Escrow account in Dubai

When you buy an off-plan property in Dubai, you pay a large part of the price before the construction is completed, and sometimes even before it starts. The natural question here is: where do these payments go, and who ensures they are not spent elsewhere?

The answer lies in the escrow account system. The amounts paid by the buyer do not enter the developer’s operational account, but are deposited in a special bank account for the project itself, and withdrawals from it are subject to the supervision of the Land Department. In this guide, we explain what an escrow account is, how it works from reservation to delivery, what protection it offers you, and how to verify it before making any payment.

What is an escrow account in Dubai?

The escrow account is the special bank account for the real estate project, in which the amounts paid by off-plan unit buyers or project financiers are deposited. It is regulated by Law No. (8) of 2007 regarding escrow accounts for real estate development in the Emirate of Dubai.

This system is based on three main rules:

• Independent account for each project: The account is opened in the name of the project and is used only for its purposes. If a developer develops three projects, each project has a separate escrow account.

• Certified banking management: The account is managed by the “account trustee,” which is a bank or financial institution accredited by the Land Department.

• Government supervision: The Land Department monitors the deposit and withdrawal movements through periodic reports submitted by the account trustee.

The legal basis for the escrow account

Law No. (8) of 2007

This law applies to every developer who sells off-plan units in real estate development projects in Dubai and receives payments from buyers or financiers. No developer may engage in this activity unless registered in the “Real Estate Developers Register” at the Land Department and licensed by the competent authorities.

The law also requires the developer to apply to the Land Department to open an escrow account for the project before selling off-plan. The account is regulated by a written agreement between the developer and the account trustee, which specifies its management terms, and a copy is deposited with the Land Department.

This law complements the Oqood system for initial property registration, in which off-plan unit sales contracts are registered. You can review the general requirements for purchase in the guide Requirements for buying an off-plan unit in Dubai.

Parties involved in the escrow account

How does the escrow account work from reservation to delivery?

The buyer’s funds in the escrow account go through four main stages:

1. Project registration and account opening: The developer registers the project with the Land Department and opens the escrow account before starting marketing or sales. Marketing a project before completing these procedures is a clear violation of the law.

2. Depositing buyer payments: Reservation and installment amounts are paid directly into the escrow account, not into the company’s account or any other party.

3. Disbursement in stages: Funds are disbursed for the purposes of constructing the project, according to completion stages approved by the Land Department, not at the developer’s discretion.

4. Retention after completion: After the developer obtains the completion certificate, the account trustee retains a percentage of the account value for a specified period before final release.

When can the developer withdraw funds?

The developer cannot withdraw from the escrow account at will. Disbursement is linked to actual construction progress, and the money is used only for the same project. This means that the payment schedule in your contract may require a certain installment, but the developer’s access to that installment depends on the completion of the corresponding stage.

For this reason, it is advisable to monitor the project’s completion percentage registered with the Land Department and compare it to the installments you have paid, especially in payment plans where most installments are concentrated during construction.

The 5% amount withheld after completion

The law stipulates that the account trustee retains 5% of the total value of the escrow account after the developer obtains the completion certificate. This percentage is not released to the developer until one year has passed since the units were registered in the buyers’ names.

The purpose of this retention is to keep the developer motivated to address defects and issues that appear after delivery. That is why the stage of property snagging before handover is especially important, as it is the right time to document any issues before this period ends.

How does the escrow account protect the buyer?

The escrow account system provides the buyer with several layers of protection, most notably:

• Funds in the account cannot be seized: The amounts deposited in the escrow account cannot be seized in favor of the developer’s creditors. If the developer faces debts or financial disputes, the project funds remain protected.

• Funds are allocated to the same project: The developer cannot transfer funds from one project to finance another, which used to happen in markets lacking this system.

• Financing loans deposited in the account: If the developer mortgages the project to obtain a loan, the financing entity must deposit the loan amount in the escrow account, to be disbursed according to the same regulations.

• Right of access: The depositor or their representative has the right to review the account’s accounting records and obtain copies.

• Periodic supervision: The account trustee is required to provide the Land Department with regular data on revenues and payments, and the Land Department has the right to request any information or assign an audit entity.

Penalties for violating developers

The law imposes imprisonment, or a fine of not less than AED 100,000, or both, for violations such as:

• Practicing real estate development without a license.

• Offering units in fictitious projects for sale with knowledge thereof.

• Embezzling or misappropriating funds paid for the project or using them for unauthorized purposes.

• Issuing a false audit report or concealing material facts in it.

