Dubai has built a detailed legal framework for off‑plan sales, centred on project‑specific escrow accounts supervised by the Dubai Land Department (DLD) and its Real Estate Regulatory Agency (RERA). Through EGSH, buyers and investors can navigate these official procedures efficiently.
For individual buyers, investors, and brokers, understanding how the escrow mechanism works is essential to assessing risk in any off‑plan property transaction in Dubai. This article explains the legal protections you benefit from, and the checks you should complete before transferring a single dirham to a developer or broker.
The guide covers the core concepts in Law No. (8) of 2007 Concerning Escrow Accounts for Real Estate Development in the Emirate of Dubai, how RERA supervises escrow accounts, the practical safeguards for buyers, a concise verification checklist, key developer obligations and penalties, and how DLD digital tools – with support from EGSH – make it easier to verify that your project and payments comply with DLD escrow account rules.
What Is a Real Estate Escrow Account in Dubai?
In Dubai, an escrow account for real estate development projects is a special bank account opened in the name of a specific development, into which all payments from off‑plan buyers, financiers and mortgage lenders for that project must be deposited.
Under Law No. 8 of 2007, escrow rules apply to every developer who sells units off‑plan and collects instalments or finance in the emirate, including many projects that were announced before the law came into force. Each project must have its own escrow account; funds for one project cannot legally be mixed with those of another.
Legal Definition of an Escrow Account
An escrow account is a bank account dedicated to a particular real estate project, into which buyers’ off‑plan instalments and any project financing are deposited and from which construction and directly related expenses are paid. Law No. 8 was published in 2007 and, as clarified by DLD, took effect on 28 June 2007, with existing developers given six months to bring their activities into compliance.
The Dubai Land Department escrow law requires that every off‑plan payment, including amounts collected before opening the account, be channelled through this controlled mechanism once the account exists.
Why Dubai Introduced Escrow for Off‑Plan Sales
According to the DLD, the purpose of the escrow framework is to control the real estate market, regulate construction and off-plan unit sales, and safeguard buyers’ rights. Previously, buyers’ payments could be commingled with a developer’s funds, increasing the risk of misuse or diversion.
By requiring all qualifying off‑plan projects to be placed in a regulated escrow structure, Dubai's off‑plan property regulations now create a clear link between buyer payments, project progress, and controlled disbursements to contractors and consultants.
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How RERA and DLD Regulate Off‑Plan Escrow Accounts
The DLD registers developers and projects and maintains Dubai’s real estate records. RERA, as its regulatory arm, oversees development activity and escrow accounts, and approves qualified financial institutions as trustees, forming the basis of RERA's protection for off‑plan buyers.
Before any unit can be sold off‑plan, the developer must be registered on the DLD “Register of Real Estate Developers” and hold a valid trade licence from the competent licensing authority. The law also states that a developer may not advertise or participate in exhibitions to promote off‑plan units without written authorisation from DLD, so any marketing you see should, in principle, be backed by formal registration and approvals.
RERA as the Regulatory Arm of DLD
RERA regulates DLD’s off‑plan segment by setting and enforcing standards for escrow accounts, advertising, project registration and disclosure. For each RERA off‑plan project registration, a project profile is created, and DLD monitors construction progress and financial flows, using technical reports and financial information provided by the developer and the escrow agent.
RERA also approves each escrow trustee bank Dubai may use for off‑plan projects, ensuring that only institutions licensed by the UAE Central Bank and entered in DLD’s “Register of Escrow Agents” can receive and hold buyers’ deposits.
Registering Developers and Approving Trustee Banks
To start selling off‑plan, a developer must first apply to open a project‑specific escrow account with an approved trustee bank. The developer must submit documents including its trade licence, proof of land ownership (such as a title deed), approved project designs, a certified statement of the project’s estimated costs and revenues, and a standard form sale contract. Only once the DLD is satisfied that these requirements are met will the Dubai off-plan escrow account be opened in the name of that specific project.
Escrow agents, which are trustee banks and financial institutions, must be licensed by the UAE Central Bank to receive third-party deposits. They must also be approved by RERA and recorded in the DLD Register of Escrow Agents. They must follow DLD escrow account rules and provide regular statements of inflows and outflows. They must also provide any additional data the DLD requires for auditing and supervision.
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How Escrow Accounts Protect Off‑Plan Buyers in Practice
Dubai’s escrow system protects buyers by enforcing strict rules on where money is deposited, how it is ring‑fenced, and when it can be released. All amounts received from off‑plan buyers, including mortgage-backed instalments and loans, must go into the relevant project escrow account. If collected beforehand, payments must be transferred into the account once it's created.
Ring‑Fenced Project Funds and Controlled Disbursement
Funds held in a project escrow account cannot be attached or seized by the developer’s other creditors; they are legally ring-fenced for that specific development. Payments from the account may generally be made only to contractors, consultants and other parties directly involved in the project, and the law limits marketing expenses from the escrow account to a maximum of 5% of total sales.
