The UAE has been among the best places for real estate investment in recent years. Many variables, such as governmental initiatives and authorities and order circumstances, support the popularity. The authorities took action to protect the interests of both buyers and developers, regardless of whether buyers choose a villa or an off-plan property. Escrow accounts are one such activity that is being used for off-plan transactions. Until all payments are made and ownership of the property is transferred to the owner, buyers and developers are required to use an escrow account.
Here, we have covered all aspects of escrow accounts, including how they operate and their advantages.
ESCROW ACCOUNT DEFINITION
A keeping account where purchasers’ funds are stored until the instalments are paid is known as an escrow account. Up until the project is turned over, the government is in charge of these finances. Depending on the terms set out by the escrow account management authority, developers are only permitted to request a particular amount of money from the escrow account.
HOW DOES ESCROW WORK?
When a buyer gets to a contract to acquire an off-plan home, real estate authorities like TAMM Abu Dhabi and RERA Dubai create an escrow account. The buyers must deposit the remaining sum into the escrow account in accordance with the payment plan once the contract has been registered.
The developers are not allowed to utilize any funds from the account other from those needed for fees related to sales, marketing, consulting, construction, and land. However, the transfer of these money to the project consultant and contractor only occurs at the conclusion of each construction phase.
In addition to these requirements, the developer may request funds from the account in accordance with the terms and conditions outlined by the regulating authority.
THE ESCROW ACCOUNT SETUP PROCEDURE
For an off-plan project, the developer asked the relevant authority to activate an escrow account. Each Emirate has its own unique account opening procedures.
The methods for setting up an escrow account in Dubai are described here in more detail.
- Select “Escrow Account Link” after logging into the “Oqood” site.
- Select the necessary service, then submit your application. The application will be handed immediately on to the account trustee after it has been submitted.
- The trustee will review the application, upload the supporting materials, and submit it to the TAS system.
- The escrow account department will investigate and decide whether to accept or reject the application. If approved, the system will be automatically updated.
The project’s payment schedule is the only record needed to process the application. However, developers must meet the requirements listed by DLD Dubai before filing an application.
Keep in mind that this procedure is only applicable to developers in Dubai; those in the other Emirates must follow the procedure detailed on the website of the land authorities.
WHY IS A REAL ESTATE ESCROW ACCOUNT REQUIRED?
There are several checklists for buying an off-plan property in Dubai and the other Emirates, but dealing with transactions is not one of them. A secured escrow account can be used for this purpose.
Here are some additional advantages to utilizing an escrow account when buying an off-plan home in the UAE.
Escrow serves as a secured third-party account that controls and keeps funds up until the transaction is finished. However, an escrow account ensures that no one keeps the money and safeguards the interests of both parties, facilitating a smooth transaction.
PROCESS FOR SECURE TRANSACTIONS
A down payment and ongoing payments are needed to confirm the deal when buying an off-plan property. By placing the funds in an escrow account, the developer is guaranteed that the buyer has the resources to pay the whole price, ensuring the security of the transaction for both parties.
There are no financial discrepancies because a third party oversees the escrow account. Additionally, both parties know that their finances are safe and that they may get their money back in the event that the Sales and Purchase Agreement (SPA) is broken.
RECORD OF LEGAL ACTIONS
Law requires the escrow account to give a formal record of the buyer’s installment payments. Having stated that, this legal document may be utilized as financial evidence in future legal proceedings.
The escrow account was the main focus of this. Escrow accounts are a government program in the United Arab Emirates to protect off-plan property purchase. This provides a further justification for real estate investment in the nation. Browse through these properties for sale in the UAE to locate an acceptable unit to invest in if you’re also interested in taking advantage of real estate investment opportunities in the UAE.