An escrow account in an off-plan project is a designated bank account for a real estate development project in which all the money paid by off-plan buyers and financiers is ring-fenced and then only used by the developer to construct and complete the specific project.
Benefits for Escrow Account:
- Payments are made into an account which is regulated by Dubai Land Department
- Payments are released by the bank directly to Contractors with an approval from Dubai Land Department based on Invoices raised
- Buyers have an additional security that the funds are being utilized towards construction on the project they are investing into
- Banks acting as account trustees have a legal obligation to provide periodic statements of the revenues and payments for every escrow account they supervise.
- Banks must submit annual reports issued by an accredited auditor on the escrow accounts they manage and confirm that payments from the escrow accounts are compliant with the law, all regulations and the escrow account agreements
- The introduction of the escrow account requirement in Dubai has brought a greater protection for buyers of off-plan property.
A Law to Regulate Developers and to Protect Purchasers’ Payments in Off-Plan Transactions. Law No. (8) Of 2007 concerning Guarantee Accounts of Real Estate Developments in the Emirate of Dubai issued by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Ruler of Dubai.