"The developer can keep 40%" — of the price of the unit, not of what you have paid.
This is the sentence that decides how much money comes back, and it is misquoted almost everywhere. Article 11 sets four bands. In three of them the developer may retain a percentage of the value of the real property unit stipulated in the off-plan sale agreement. In the fourth — and only the fourth — the percentage is taken of the amounts paid to him by the purchaser. On a AED 2,000,000 unit where you have paid 20%, that distinction is the difference between getting nothing back and getting AED 280,000 back inside sixty days.
Where the rule comes from
Article 11 of Law No. 13 of 2008 Regulating the Interim Real Property Register, as amended by Law No. 19 of 2017, governs what happens when an off-plan purchaser stops performing. In 2018 the Director General of the Dubai Courts asked the Supreme Legislation Committee for an authoritative reading of it, and the Committee published Explanatory Notes on Article (11) — a government interpretation of a government law, reproducing the article in full and then explaining each paragraph. It is the document this guide is built on, and it is the reason the awkward details below can be stated rather than guessed at.
The Notes are candid about why the article was amended at all: the need arose "given the array of varied judicial interpretations thereof and the divergent methods of implementation thereof by courts". The disputes, they say, "mostly arose in connection with the Developer's right to unilaterally terminate the Off-plan Sale agreement where the purchaser was found in breach".
The procedure, before any percentage applies
Article 11(a) gives the developer a route that avoids courts and arbitration — but it is a route with four gates, and the developer controls only the first one.
- The developer notifies the DLD. On the DLD's prescribed form, with all details of developer and purchaser, a description of the unit, "a detailed account of the contractual obligations breached by the purchaser", and anything else the DLD requires.
- The DLD verifies. The Notes are explicit: on receipt, "the DLD will verify, by all means necessary, the validity of the Developer's claims that the purchaser is in breach". Only where breach is established does the next step follow.
- The DLD serves you thirty days' notice. Not the developer — the DLD. The notice must be in writing and dated, and delivered in person, by registered mail with acknowledgement of receipt, by email, or by another means the DLD prescribes. Its stated purpose is "to give the purchaser sufficient time to fulfil his contractual obligations, and prevent the Developer from taking the measures stipulated in the Law".
- The DLD attempts a settlement. "Where possible, mediate an amicable settlement between the Developer and purchaser." The Notes go further than the article: the DLD "must exert adequate efforts and discuss all available options to enable the parties to reach an agreement". A settlement reached is attached to the sale agreement as an addendum, signed by both, and becomes "an integral part" of it.
- The DLD issues the official document. Only if the thirty days expire with no performance and no settlement. It certifies two things: that the developer followed the procedure, and the percentage of completion of the unit, "calculated in accordance with the relevant standards and rules adopted by RERA".
The four bands
Article 11(a)(4) then sets out what the developer may do "without recourse to courts or arbitration", by reference to that certified percentage.
| Completion of the unit | What the developer may do | Retention is a percentage of… | Refund deadline for the excess |
|---|---|---|---|
| Above 80% | Any one of three: keep the contract alive, retain everything paid and claim the balance; ask the DLD to sell the unit at public auction and charge you the costs; or terminate and retain up to 40% | the value of the unit stipulated in the agreement | 1 year from termination, or 60 days from resale — whichever is earlier |
| 60% to 80% | Terminate unilaterally, retain up to 40% | the value of the unit stipulated in the agreement | 1 year from termination, or 60 days from resale — whichever is earlier |
| Under 60%, work commenced — site taken, construction started on approved designs | Terminate unilaterally, retain up to 25% | the value of the unit stipulated in the agreement | 1 year from termination, or 60 days from resale — whichever is earlier |
| Work not commenced, for a reason beyond the developer's control and without negligence or omission on his part | Terminate unilaterally, retain up to 30% | the amounts paid by the purchaser | 60 days from termination |
Read the third column twice. In the first three rows the base is the contract price of the unit. In the last row it is your money. The Notes reproduce the wording without softening it: 25% and 40% of "the value of the Real Property Unit stipulated in the Off-plan Sale agreement"; 30% "of the amounts paid to him by the purchaser".