When a project is mortgaged to raise finance, the mortgage proceeds must also be paid into the escrow account, so that all construction funding is subject to the same controls. This structure means the RERA escrow account Dubai buyers pay into is not a general corporate account but a monitored pool reserved for the project they have purchased.
Warranty Retention and Safeguards If a Project Stops
Under Article (14) of Law No. (8) of 2007, once a completion certificate is issued for a project, the escrow agent must retain 5% of the total value of the escrow account. This retained amount is released to the developer only one year after units are registered in the purchasers’ names, functioning as a warranty fund for post‑handover defects and issues.
If a serious problem arises and a real estate development project is not completed, the law obliges the escrow agent, after consulting DLD, to take necessary measures to preserve depositors’ rights. These measures may include arranging for another party to complete the project or refunding amounts to depositors from the escrow balance. This emergency mechanism, combined with the earlier ring‑fencing, is central to how a real estate escrow account, which UAE buyers rely on, is designed to mitigate the impact of project failure.
What Buyers Should Check Before Paying for Off‑Plan Property
Before you sign a sale contract or transfer any funds, DLD and RERA repeatedly remind buyers to confirm that the project is registered and that all payments will be made only into the approved escrow account for off‑plan property in Dubai. Paying outside this framework – for example, to a developer’s general corporate account or to an unapproved intermediary – weakens your legal protections and may indicate a regulatory breach.
The following checklist summarises the key verifications buyers can perform through official channels and documentation to reduce risk and confirm that their purchase aligns with DLD and RERA guidance.
| What to check | Where to check / what to request |
|---|---|
| Developer registration and trade licence | Ask for a copy of the trade licence and confirm that the developer appears in DLD’s Register of Real Estate Developers via DLD channels or through a service centre such as EGSH. |
| Project registration with RERA | Confirm that the project is registered as an off‑plan development with DLD/RERA; this may be reflected in official project documents and in DLD systems. |
| Escrow account details | Obtain the official escrow account details issued for the project, including the name of the project, the trustee bank and the IBAN; verify that these match the details in your sale contract and any DLD confirmations. |
| Project status and completion percentage | Use DLD’s Real Estate Project Status service to view the registered project, developer details and the latest reported completion percentage. |
| Payment method and receipts | Ensure every instalment, including any mortgage‑funded payments, is transferred directly to the project’s escrow account, and keep bank transfers, receipts and confirmations as proof of payment. |
| Access to escrow records | As a depositor, you or your authorised representative may request access to your own records in the escrow account from the trustee bank, to verify that your payments have been correctly recorded. |
The DLD has reported cases in which companies received funds outside the escrow account or advertised projects not registered in their name, leading to fines and potential escalation measures. Buyers should treat any request to pay outside the official escrow account for off-plan property in Dubai as a clear warning sign and seek clarification from DLD or a qualified adviser before proceeding.
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Developers’ Obligations, Violations and Penalties
Developers operating in Dubai’s off‑plan market are subject to strict obligations under Law No. (8) of 2007 and related regulations, designed to ensure that buyers’ funds are safeguarded and projects are delivered as promised. These duties apply in addition to general company law and licensing requirements, and failure to comply can result in administrative sanctions, criminal penalties and removal from DLD’s registers.
Core Duties When Managing Escrow Funds
Key obligations on developers include:
- Opening a separate escrow account for each real estate development project, and ensuring all buyer instalments, mortgage proceeds and other project financing are deposited into that account.
- Restricting disbursements to legitimate project‑related costs, such as payments to contractors, consultants and approved marketing expenses, observing the 5% cap on marketing from escrow funds.
- Providing accurate and complete information to DLD and the escrow agent, including technical reports, financial statements and any documents required to monitor progress and compliance.
- Respecting conditions attached to services like DLD’s Escrow Account activation process, which may include minimum construction completion thresholds or deposits from bank guarantees, the developer’s own funds or mortgage finance before buyers’ funds are used.
These obligations create a transparent link between the flow of money through the Dubai off-plan escrow account and the physical progress of construction on site.
Administrative Fines and Criminal Liability
DLD and RERA enforce compliance through a combination of administrative action and, where necessary, referral to criminal authorities. Public statements from DLD describe, for example, an administrative fine of AED 50,000 imposed on a company that received amounts outside the escrow account and advertised projects not registered under its name. In cases of continued non‑compliance, measures can escalate to suspension of the company’s licence and referral to the Public Prosecution.
Article (16) of Law No. (8) of 2007 lists a range of criminal offences, including conducting real estate development without a licence, providing false information to obtain a licence, offering units in fraudulent projects, misappropriating development funds and preparing fraudulent technical or audit reports. These offences can result in imprisonment and fines of at least AED 100,000.
Under Article (17), the DLD may also strike a developer off the Register of Real Estate Developers for reasons such as bankruptcy, unjustified failure to commence construction within six months of being permitted to sell off‑plan, revocation of the trade licence or serious violations involving misuse of funds or false statements. These penalties underscore the seriousness of using funds outside the escrow account in Dubai and other breaches of the escrow law.
