Escrow Accounts: Safe Payment for Off-Plan Properties in Dubai

Financial security and transparency are necessary for a smooth and on-time completion of any real estate project. To protect both the developer and the buyer, Dubai mandates a secure and third-party transaction system for off-plan projects. The developer will need to create an Escrow Account. The developer opens the escrow account with a bank approved by the Dubai Land Department (DLD) after obtaining approval from RERA. 

This blog explains everything about escrow accounts for off-plan real estate developments in Dubai. Let’s explore everything in detail.

What is an escrow account in Dubai’s off-plan real estate projects?

An escrow account is a third-party account managed by banks in Dubai. When buyers make payments, the money goes into this account and stays there until part of the project is finished. The developer only gets the money after showing real progress and meeting the rules outlined in the escrow agreement.

Why Developers and Investors Prefer Escrow Accounts for Off-Plan Properties in Dubai?

Here are the benefits of creating an escrow account for real estate developments in Dubai for both investors and developers:

• The funds can be used only for project development.
• The funds are always available for construction.
• It is according to the RERA guidelines for off-plan sales.
• It prevents the misuse of payments.
• 5% of payments are reserved for potential defects.

How Can a Real Estate Agency Help You?

Setting up an escrow account for your off-plan property in Dubai doesn’t have to be stressful. With Jaxtox, you’ll get expert advice, full support, and the confidence that your investment is safe at every step.

Get in touch with Jaxtox today — we’ll make the process simple and hassle-free.

Key Legal Requirements for Escrow Accounts in Dubai

• RERA approval is required before opening an escrow account.
• Each account must be linked to one real estate project only.
• Accounts must be opened with RERA-approved banks.
• All buyer payments must go into the escrow account.
• Buyers get a reference number for tracking payments.
• Funds may be used only for specific project-related expenses, such as payments to contractors, consultants, and up to 5% for marketing.
• 5% of total payments stay locked for one year after handover for defect repairs.
• Funds are protected from the developer’s creditors.
• RERA monitors progress and can cancel delayed projects.
• Final budgets and plans must be submitted.

Documents Required to Open an Escrow Account for Off-Plan Properties in Dubai

According to Dubai’s Escrow Account Law (Law No. 8 of 2007), the following documents are needed to open an escrow account: 

• Certificate of Membership in the Dubai Chamber of Commerce and Industry
• Trade Licence (issued by the Department of Economic Development)
• Title Deed of the Land to Be Developed (issued by the Dubai Land Department)
• Copy of the contract concluded between the master developer and the sub-developer (if applicable)
• Initial Architectural Designs and Engineering Plans Approved by the Competent Entities and the Master Developer
• Financial Statement of the Estimated Cost and Revenues of the Project Certified by an Accredited Chartered Auditor
• Undertaking by the Sub-Developer to Start Construction Works Upon Obtaining Approval for Off-Plan Sale (or an undertaking by the master developer if no sub-developer exists)
• Standard Sale Contract Between the Developer and the Purchaser

Stepwise Process of Creating an Escrow Account for Off-Plan Projects in Dubai

If you are a real estate developer in Dubai, it is necessary to open an escrow account with the Dubai Land Department (DLD). Here is how to open an escrow account for your off-plan property:

Step 1: Access the Oqood Portal

Log in to the Oqood Portal provided by the Dubai Land Department. In this portal, developers can manage all the transactions for their projects.​

Step 2: Select ‘Completing the Provisional Procedures’

Within the portal, select the tab “Completing the Provisional Procedures.” It means that you now initiate the process of opening an escrow account for your project.​

Step 3: Enter Project Details

Next, select the property in question. Fill in the necessary details. Upload the required documents. The document of the project’s payment plan is mandatory to provide during this step.​

Step 4: Choose a Payment Method

Choose a suitable payment plan for the transaction that suits your needs. Options may include using the Noqodi wallet or deductions from the escrow account.​

Step 5: Submit Your Application

Review all the details carefully. Submit your application when everything is correct and all the necessary documents are provided.​

Step 6: Wait for Review and Approval

During this step, your application is first reviewed by an account trustee. If everything is in order, it is forwarded to the Escrow Account Department for final approval.​

Step 7: Buyer Makes Down Payment

Once the escrow account is approved and set up, the buyer will be required to make the first deposit into this account as agreed during the payment plan.

Contact Jaxtox Now to Open an Escrow Account in Dubai for Your Off-Plan Property

Want to create an escrow account for your off-plan real estate project? Our property advisors in Dubai will simplify the process and manage all the necessary steps on your behalf. We will guide you through every process, get the necessary documentation, and create an escrow account for your property. 

What is the purpose of the 5% retained amount in the escrow account?

According to Article 14 of the Escrow Account Law, once a project is finished, % of the total amount paid must remain in the escrow account for one full year. It ensures that the developer or contractor quickly fixes any problems or defects in the property that are visible at the time of handover or show up within the first year after the buyer receives the property.

For what purposes can payments be made from an escrow account?

Money from the escrow account can only be used to pay contractors, consultants, and some marketing costs. The developer cannot use this money for every project-related cost.

Conclusion

An escrow account in Dubai is a third-party and secure medium to protect buyer payments. It brings transparency on the developers’ side as they can only use the money for building the project. This transaction system helps to avoid project delays, builds trust, and follows RERA rules. If you need help setting up an escrow account, contact Jaxtox and let our experts handle the whole process for you.