What that does to real numbers
Take a unit at a contract price of AED 2,000,000, on which you have paid 20% — AED 400,000 — and then stopped.
| Certified completion | Ceiling on what the developer may retain | Against AED 400,000 paid |
|---|---|---|
| 65% (60–80% band) | 40% × AED 2,000,000 = AED 800,000 | Exceeds everything you paid — nothing to refund |
| 40%, work commenced | 25% × AED 2,000,000 = AED 500,000 | Exceeds everything you paid — nothing to refund |
| Work never commenced, beyond developer's control | 30% × AED 400,000 = AED 120,000 | AED 280,000 refundable within 60 days |
Two honest qualifications. Each figure is a ceiling — the article says "up to", so a developer may retain less, and the amount actually retained is the developer's decision within that cap, reviewable by a court under paragraph (f) below. And the retention ceiling is not a debt: the article gives the developer a right to keep, not a new right to collect the shortfall, except in the one case where he keeps the contract alive above 80% and claims the balance of the price.
The practical reading for a purchaser in difficulty is uncomfortable but useful. Once a project is past 60% complete, the retention ceiling on a typical unit will usually swallow a deposit-plus-a-few-instalments entirely, and the negotiating value of the DLD's mediation step — before the official document issues — is far higher than anything available afterwards.
Where the money physically comes from
The Notes add a detail the article's bare text leaves implicit. In the above-80% band the developer's right is to deduct, through the Escrow Agent, up to 40% of the unit's value "from the amounts deposited by the purchaser in the Escrow Account of the Real Property project". That is where off-plan instalments sit under Law No. 8 of 2007 — an account whose funds are "exclusively dedicated to the construction of the Real Property project", and on which "no attachment may be imposed … for the benefit of the creditors of the Developer".
So the retention is executed against the escrow, not against you personally, and the escrow agent is a third party with duties of its own. The Notes describe the right as one the developer "may exercise … at his own will, as a legitimate means of execution against the property of a purchaser who is in breach", requiring no court ruling.
If the project itself is cancelled
Article 11(b) is short and absolute: where the project "is cancelled pursuant to a reasoned decision of RERA, the Developer must refund all payments made by the purchasers", under the procedures of Law No. 8 of 2007. The Notes underline the mechanism: the escrow law requires the escrow agent "to take the necessary measures to protect the rights of depositors and ensure the depositors are refunded their payments in the event of any emergency situation that results in non-completion of the Real Property project, including cancellation of the project by RERA".
A cancelled project and a defaulting purchaser are therefore opposite cases with opposite outcomes — full refund on one side, a retention ceiling on the other — which is why establishing which situation you are actually in is the first question, not the last.
Three paragraphs that change the negotiation
Paragraph (e) — this is public order. The rules and procedures in Article 11 "are considered part of public order, and failure to comply therewith will result in nullity of the legal act in question". The Notes spell out what that means: the provisions "are imperative norms and … parties to Off-plan Sale agreements may not agree to any terms, procedures, or rules in violation thereof". A clause in your SPA allowing the developer to cancel and keep everything on a missed instalment is not a clause you negotiated badly. It is void.
Paragraph (d) — it applies backwards. The article applies "to all Off-plan Sale agreements concluded prior to or after the commencement of this Law". The Notes treat this as a deliberate exception to Article 112 of the UAE Constitution's rule against retroactivity, and draw the consequence for litigation: courts "must apply Article (11), as amended by Law No. (19) of 2017 retroactively, to all claims being heard by them" concerning developer termination for purchaser breach — though not to claims already closed by a final definitive judgment.
Paragraph (f) — the court is still open to you. The article "will not preclude the purchaser from having recourse to courts or arbitration where the Developer abuses any of his powers under this Article". The Notes state that the developer's Article 11 powers "are subject to judicial review and to nullification by the judiciary where it is established that the Developer has abused the powers vested in him". The no-court route belongs to the developer; the court route remains yours.
Paragraph (c) sets the outer limit: none of this applies to sales of undeveloped land that involve no off-plan sale. Those stay governed by whatever the parties agreed.
The registration that puts you inside Article 11
Article 11 governs off-plan sale agreements "which must be registered on the Interim Real Property Register". That registration is the Oqood step, and the DLD's e-service for it sets out the terms plainly: the contract must be signed by developer and purchaser, and registration must occur within 90 days from the date of signing. The developer files it through the Real Estate Developers Portal, quoted at one business day, and the output is a provisional registration e-certificate.
The DLD's published fee lines for that registration are 2% of the sale value from the seller and 2% from the purchaser, plus AED 10 knowledge fees and AED 10 innovation fees, plus an AED 1,000 fee where the developer self-registers through the portal. Whether those percentages are actually charged to you or absorbed by the developer is a matter of your contract — but they are the DLD's stated fees for the service, and a purchase presented as carrying no registration cost at all is worth a question.