In addition, the penalty schedule approved by the Real Estate Regulatory Agency sets a fine of AED 500,000 for not opening an escrow account, and the same amount for not depositing funds in the account.

What happens to your money if the project is stalled or canceled?

If circumstances arise that prevent the project’s completion, the law requires the account trustee to consult with the Land Department and take necessary measures to protect depositors. These measures may follow one of two paths: ensuring project completion or refunding amounts to buyers.

The developer’s registration is also canceled in cases such as:

• Declaration of bankruptcy.

• Failure to commence construction within six months of obtaining off-plan sale approval, without an acceptable excuse.

• Revocation of the developer’s license.

Your money being in the escrow account is what makes these measures practically possible, as the funds remain registered in the project’s name and are not mixed with the company’s funds. For detailed procedures in such cases, refer to the guides How to act if an off-plan project is canceled and Buyer’s rights in case of delayed delivery.

How do you verify the project’s escrow account before payment?

Verifying the escrow account is a step that takes minutes and should be done before paying any amount, including the reservation fee. Follow these steps:

• Search for the project officially: via Dubai REST app, or through the project tracking service on the Land Department website under the Real Estate Regulatory section.

1. Match project data: Ensure the project name, number, and developer’s name match what was presented to you.

2. Verify the escrow account: Check for the existence of a registered escrow account for the project and the name of the account trustee bank.

3. Review the completion percentage: Compare the registered completion percentage with what is advertised in marketing materials.

4. Review the contract: Make sure the sales contract includes the escrow account number and that payment instructions refer to it explicitly.

For comprehensive verification of the project and developer’s license, refer to the guide How to verify that a real estate project in Dubai is licensed and safe.

Warning signs before payment

Stop and verify before payment if you notice any of the following:

• Request to transfer the amount to an account in the name of the developer company, a broker, or an individual.

• Request for cash payment or through a third party.

• Marketing a project that does not appear in official records or does not have an advertising permit.

• Failure to mention the escrow account number in the contract or in payment receipts.

• Pressure to complete the reservation quickly before you can verify.

The Land Department has explicitly urged investors to ensure that off-plan projects sold are registered in the escrow account and not to pay any amounts outside the project’s escrow account. To choose a developer with greater confidence, refer to the guide How to choose a trusted real estate developer in Dubai.

Buy your off-plan property in Dubai with confidence with Imtilak Global

The escrow account protects your money, but protection starts with choosing and verifying the right project before reservation. At Imtilak Global, our team of consultants accompanies you at every stage. We verify the registration of the project and its escrow account, review the payment plan and contract terms with you, and monitor construction stages until you receive your unit. If you reside outside the UAE, we help you complete the purchase remotely, step by step. Contact us now via WhatsApp and get a free consultation to help you choose a reliable project that suits your budget and goals.

Investor Guide: Frequently Asked Questions about the escrow account in Dubai

Can the developer use the escrow account funds for another project?

No. The escrow account is opened in the name of the project and used only for its purposes, with a separate account for each project. Using project funds for unauthorized purposes is a violation punishable by imprisonment, a fine, or both.

Is it permissible to pay the developer outside the escrow account?

For off-plan properties, payments must be deposited into the project’s escrow account. Not depositing amounts in the account is a violation with a fine of AED 500,000 on the developer. Therefore, you should not pay any amount to another account, even if presented as a temporary measure.

What happens to my money if the developer goes bankrupt?

The escrow account funds cannot be seized in favor of the developer’s creditors, and the bankrupt developer’s registration is canceled. The account trustee, in consultation with the Land Department, takes necessary measures to protect depositors, either by completing the project or refunding amounts.

How do I know the escrow account number for a specific project?

You can search for the project via the Dubai REST app or the project tracking service on the Land Department website. The escrow account number should also be mentioned in the sales contract and payment instructions.

Is the escrow account required for ready properties?

No. Law No. (8) of 2007 applies to the sale of off-plan units in projects that are not yet completed. For ready properties, the price and ownership are transferred in a single transaction upon registration with the Land Department.

What is the percentage of amounts withheld after completion and when is it released?

The account trustee retains 5% of the total value of the escrow account after the developer obtains the completion certificate, and it is not released to the developer until one year after the units are registered in the buyers’ names.

The escrow account is the first line of protection for off-plan property buyers in Dubai. It keeps your money allocated to your project, links its release to the developer with construction progress, and protects it from the developer’s creditors if the project is stalled. But this protection starts with you: verify the project account before payment, and do not transfer any amount outside it.

If you are considering buying an off-plan property in Dubai, contact the Imtilak Global team to help you verify the project registration and its escrow account before reservation.