Using DLD Digital Services and EGSH Support
DLD operates several digital services to help buyers and other stakeholders verify the status of off‑plan projects and their escrow arrangements. One of the most useful is the Real Estate Project Status service, which allows the public to look up registered projects in Dubai and view information such as the developer’s name and the latest reported construction completion percentage. This helps you cross‑check that physical progress aligns with the stage of payments you are being asked to make.
Separately, DLD provides an Escrow Account activation e‑service that sets out the technical and financial conditions that must be met before a project’s escrow account is fully activated to receive buyer funds. These may include recent DLD technical reports, minimum construction completion levels, or the deposit of funds from bank guarantees, the developer’s own capital, or mortgage financing, to ensure an appropriate risk profile before purchasers’ money is used. Steps to activate an escrow account for Dubai developer applications must be handled by the developer, DLD, and an approved trustee bank.
Through arrangements approved by the DLD and the RERA, only UAE Central Bank-licensed banks that are formally approved by RERA may act as escrow trustees. These banks are required to open independent escrow accounts for each real estate project and, in some cases, separate sub-accounts for individual units, all subject to DLD/RERA supervision and compliance requirements.
EGSH, as a licensed government services centre, can assist buyers, investors and developers in accessing DLD e‑services, understanding what information to review before making payments, and preparing the documentation needed for dealings with DLD or escrow trustee banks, while all formal decisions remain with the competent authorities.
Paying Safely for Off‑Plan Property in Dubai
Law No. (8) of 2007, implemented by DLD and RERA, requires that buyers’ instalments for off‑plan units be paid into project‑specific, ring‑fenced escrow accounts, managed by approved trustee banks and monitored through regular technical and financial reporting.
For buyers, the core steps are to verify that the developer and project are properly registered, confirm the correct escrow account details, pay only into that account, and periodically check project information through DLD channels. EGSH can support you in navigating these official processes and interacting with DLD and escrow agents, while your rights and obligations continue to be defined by Dubai’s real estate laws and regulations.
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FAQ
What is an escrow account for off-plan property in Dubai?
It is a bank account opened in the name of a specific off‑plan real estate project, into which all payments from buyers, financiers and mortgage lenders for that project must be deposited under Law No. (8) of 2007. The funds in this account are used only for construction and directly related costs of that project, and cannot be seized by the developer’s other creditors.
How does a RERA escrow account protect off-plan buyers?
RERA oversees the registration of developers and projects, approves trustee banks, and monitors inflows and outflows from each escrow account against construction progress. Because all buyer payments must go through the regulated account and disbursements are restricted to project purposes, with ring‑fencing from other debts, buyers gain stronger protection against the misuse of their instalments.
How to check an escrow account for a Dubai off-plan project?
Buyers should obtain the official escrow account details from the developer’s DLD‑approved documentation and ensure that the account is in the project’s name and held with an authorised trustee bank. They can then verify these details through DLD channels or via a government services centre such as EGSH before making any transfer, and keep confirmations from their bank showing payment to that specific account.
What happens if a developer does not complete an off-plan project in Dubai?
If a project is not completed, the law requires the escrow agent, after consulting DLD, to take measures to preserve buyers’ rights. Depending on the situation and DLD’s direction, this can include arranging for another party to complete the project or refunding buyers from the remaining balance in the project’s escrow account.
What are the penalties for using funds outside the escrow account in Dubai?
The DLD has imposed administrative fines, such as AED 50,000, on companies that received buyer payments outside the approved escrow account or advertised non‑registered projects, with the possibility of licence suspension and referral to the Public Prosecution if violations persist. More serious conduct, such as misappropriating development funds or running fraudulent projects, can attract criminal penalties, including imprisonment and fines of at least AED 100,000.
Is my off-plan project registered with RERA?
You can confirm registration by checking project details through DLD’s Real Estate Project Status service or by requesting official confirmation via DLD or a government services centre. Registered projects will appear in DLD systems, including project name, developer, and completion percentage, indicating that they are subject to RERA’s off‑plan supervision framework.
What is the DLD Real Estate Project Status service for off-plan projects?
It is an electronic service provided by DLD that allows the public to view registration and progress information for real estate projects in Dubai, including off‑plan developments. By entering the project name or other identifiers, buyers can see the developer, basic project data and the latest completion percentage reported to DLD.
What are the steps to activate an escrow account in Dubai a developer must follow?
A developer must submit an application through DLD’s Escrow Account activation service, providing documents such as the trade licence, title deed, approved designs, financial statements and required technical reports. DLD evaluates whether the technical and financial conditions are met – including any minimum construction thresholds, initial funding from the developer, bank guarantees, or mortgage finance – before authorising the account to receive buyers’ funds.
Reviewed by
Muneer Juma Al Balushi
Real Estate Registration Trustee Consultant
Muneer Juma Al Balushi has six years of experience in the real estate registration system of the Dubai Land Department. He specialises in accurate, secure, and legally compliant property registration.
This article is intended to provide general information based on official UAE sources, and does not constitute personalised legal advice. Before acting, applicants should verify the current rules and fees directly with the relevant authority or an authorised service centre.
