How escrow protects off-plan payments

Buying off-plan means paying for something that does not exist yet. Without protection, a buyer’s instalments could be spent on another project, on land, or on running the developer’s business. Escrow exists to stop that.

A developer that sells off-plan in Dubai must register the project with the regulator and open a dedicated escrow account for that project with an approved bank. Buyers’ payments for that project go into that account.

The bank acts as the account trustee. Money is released to the developer in stages, against evidence of construction progress on that project, and it is meant to be used for building that project. A portion is typically held back for a period after completion to cover defects.

Abu Dhabi applies the same principle through its own law and regulator: off-plan payments are held in a regulated project escrow account.

• The project is registered with the regulator. In Dubai this can be checked through the Dubai Land Department’s own app and website.
• The escrow account for the project is named in your sale and purchase agreement, with the bank and account details.
• Every payment request shows that same account. The account name should refer to the project, not to a person or an unrelated company.
• Your purchase has been entered on the interim register, and you hold the certificate.
• You receive a receipt for every instalment.

Escrow protects where the money sits and what it can be used for. It does not guarantee the completion date, the finish, or what the home will be worth. Those depend on the developer, the contract and the market.

So escrow is one check among several. The others are the developer’s record of finishing what it starts, the terms of the sale agreement on delay and cancellation, and how realistic the payment plan is for you if completion moves.

• A request to pay a personal account, a broker’s account, or in cash.
• Account details that arrive by message and differ from the sale agreement.
• Pressure to pay before you have seen the registered agreement.
• No project registration that you can look up yourself.

This is general information, not legal advice. Release rules and retention terms are set by law and regulation and can change. Confirm the current position with the regulator and take independent legal advice on your own agreement.