Escrow Accounts and Buyer Protection in Dubai

Every developer selling off-plan property in Dubai must open a separate escrow account for each project with a bank or financial institution accredited by the Dubai Land Department (DLD). Buyers’ payments go into that account, the money can be used only for building that project, and it is released in stages as construction is verified. The developer’s creditors cannot attach it. Escrow is the main legal protection for off-plan buyers, but it has limits, and knowing them is part of buying well.

Why Dubai requires escrow for off-plan sales

When you buy off-plan, you pay before the thing you are buying exists. Without controls, a developer could use buyers’ money for another project, for its own debts, or for anything else. The emirate’s answer is Dubai Law No. 8 of 2007 on escrow accounts, which applies to every developer that sells units off-plan in the emirate and receives payments from buyers or financiers.

DLD’s guidance describes the purpose plainly: the escrow account exists to regulate the construction of units sold off-plan and to protect investors’ rights. The law sits alongside the interim register law, which requires every off-plan sale to be registered, and RERA’s supervision of developers, projects and advertising.

How a project escrow account works

Who opens it and who supervises it

• The developer applies to DLD to open the account before selling any unit off-plan. The application includes, among other things, the title deed of the land, approved designs, a certified statement of the project’s estimated costs and revenues, and a standard sale contract.
• The escrow agent is a bank or financial institution accredited by DLD. The account is opened in the project’s name under a written agreement between the developer and the escrow agent, and a copy goes to DLD. DLD publishes the list of approved escrow account trustees.
• RERA regulates, audits and monitors escrow accounts and approves the institutions that may manage them, under Law No. (4) of 2019. Escrow agents must send DLD regular statements of income and spending on each account.

Each project has its own account. A developer running several projects must keep a separate escrow account for each, so money paid for one building cannot be moved to another.

The same discipline applies to project financing. If a developer mortgages a project to borrow from a bank or finance company, the law requires the lender to deposit the loan into the project’s escrow account, so that it is managed under the same rules as buyers’ money. DLD’s guidance adds that when a buyer finances a purchase, the amounts paid by the buyer’s lender also go into the escrow account.

How money is released to the developer

Money does not pass straight from your payment to the developer. DLD’s guidance explains that the agreement between the developer and the escrow agent lists the main construction stages. When a stage is complete, the developer asks for payment to its contractors or consultants, the escrow agent’s engineer visits the site to check the work, and only then is the payment released.

Payments from escrow are limited to the costs of building the project, such as contractors and consultants, with only a small share allowed for marketing. Not every expense a developer incurs can be paid from the account. DLD’s escrow activation service also ties releases to recent technical reports issued by DLD on the project’s progress.

Retention after completion

Under the escrow law, once the developer obtains the completion certificate, the escrow agent retains 5% of the escrow account, held back for one year after the units are registered to buyers. DLD’s guidance links this retention to defects that become apparent at completion or in the first period after handover, giving the developer and contractor a reason to fix them. The law releases the retained amount to the developer, not to buyers, so it is not a fund you can claim from directly.

How to confirm you are paying into the right account

The simplest way to lose money in an off-plan purchase is to pay it into the wrong account. These checks are worth doing before every payment, not just the first.

1. Read the SPA. It should name the project’s escrow account and the bank that holds it.
2. Check the project. Search for it in DLD's Project Status Enquiry (Mashrooi) on the DLD website and in the Dubai REST app. The results show the escrow bank, the developer, the status and the completion.
3. Check the account number. The Dubai REST app shows the escrow account number for off-plan projects, together with the payments due on your unit. It should match your SPA and the payment instructions you receive.
4. Check the payee. The account should be in the project’s name. Brokers must pay off-plan buyer money straight into the project escrow account, without deducting commission.
5. Keep receipts. Each receipt should show the escrow account and the amount.

The escrow law also gives depositors a right of their own: you, or your representative, may access your own accounting records in the escrow account and ask for copies. If a receipt or a statement from the developer does not match what you paid, that right gives you a way to check.

Treat any request for cash, or for payment into a personal account or a company account that is not the project escrow account, as a warning sign. Stop and check with the developer and DLD before you pay. If payment details change by email, confirm them with the developer by phone on a number you already have.

What escrow does not protect against

Escrow is an important protection, but it is not a promise that nothing can go wrong, and the law does not present it as one. These risks sit outside it:

• Delay. Escrow controls money, not the timetable. A late project is governed by your SPA’s completion date, grace period and delay clauses.
• Specification changes. Whether the finished unit matches what you were shown depends on the contract and the planning approvals, not on escrow.
• Market value. Escrow does not protect the value of the unit. The property may be worth less at handover than you paid.
• Your own default. If you stop paying, the interim register law lets the developer, after notice through DLD, terminate and keep up to 40% of the unit price if the project is 60% or more complete, or up to 25% if works have started but are below 60%, depending on the certified stage of construction.
• Money paid outside escrow. The protections apply to money in the escrow account. Payments made elsewhere are much harder to recover.
• Insufficient funds. If a project fails and the account does not hold enough, refunds depend on what can be recovered from the developer.

If a project is cancelled

The law sets out what should happen when a project is not completed. Under the escrow law, if a project is not completed, the escrow agent must consult DLD and take the measures needed to protect depositors, either by making sure the project is completed or by refunding their payments.

RERA can also cancel a project formally. If RERA cancels a project, or works never start for reasons beyond the developer, buyers are entitled to a refund of all payments under the escrow law. The implementing bylaw requires RERA to appoint an auditor to check what was paid and spent, and to ask the escrow agent to refund the money in the account within a short deadline. If the account does not hold enough, the developer must refund the rest within a set period, and RERA refers a developer that does not pay to the courts. Disputes and the liquidation of unfinished and cancelled projects go to a special tribunal set up by Decree No. (33) of 2020.

DLD’s guidance is candid about the practical side. Money recovered from escrow is distributed to those entitled to it in full or in proportion, depending on what the account holds, and liquidations can take time. Our guide to what happens if a project is delayed or cancelled explains the process and the steps you can take.

Other protections: interim register, RERA oversight, advertising permits

Escrow works together with other rules. None of them is a complete protection on its own, but together they give you several ways to check a project.

• The interim register. Under Dubai Law No. 13 of 2008 on the interim real estate register, as amended in 2020, every off-plan sale must be registered, and an unregistered sale is void. Registration records your purchase and lets you sell or mortgage it.
• Developer and project approval. No developer may sell off-plan unless it is in DLD’s register and licensed. A developer may not sell units before taking possession of the land and obtaining approvals, and a sale made before the project is approved and registered is void.
• RERA oversight. RERA approves development projects, monitors their completion, and considers complaints against those working in the sector.
• Advertising permits. A developer may not advertise off-plan units in local or international media, or at exhibitions, without written DLD authorisation. Brokers and other advertisers follow the general rule. Every real estate advert needs a Trakheesi permit, and the permit number and QR code must appear on the advert. At exhibitions, DLD does not allow Dubai off-plan projects to be shown unless they are registered with its escrow account department.

Before you pay anything, it is worth running the full set of checks in our guide on how to verify an off-plan project and broker, and reading the wider picture in our guide to the risks of buying off-plan. You can also go back to our overview of off-plan in Dubai for how escrow fits into the whole purchase.

If you would like someone to run these checks with you on a specific project, our developer due diligence service covers the escrow account, the developer’s record and the contract terms.