If you have received a notice
- Establish who sent it. A demand from the developer is not the Article 11 notice. The thirty-day notice comes from the DLD, in writing and dated, after the DLD has verified the breach.
- Use the thirty days as thirty days. They exist, per the Notes, to let you perform and stop the process. Performance during the window ends it.
- Engage with the mediation. This is the step where terms are still available, and the DLD is obliged to "discuss all available options". A settlement reached becomes a binding addendum to the SPA — a restructured payment plan documented properly, not a verbal indulgence.
- Ask which band, and on what evidence. Not "how much can you keep" but "what completion percentage has the DLD certified, in which official document". Each band has a different ceiling and, in one case, a different base.
- Check the base being applied. If the developer has not commenced work and says he is keeping 30%, that is 30% of what you paid — not of the contract price.
- Diarise the refund deadline. One year from termination or sixty days from resale of the unit, whichever comes first, in the three construction bands; sixty days from termination in the work-not-commenced band. The excess is owed to you, and the deadline runs whether or not anyone reminds you.
- Ignore contract clauses that contradict the article. Paragraph (e) makes compliance a matter of public order, and non-compliant acts null.
- If the power has been abused, paragraph (f) is your route. A termination that skipped the DLD steps, a retention above the ceiling, or a refund that never arrived are all judicially reviewable.
Sources
- Explanatory Notes on 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 full text of Article 11 and the Supreme Legislation Committee's interpretation of it: the notification to the DLD, the DLD's verification, the thirty-day notice and its permitted methods of service, the DLD-mediated settlement and its status as a binding addendum, the official document certifying the completion percentage on RERA's standards, the four retention bands with their differing bases and refund deadlines, the deduction through the escrow agent, the full refund on RERA cancellation of a project, the exclusion of bare land sales, the retroactive application and its constitutional basis, the public-order status of the article, and the purchaser's preserved recourse against abuse, issued 2018, Dubai Legislation portal, official English text
- Request to register the initial sale — the Oqood registration of off-plan units on the provisional register: the 90-day deadline from contract signature, the required documents, the fee lines of 2% from the seller and 2% from the purchaser plus AED 10 knowledge and AED 10 innovation fees and an AED 1,000 developer self-registration fee, one business day, and the provisional registration e-certificate as the output, Dubai Land Department e-service
- Law No. (8) of 2007 Concerning Escrow Accounts for Real Property Development in the Emirate of Dubai — cited in the Explanatory Notes for the dedication of escrow funds to project construction, the bar on attachment by the developer's creditors, and the escrow agent's duty to secure refunds where a project is not completed, including on RERA cancellation, Dubai Legislation portal
Verified 8 September 2026. The text of Article 11, the four retention bands, the two different bases for the percentages, the procedural sequence, the refund deadlines and the paragraphs on public order, retroactivity and recourse against abuse were read in the Supreme Legislation Committee's official English Explanatory Notes on the day of publication, and are quoted or closely paraphrased from that document. The Oqood registration deadline, fee lines, processing time and output were read on the live Dubai Land Department e-service page. The worked example on a AED 2,000,000 unit is our arithmetic applied to the statutory ceilings and is illustrative only. General information, not legal advice.
Questions
How much can a Dubai developer keep if I default on an off-plan purchase?
It depends on the completion percentage certified by the DLD. Above 80% and between 60% and 80%, up to 40% of the value of the unit stipulated in the agreement. Below 60% with work commenced, up to 25% of that value. Where the developer has not commenced work for a reason beyond his control, up to 30% of the amounts you have actually paid. Each figure is a ceiling — the article says "up to".
Is the 40% taken from what I paid or from the price of the unit?
From the price of the unit. Article 11(a)(4)(A)(3) and (B) both allow the developer to retain up to 40% "of the value of the Real Property Unit stipulated in the Off-plan Sale agreement", and the 25% band uses the same base. Only the fourth band — where the developer has not commenced work — is expressed as a percentage "of the amounts paid to him by the purchaser". On a unit priced at AED 2,000,000, a 40% ceiling is AED 800,000 regardless of whether you have paid AED 400,000 or AED 900,000.
Can a Dubai developer cancel my off-plan contract without going to court?
Yes, but only after a fixed sequence. The developer must notify the DLD on its prescribed form; the DLD must verify the breach; the DLD must serve you a written, dated thirty-day notice requiring you to perform; the DLD must, where possible, mediate a settlement; and only if the thirty days expire without performance or settlement does the DLD issue an official document certifying compliance and the completion percentage. Termination without that sequence is not the Article 11 route.
