Property transactions are subject to federal civil laws on contracts, liability, breach, cancellation and compensation, and Dubai-specific property laws on registration, developer obligations, escrow, off-plan sales and investor protection.
However, the legal framework has been transformed by the implementation of the new Civil Transactions Law, Federal Decree-Law No. 25 of 2025, which is in force from 1 June 2026. It repeals and replaces Federal Law No. 5 of 1985 and reinforces the principles of accountability, transparency and predictability in civil and commercial dealings. For buyers who experience delays, defects or cancellations on a project, it is important to understand these remedies and seek advice from a real estate dispute lawyer in Dubai to help safeguard your options for recovery and enforce your legal rights.
Legal Capacity and Choice of Law under the Civil Code
Clear rules on legal capacity and applicable law are also important for investor protection. As per Article 84 of the Federal Decree Law No 25 of 2025, Persons who have attained the age of eighteen Gregorian years and are of sound mind shall acquire the capacity to have rights and to assume obligations. This means young adult investors can legally enter into binding property deals on their own.
The new law also clarifies conflict-of-laws rules. Article 19 allows parties to choose the governing law for contractual obligations, while real estate contracts remain governed by the law of the place where the property is located. Where no law is chosen, Article 19 applies the law of the country where the parties have a common domicile; if their domiciles differ, the law of the country where the main obligation of the contract is performed will apply, unless the circumstances show that another law was intended. Article 20 further provides that non-contractual obligations are generally governed by the law of the country where the event giving rise to the obligation occurred, subject to the statutory exception stated in the article.
Pre-Contractual Responsibilities
In real estate transactions, buyers often rely on project representations, disclosures and financial information prior to making a purchase. Articles 121 to 123 of Federal Decree-Law No. 25 of 2025 strengthen this pre-contractual stage by dealing with good faith in negotiations, disclosure obligations and confidentiality.
Article 121 requires pre-contractual negotiations, their conduct, and termination to be carried out in good faith. However, negotiations do not oblige either party to conclude the contract. A party may withdraw from negotiations, provided this is not done in bad faith. Bad-faith negotiations or termination may give rise to liability for actual damage suffered, but not expected profits or lost opportunities unless otherwise agreed. It also treats the deliberate omission of a material statement affecting the validity of the contract as bad faith. In real estate transactions, this may include undisclosed information relating to the project, property condition, approvals, defects, delays, or ownership.
Article 122 requires disclosure of information that is decisive to the other party’s consent where that party is presumed unaware of it or has relied on the contracting party. This obligation cannot be excluded by agreement. Concealment of such information may entitle the affected party to seek annulment of the contract.
Article 123 protects confidential information acquired in the course of the negotiations or the performance of the contract. Use or disclosure without authorisation may give rise to liability. Taken together, these provisions offer greater protection against bad-faith negotiations, non-disclosure and misuse of confidential information in real estate transactions.
Contractual Performance, Hardship, and Liquidated Damages
The new Civil Transactions Law preserves the binding force of contracts while recognising that certain events may affect performance. Article 138 allows parties to enter into framework agreements that set essential terms for future contracts, which can be useful in long-term real estate and investment arrangements. The law also makes a distinction between hardship and force majeure: Article 224 states that if the performance has become excessively difficult as a result of events that were exceptional, general and unforeseeable but the performance is still possible, the court may reduce the obligation to a reasonable level or cancel the contract. Any agreement to the contrary is null and void.
By contrast, Article 236 applies where the performance becomes objectively impossible for reasons outside the control of the debtor, in which case the obligation may be extinguished and the contract dissolved. This distinction is relevant for real estate investors because generally increased costs, delays, or commercial difficulties do not amount to force majeure unless performance is impossible, but unforeseen public events that make performance excessively burdensome may in some cases justify judicial intervention under Article 224.
Article 340 of the Civil Transactions Law governs liquidated damages. Parties may agree in advance on compensation for breach, but the court may reduce it if the debtor proves it is excessive or the obligation was partly performed. The court may also reduce or deny compensation if the creditor contributed to or aggravated the harm. Compensation above the agreed amount is allowed only where the creditor proves fraud or gross fault by the debtor. Any agreement excluding these rules is void.
Article 836 of the Civil Code states that the employer can terminate the contract before its completion. The contractor is compensated for the expenses incurred, the work performed, and the profit lost. The court may reduce compensation for lost profit to such extent as fairness so requires, having regard to any savings or alternative earnings.
Completed Properties and Hidden Defect Claims
For purchasers of finished flats, the condition and quality of the unit remain important after handover. Article 495 of the Civil Transactions Law provides that if there is a latent defect in the property sold, the purchaser may return it or keep it and demand a reduction of price in proportion to the defect. The seller can avoid this by giving, if applicable, a defect-free equivalent.
