Dubai's escrow law, Law No. 8 of 2007, requires every developer selling off-plan to pay buyers' money into a project-specific escrow account at a bank accredited by the Dubai Land Department. The money can only be spent on that project, and the developer's creditors cannot touch it. Since 2007, compulsory registration of off-plan sales and fixed rules on cancellation and refunds have been built around it.
Escrow is the word people reach for when they want reassurance about buying off-plan in Dubai, and with reason. The protection has moved on a good deal since it was introduced, however, and much of what is written about it is out of date or simply wrong. What follows is my own account of where the law came from, what it actually requires, and how the rules around it have changed.
Law No. 8 of 2007 Concerning Escrow Accounts for Real Estate Development was issued on 6 May 2007. It applies to any developer selling units off-plan in Dubai and receiving payments from buyers or financiers. Those payments must go into an account opened in the name of the project, not the developer, with a bank accredited by the Dubai Land Department (DLD), and they may be used only to build that project.
Dubai opened designated areas to ownership by foreign nationals in 2006, and off-plan selling grew quickly. There was, at that point, no statutory requirement to hold buyers' money separately. A deposit paid to a developer became part of its general funds, and the buyer's protection rested on the sale contract, general civil law and the developer's solvency. A deposit could fund the next land purchase just as easily as the building the buyer had paid for.
The law introduced a Register of Real Estate Developers and barred anyone not on it from developing. Developers now needed written DLD approval before advertising off-plan projects or exhibiting them, at home or abroad. Opening an escrow account required a full file: title deed, approved designs, an auditor-certified cost and revenue statement, an undertaking to start construction and the standard sale contract.
Each project must have its own account, and the developer's creditors cannot attach the money in it. Bank loans secured on the project must be paid into the same account. Once the completion certificate is issued, five per cent of the account is retained and released only a year after units are registered to their buyers. If a project fails, the escrow agent, after consulting the DLD, must see it completed or refund buyers.
There were teeth as well. Diverting project money, selling units in fraudulent projects, or a developer dealing with an unregistered broker each carry imprisonment, a fine of at least AED 100,000, or both. A developer that has not started construction within six months of being permitted to sell can be struck off. Developers already trading were given six months to comply.
As far as I can establish, Law No. 8 itself has not been rewritten. The changes have come through the laws built around it. The most important is Law No. 13 of 2008, which created the Interim Real Property Register, known as Oqood, and made any off-plan sale void unless it is registered. Escrow protects the money; registration protects the buyer's legal interest in the unit.
| Year | Legislation | What changed |
|---|---|---|
| 2007 | Law No. 8 of 2007 | Project escrow accounts, a register of developers, advertising permits, the 5% retention and criminal penalties. |
| 2008 | Law No. 13 of 2008 | Interim Real Property Register (Oqood). Unregistered off-plan sales are void. |
| 2009 | Law No. 9 of 2009 | Replaced the definitions and the cancellation article of Law No. 13. |
| 2010 | Executive Council Resolution No. 6 of 2010 | Implementing bylaw. Developers cannot refuse handover or title once the completion certificate is issued and the buyer has paid. |
| 2017 | Law No. 19 of 2017 | Rewrote the buyer-default procedure and set refund timeframes. |
| 2020 | Law No. 19 of 2020 | Current rules: DLD notice, retention capped at 25% or 40% by completion stage, full refund if RERA cancels the project. |
The current cancellation rules sit in Law No. 19 of 2020. If a buyer defaults, the developer must notify the DLD, which gives the buyer 30 days' notice and may mediate. After that, a developer may keep up to 25 per cent of the price where construction has started but is under 60 per cent complete, and up to 40 per cent beyond that, refunding the excess within a year or within 60 days of resale, whichever comes first. If a project is cancelled by RERA, or never starts for reasons outside the developer's control, buyers are refunded in full through escrow.
Escrow protects your money from misuse. It does not guarantee completion on time, compensate for delay, protect against a falling market or govern build quality. Nor does it protect money that never reached the account, which is why payments should only ever go to the escrow account named in the sale contract. And the protection runs both ways: a buyer who stops paying can lose a quarter or more of the price.
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The stakes are often higher on the commercial side. A business buying an office floor or retail unit off-plan is usually planning a move around handover, letting a lease lapse or scheduling a fit-out. Escrow looks after the deposit; it does not look after the lease you did not renew. I treat it as the floor rather than the ceiling, and still check the developer's delivery record, actual construction progress and whether payments are tied to milestones rather than dates.
For a law drafted in 2007, it has worn well. If you are weighing up an off-plan commercial purchase and would find it useful to go through a developer's paperwork with someone who reads it for a living, I would be glad to help.
Frequently asked questions
0601Is my off-plan deposit safe in Dubai?
It is protected from misuse, provided it was paid into the project's escrow account and the sale is registered on Oqood. It is not protected against delay or a fall in value, and you can lose part of it if you default on later payments.
02Can a developer use escrow money for another project?
No. Each project must have its own escrow account, the money may be spent only on that project, and the developer's creditors cannot attach it.
03What happens if an off-plan project is cancelled?
If RERA cancels a project by a final reasoned decision, or it never starts for reasons beyond the developer's control, buyers are entitled to a full refund through the escrow account under Law No. 8 of 2007.
04How much can a developer keep if I stop paying?
After the DLD notice process, up to 25 per cent of the price if the project is under 60 per cent complete, and up to 40 per cent above that. Beyond 80 per cent, the developer may instead hold you to the contract or ask the DLD to auction the unit.
05Is the five per cent retention a new rule?
No, despite what is often claimed. The five per cent retention, released a year after units are registered to buyers, has been in Article 14 of the escrow law since 2007.
06Does the escrow law apply to land or completed property?
It applies to off-plan sales in development projects. The cancellation rules expressly exclude land sale agreements that involve no off-plan sale, and a completed, title-deeded unit is bought and registered in the normal way.
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Published 2 October 2026 by Stephen James Mitchell MBA. Market figures quoted reflect the data available at that date.
