Legal Position On The Delay In The Date Of Handover Real Estate Unit

I bought a real estate unit in Dubai under construction and the contract provided that in case of a delay in the date of the handover, the seller shall pay 5000 AED a month as a delay fine. The decided date of handover was in 2014. I was notified in 2020 that the unit is completed and I am required to pay the last installment that agreed thereupon at the completion date.

I notified the developer to deduct the fine value from the balance. In addition, because of the delay in the unit handover, I have rented another unit as my accommodation.

What are the rights that I shall claim?

You shall file a case before the competent court against the seller claiming them to pay a delay fine as agreed thereupon in addition to compensation for the rental value of the other unit.

Details are as follows:

First: Concerning the delay, the fine agreed thereupon:

t is clear that as per the purchase and sale agreement the balance of the unit price shall be paid at the time of completion. This means that you implemented all your contractual obligations towards the developer without any violation or deficiency.

It is also established that the date of completion is at the end of 2014 which means 6 years. Whereas the developer, for this long time, did not deliver the unit till now, he violated also the expected date of completion.

Article 246 of civil transactions law stipulates as follows in case of a delay in the date of the handover what is the legal situation ?:

1. The contract shall be implemented, according to the provisions contained therein and in a manner consistent with the requirements of good faith.

2. The contract is not restricted to what is contained therein but shall extend to its essentials in accordance with the law, custom, and the nature of the transaction

It is clear that good faith is not found totally in the developer’s transaction because six years passed from the contract date or without completing the unit or delivering it as per the regular commercial customers in the real estate field

It is not reasonable to take six years without delivering or completing a real estate unit. This means that the developer violated their obligations in building and completion which leads to the nonfulfillment of their obligations.  

It is clear that you agreed with the developer that the developer shall pay 5000 AED a month as a fine if they violated the contractual completion date at the end of 2014. The developer did not deliver the real estate unit till now even though you paid all your obligations and money amounts. 

Second: Concerning the claim for the rental value

The agreement upon the contraction completion date was 2014. Whereas the developer did not deliver the unit until now, this means they did not fulfill their contractual obligations in time as approved which forced you to rent another unit for 6 years. If the developer fulfilled their contractual obligations, you would not rent the other unit. Therefore, you have the right to claim the developer compensation for your loss of the rental amounts lost due to the developer’s violation of contractual obligations.

As per the rulings of the cassation court:

“Article 292 of civil transactions law stipulates as follows:

Damages shall, under all circumstances, be assessed to cover the prejudice sustained and the lost profit provided it is a

the natural consequence of the prejudicial act. This damage shall occur eventually because damages that do not occur eventually or are just expected to occur shall not be compensated until they occur eventually. Law does not prevent the assessment of lost profit if there are reasonable causes or the chance of this profit is possible and shall be compensated.   

(Dubai Cassation Court- Challenge No.81/2009- Civil Circuit- Session 7/6/2009)

Whereas the developer failed to complete the unit and delivers it in time, the prejudice against you makes you lose the benefit from the subject unit and rent another one. 

Therefore, you shall go to the Land Department to enquire about the rental value of this unit from 2014 in case it was delivered to you on a such date up till now. You shall claim in your case to impose upon the developer to pay this value as compensation for the lost annual

rent from the date of contractual completion until now.    

Article 282 of civil transactions law stipulates as follows:

The author of any tort, even if not discerning, shall be bound to repair the prejudice.

Article 292 of civil transactions law stipulates as follows

Damages shall, under all circumstances, be assessed to cover the prejudice sustained and the lost profit provided it is a natural consequence of the prejudicial act