Escrow accounts in Dubai explained

• About Escrow Accounts
• The Escrow Account Law
• How to Set Up an Escrow Account
• Advantages of an Escrow Account
• FAQs

While Dubai’s booming real estate agency is a huge attraction, it comes with its own complexities and increased chances of fraud. In recent years, the market has witnessed tremendous demand for off-plan projects in the emirate. Hence, an increased need for escrow accounts in Dubai.

You may wonder what is an escrow account and how does it work? This guide answers that and more. So, let’s dive in!

What is an Escrow Account

Imagine placing your money in a secure box with two keys. You hold the ownership key, but another trusted party, a bank, for instance, holds the access key. That’s essentially an escrow account. You put your money in; it’s kept safe and only released when you and the other party (a seller) agree on specific conditions, like a house being built or a project finished.

In Dubai’s property scene, escrow accounts act as secure middlemen. The buyer deposits a down payment into a bank account managed by the real estate company. However, the seller only receives the money once the property is handed over to the buyer, ensuring everyone plays fair.

The Escrow Account Law

Escrow accounts play a crucial role in Dubai’s real estate sector, safeguarding buyers and developers. The Real Estate Regulatory Agency (RERA), a division of the Dubai Land Department (DLD), oversees the implementation of the following laws:

• Law No. 7 of 2007 Concerning Land Registration in Dubai (as amended): Establishes the legal framework for land registration, including provisions related to escrow accounts.
• Law No. 13 of 2017 Regulating the Real Estate Sector in the Emirate of Dubai (as amended): Regulates the real estate sector, including the mandatory use of escrow accounts for off-plan properties.

Real estate developers in Dubai who sell off-plan units and receive monetary payments from the buyers, as dictated in the terms of the purchase agreement, are subject to these Escrow Account laws. Under these legislations, money paid by the buyer against any off-plan project/property must go to the developer’s escrow account.

Check out the tips for buying off-plan property in Dubai to understand where to look for such property and who are the top and trusted developers in the market.

How to Set Up an Escrow Account

Setting up an escrow account in Dubai is an easy task. The developer has to contact the registered authority to activate an escrow account for an off-plan property.

Please note that the developer needs to open a separate account for each off-plan project.

To initiate the process, follow these steps:

• Step 1: Log in to the Oqood portal and select the escrow account link.
• Step 2: Select the required service and submit your application.
• Step 3: Your application will be sent to the Trustee Account, which will study the capability.
• Step 4: The trustee will then upload and send their document of findings through the escrow account system.
• Step IV: The escrow account department will audit the capability and approve or reject the application.
• Step V: The system will be updated automatically if your application is approved.

Two things to bear in mind: First, the only document required during the process is the payment plan for the off-plan project. Second, this process is valid only for developers looking to open an escrow account in Dubai.

How to view Approved Escrow Account Trustee

To check escrow accounts working in Dubai, you must visit the DLD website. Here’s the step you need to follow:

• Visit the official DLD website
• Select ‘All Services’ from the ‘Service’ tab shown on the main page
• Click on or expand the ‘Information Services’ tab
• Select ‘Approved escrow account trustees’
• Press on the ‘Access this service’ button
• View the list of registered Escrow Account trustees

Benefits of Escrow Accounts in Dubai

The Escrow Account Law was introduced to protect the rights of all the parties involved in the agreement. Hence, an escrow account has several benefits when investing in an off-plan project.

• Enhanced Security: Money is held securely by a neutral third party (escrow agent) until specific conditions are met, safeguarding it from misuse or fraud by any party involved.
• Increased Transparency: The escrow agreement outlines all conditions for releasing funds, ensuring everyone understands their obligations and expectations, thus fostering trust and transparency.
• Record of the Proceedings: Since the Escrow Account Law is in action and all the transactions are recorded by the escrow trustees, there’s little to no chance of fraud or default.
• Streamlined Transactions: Escrow services can handle complex transactions by managing fund disbursement, saving time and effort for all parties involved. This can be particularly helpful for transactions with multiple parties or complex conditions.

FAQs About Escrow Accounts in Dubai

What is the concept of an Escrow Account?

The Escrow account concept in Dubai mainly protects the rights of a buyer and a developer until the off-plan property is handed over and the instalments are settled. It is a legal agreement where a third party (bank) holds the money or the property until the depositor (the person who wants to buy the off-plan project) completes the terms and conditions of the purchase agreement.

Who owns the money in an escrow account?

In most cases, the legal ownership of the money in an escrow account remains with the depositor (the person who initially deposited the funds). However, control over the funds is transferred to the escrow agent, who holds them securely until specific conditions are met.

Who is required to open escrow accounts?

Any developer who wants to sell off-plan properties in Dubai must open an Escrow account with a registered Escrow agent (usually a bank).

Can you name areas with top off-plan projects in Dubai?

If you are interested in properties for sale in Dubai, there are various areas in Dubai with the best off-plan projects in the pipeline. These include Jumeirah Village Circle (JVC), Arjan, Al Furjan, Dubai South, DAMAC Hills 2 and more.

With this, we conclude our guide on escrow accounts in Dubai. Feeling confident after reading this? Good, because we have the list of the most popular off-plan projects in Dubai by Nakheel that come with easy instalments. Similarly, top Meraas off-plan projects in Dubai for investments are lucrative for those looking to diversify their real estate portfolio.

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