Article 497 sets out cases where the seller will not be liable for a defect, including where the defect was disclosed at the time of sale, where the buyer knew of or accepted the defect, where the defect is customarily tolerated, or where liability was validly excluded. However, the seller cannot rely on an exclusion where the defect was deliberately concealed by fraud or where the buyer was prevented from discovering it.
Article 510 provides that defect warranty claims will not be heard after one year from the day following delivery, unless the seller agreed to a longer warranty period. The seller cannot rely on this time limit if the defect was fraudulently concealed.
Dubai Specialised Off-Plan Protections and Buyer Default
In Dubai, off-plan real estate transactions are regulated by Law No. 13 of 2008 on the Interim Real-Estate Register in the Emirate of Dubai, as amended. Article 3 requires all dispositions relating to off-plan units to be recorded in the Interim Real Estate Register, failing which the transaction is void and unenforceable. Article 11, as amended by Law No. 19 of 2020, lays down a mandatory procedure which developers must follow when a purchaser breaches an off-plan sale agreement. The developer has to notify the Dubai Land Department (DLD) of the purchaser’s default. The DLD will then verify the breach and inform the purchaser in writing. It will allow a 30-day period to meet the contractual obligations and, where possible, facilitate an amicable settlement between the parties.
Where the purchaser fails to remedy the breach within the period, the DLD may issue a document confirming that the developer has followed the statutory process and indicating the percentage of completion of the project. The developer may avail of the remedies available under Article 11 on the basis of that document. The buyer retains the right to institute legal or arbitral remedies.
Article 11 of Law No. 13 of 2008 (as amended by Law No. 19 of 2020) stipulates remedies for purchaser default, depending on the stage of project completion. If the completion is over 80%, the developer can perform the contract, seek an auction of the unit or terminate and keep up to 40% of the unit value. If completion is between 60% and 80%, the developer may terminate and retain up to 40% of the unit value. Where the developer has commenced work and completion is below 60%, the developer may terminate and retain up to 25% of the unit value. Excess amounts must be refunded. If work has not commenced due to reasons beyond the developer’s control, and without negligence or omission on its part, or if the project is cancelled pursuant to a final reasoned decision of RERA, purchaser payments must be refunded. Article 13 of Dubai Executive Council Decision No. 6/2010 on the Approval of the Executive Regulation of Dubai Law No 13/2008 requires compensation where net area decreases by more than 5%.
Tribunals and Amicable Settlement Pathways
Where a Dubai real estate project is cancelled by a final reasoned decision of RERA, disputes relating to that project may fall within the jurisdiction of the Special Tribunal established under Decree No. 33 of 2020 on the Judicial Committee for Unfinished and Cancelled Real Estate Projects in the Emirate of Dubai. The Tribunal has the power to liquidate cancelled projects, determine and settle rights of investors and purchasers and to dispose of disputes arising from incomplete or cancelled developments. Law No. 8 of 2007 on Guarantee Accounts is still relevant because payments for off-plan units are generally deposited into project escrow accounts. But the recovery by purchasers is not guaranteed automatically in full, but depends on the particular liquidation process, statutory provisions and the available funds.
Dubai has friendly ways of settling disputes before you go to court. The Centre for Amicable Settlement of Disputes was originally established under Law No. 16 of 2009 and now operates within Dubai’s updated conciliation framework under Law No. 18 of 2021, as amended by Law No. 9 of 2025. Under Article 1(3) of Dubai Decision No. 4 of 2025, the Centre has jurisdiction to hear disputes with a claim value not exceeding AED 500,000, save for certain disputes involving regulated financial institutions. It also responds to claims for division of common property, except inheritance-related ones. Settlements made via the Centre are registered, authorised and granted executory force, which means that they are enforceable according to the applicable enforcement procedures.
Conclusion
Real estate investor disputes in Dubai must be carefully considered in light of both federal civil law remedies and Dubai-specific property rules. The new Civil Transactions Law enhanced certain areas important to property buyers, such as legal capacity, pre-contractual disclosure, good faith negotiations, hardship, liquidated damages and defect claims. Dubai’s real estate laws offer specific protections for off-plan buyers, default procedures, cancelled projects, escrow accounts and area discrepancies at the same time.
For investors, the key issue is not only identifying a breach but also choosing the correct legal route. A delay, defect, cancelled project, payment dispute, or misrepresentation claim may fall under different procedures depending on the facts, the stage of the project, the contract terms, and the authority involved. Early legal review can help preserve evidence, assess recovery options, and avoid procedural mistakes.