Who sends the thirty-day notice in a Dubai off-plan default?
The Dubai Land Department, not the developer. Article 11(a)(2)(A) requires the DLD, promptly on receiving the developer's notification and verifying the breach, to serve a thirty-day notice on the purchaser requiring him to fulfil his contractual obligations. It must be in writing and dated, and delivered in person, by registered mail with acknowledgement of receipt, by email, or by another means the DLD prescribes.
When must a Dubai developer refund the excess after terminating?
In the three bands where work has commenced, within one year from termination of the agreement or within sixty days from the date of resale of the unit to another purchaser, whichever occurs earlier. In the band where the developer has not commenced work, within sixty days from termination.
What happens if RERA cancels the project?
Article 11(b) requires the developer to refund all payments made by purchasers, in accordance with Law No. 8 of 2007 on escrow accounts. The Explanatory Notes add that the escrow law obliges the escrow agent to take the measures necessary to protect depositors and ensure they are refunded where an emergency results in non-completion of the project, including cancellation by RERA.
Can my contract override Article 11?
No. Article 11(e) makes its rules and procedures part of public order and provides that failure to comply results in nullity of the legal act in question. The Supreme Legislation Committee's Explanatory Notes state that the provisions are imperative norms and that parties to off-plan sale agreements "may not agree to any terms, procedures, or rules in violation thereof".
Does Article 11 apply to contracts signed before 2017?
Yes. Article 11(d) applies the rules to all off-plan sale agreements concluded before or after the commencement of the law, and the Explanatory Notes treat this as a deliberate exception to the non-retroactivity principle in Article 112 of the UAE Constitution. The Notes add that courts must apply the amended article retroactively to claims still before them, though not to claims already closed by a final definitive judgment.
Can I still sue the developer after Article 11 termination?
Yes, where the power has been abused. Article 11(f) preserves the purchaser's recourse to courts or arbitration where the developer abuses any of his powers under the article, and the Explanatory Notes confirm those powers are subject to judicial review and nullification where abuse is established. The no-court shortcut belongs to the developer, not to the dispute.
What can a developer do if the unit is more than 80% complete?
One of three things. Keep the agreement alive, retain everything paid and claim the balance of the price — in which case, on receiving it, the unit must be registered in the purchaser's name. Ask the DLD to sell the unit by public auction to recover what is owed, with the purchaser liable for the costs of the sale. Or terminate unilaterally and retain up to 40% of the unit's contract value, refunding the excess.
Who decides the completion percentage in a Dubai off-plan dispute?
The DLD, in the official document it issues after the thirty-day notice expires. Article 11(a)(3)(B) requires that document to confirm the percentage of completion of the unit "calculated in accordance with the relevant standards and rules adopted by RERA". The developer's own assertion of a completion figure is not what the bands run on.
Does Article 11 apply to buying land in Dubai?
No. Article 11(c) states that its rules and procedures do not apply to land sale agreements which do not involve any off-plan sale, and that land sale continues to be governed by the terms agreed by the parties.
How long do I have to register an off-plan purchase in Dubai?
The DLD's e-service for registering the initial sale states that registration must occur within 90 days from the date of signing the contract. The developer files it through the Real Estate Developers Portal, the DLD quotes one business day for the service, and the output is a provisional registration e-certificate placing the unit on the Interim Real Property Register.
What are the DLD fees to register an off-plan sale?
The DLD's published fee lines for registering the initial sale are 2% of the sale value from the seller and 2% from the purchaser, plus AED 10 knowledge fees and AED 10 innovation fees, plus an AED 1,000 fee where the developer registers through the portal himself. How those are allocated in practice is a matter of the sale contract.
Where does the retained money physically come from?
From the project escrow account. The Explanatory Notes describe the developer's right in the above-80% band as a right to deduct, through the escrow agent, up to 40% of the unit's value from the amounts the purchaser deposited in the project's escrow account under Law No. 8 of 2007. Those funds are dedicated to construction of the project and cannot be attached by the developer's own creditors.
Related
- What buying actually costs — the DLD fee lines in full, worked through on a real price.
- Transfer, step by step — what completion looks like when it goes right.
- Pre-approval and the nine refusals — the finance that has to be in place before the instalments are.
- Service charges and Mollak — what starts arriving once the unit is handed over.
- Mortgage calculator — the affordability check that keeps an instalment plan survivable.
- Ending a tenancy early — the other Dubai contract where walking away has a published price.