.
The court dismissed the involvement of a second company in the case, as it was able to present evidence confirming it had returned the funds it had initially received from the plaintiffs.
Land Sale and Construction Agreements
As outlined in the case details, the plaintiffs entered into a land purchase agreement with the main real estate company to acquire a residential plot worth AED 1,334,000. On the same day, they also signed a civil works management services contract with the second company, committing to the construction of a villa on the purchased land.
According to the agreement, payments were to be made in three installments. The plaintiffs paid a total of AED 1,467,000, which included AED 1,334,000 for the land and AED 133,000 as the first installment towards the construction services.
Failure to Deliver and Contract Termination
Despite receiving full payment, the first company failed to hand over the land. As a result, both parties signed a termination agreement, which nullified both the land sale and the service contract. The development company agreed to refund the money it had received, but failed to honor this commitment.
Court documents reveal that the first company only returned AED 66,000, leaving an outstanding balance of AED 1,267,000 that remains unpaid to the plaintiffs.
Court’s Findings and Legal Reference
The court emphasized that the real estate developer did not provide sufficient evidence proving it had repaid the full amount. Therefore, the company is still liable to refund the remaining balance.
Meanwhile, the court cleared the second company of any responsibility, noting that it had already refunded the amount it received from the plaintiffs, supported by valid documentation.
Dr. Alaa Nasr, the legal counsel representing the plaintiffs, referenced Article 246 of the Civil Transactions Law, which states that contracting parties must uphold the terms of the agreement. He further noted that a contractor is legally bound to carry out the agreement as per the specified terms and conditions.
Key Takeaways:
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The Dubai Real Estate Court ordered a refund of AED 1.267 million due to the developer’s failure to deliver the land.
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Total payment made by plaintiffs: AED 1.467 million.
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Outstanding amount: AED 1.267 million (only AED 66,000 refunded).
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The second company was not held liable, having already refunded its share.
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The ruling is grounded in Article 246 of the Civil Transactions Law.
