# How Dubai's escrow law protects off-plan buyers, and where it doesn't

> What Law No. 8 of 2007 requires developers to do with off-plan payments, what the 5 percent retention protects, and what happens if a project is cancelled.

Source: https://www.askeric.io/blog/how-escrow-works-off-plan

Published 2026-08-09.

Tags: buying-process, legal

## The short answer

If buying off-plan ever ends up on your family's Dubai list, not just renting while you settle in, there is one question worth answering properly before any deposit leaves your account: where does the money actually go before the building exists? Since 2007, Dubai law has answered part of that. Every developer selling units off-plan must open a dedicated escrow account for that specific project, deposit buyer payments into it, and release funds only for that project's own construction, never for the developer's other projects or debts. That is a real protection, and it comes straight from the Land Department's own fee and legal framework, Law No. 8 of 2007, which states an escrow account "will be dedicated exclusively to the construction of that Real Estate Development project" and that "no attachment may be imposed on the payments deposited in this account for the benefit of the creditors of the Developer."

What it is not is a guarantee that you get every dirham back if a project collapses. The Land Department's own guidance is explicit that if a project is cancelled, the escrow funds are what get returned, not a fixed sum, and that means a shortfall is possible if not enough of your money is still sitting in the account. Escrow lowers the risk of buying off-plan considerably. It does not remove it, and knowing exactly what it does and does not cover is worth ten minutes before you sign anything.

## The hidden mechanism: what actually happens to your payments

Escrow works by separating the money from the developer, not by holding it back from construction.

Under Article 7 of Law No. 8 of 2007, a developer cannot simply take your deposit into a company account. It has to go into an account opened in the name of the specific project, held by an accredited escrow agent, a bank or financial institution the Land Department has approved and lists on its own register of trustees. If a developer runs several projects, Article 9 requires a separate escrow account for each one; your payment for one tower cannot legally fund construction on another. If the developer later mortgages the project to raise finance, Article 13 requires that loan money to be deposited into the same escrow account too, under the same rules, rather than sitting outside the system.

Money does not sit idle in that account either. It is released against verified construction progress, which is the actual mechanism protecting you: a developer cannot draw down your instalments faster than the building is actually going up. Once the project obtains its completion certificate, Article 14 requires the escrow agent to hold back 5 percent of the account's total value, releasing that retained slice to the developer only a year after units are registered in buyers' names. That holdback functions as a defect buffer, giving the developer a direct financial reason to fix problems that show up in the first year rather than walk away from them.

## The variables that change how much protection you actually have

Three things move you from "escrow, in theory" to "escrow, in practice."

The first is whether the escrow account genuinely exists for the exact project you are being shown, not just for the developer in general. Article 5 of the law bars a developer from advertising or marketing off-plan units without the Land Department's written authorisation, and a 2025 RERA circular to developers is explicit that this covers projects being promoted "before completing the required registration procedures and opening an escrow account," which it names as a violation of the law. Ask the developer directly for the escrow account number and the name of the trustee bank, and cross-check that bank against the Land Department's own published list of approved escrow trustees, rather than taking a sales agent's word for it.

The second is what happens if the project stalls or is cancelled, and here the protection has real limits. The Land Department is direct that it cannot terminate a contract between developer and buyer just because a buyer wants out; that goes to the real estate court, with the Department's role limited to trying to reconcile the two sides. If a project is formally cancelled, the account moves to the Department's liquidation section, which asks the developer to return buyer payments within 60 days, extendable for cause, escalating to the courts if the developer does not comply. Crucially, the Department describes the actual payout as being "distributed to the beneficiaries, either in full or in proportion, depending on the amount available in the account." If most of what you paid has already gone toward genuine construction costs and the project still fails, "in proportion" can mean less than what you put in.

The third is your own side of the contract. Escrow protects your money from the developer's other creditors, but it is not protection against your own missed instalments. Under the separate Interim Property Register law, a developer facing a defaulting purchaser can, after a formal Land Department notice and cure period, unilaterally terminate the agreement and keep a share of the unit's value out of what was already paid into escrow, a share that scales with how far construction has actually progressed, before refunding the remainder. That process runs through the [interim register](/blog/dld-transfer-fee-explained) that off-plan sales are entered into before a home is finished. Keeping instalments current is as much a part of protecting your deposit as the escrow law itself.

## A worked example

Picture a family paying a 20 percent deposit on an off-plan two-bedroom, with the rest due against construction milestones over two years. Before transferring the deposit, they ask the developer for the project's escrow account number and trustee bank name, and check that bank appears on the Land Department's own trustee list rather than trusting a brochure. Partway through, they ask for a current completion percentage from the project's Land-Department-approved consultant before making the next instalment, since payment requests are meant to track real progress, not a fixed calendar. Neither step slows the purchase down. Both are the difference between confirming the protection is actually in place and simply assuming it.

This is general information, not financial advice, not legal advice and not immigration advice; always speak to a licensed professional before you act.

## A practical order to run this in

1. **Get the escrow account number and trustee bank name in writing** from the developer before any payment leaves your account.
2. **Check that bank against the Land Department's published list of approved escrow trustees**, rather than taking the sales team's word for it.
3. **Confirm the project has Land Department authorisation to market off-plan at all**, since that authorisation only follows a working escrow account.
4. **Ask for a completion-percentage update from the project's approved consultant before each instalment**, not just before the first one.
5. **Keep your own instalments current**, since a default can cost you a meaningful share of what you have already paid in.

## The one-line version

Escrow means your off-plan payments are ring-fenced for that one project and released against real progress, not that you are guaranteed to get every dirham back if the project fails, so checking that the account is real matters as much as checking the price.

## Sources

- [Law No. (8) of 2007 Concerning Escrow Accounts for Real Estate Development in the Emirate of Dubai](https://dlp.dubai.gov.ae/Legislation%20Reference/2007/Law%20No.%20(8)%20of%202007.html)
- [Dubai Land Department: Frequently Asked Questions](https://dubailand.gov.ae/en/frequently-asked-questions/)
- [Dubai Land Department: Approved Escrow Account Trustees](https://dubailand.gov.ae/en/eservices/certified-escrow-agents/escrow-account-details/)
- [RERA Circular (2025-02): Compliance with Law No. (8) of 2007 Regarding the Marketing of Real Estate Projects](https://dubailand.gov.ae/media/s33iktc4/compliance-with-law-no-8-of-2007-regarding-the-marketing-of-real-estate-projects.pdf)
- [Explanatory Notes on Article (11) of Law No. (19) of 2017 Amending Law No. (13) of 2008](https://dlp.dubai.gov.ae/Legislation%20Reference/2018/Explanatory%20Notes%20on%20Article%20(11)%20of%20Law%20No.%20(19)%20of%202017.pdf)