Abu Dhabi: Developers can now cancel off-plan sales under new laws
Revised rules aim to enhance transparency and investor protections
ABU DHABI has enacted major real estate law reforms through Law No. (2) of 2025, empowering developers to terminate off-plan sale and purchase agreements (SPAs) under regulated conditions.
The update eliminates the need for developers to go to court or arbitration if buyers default on contractual obligations, offering a faster route for dispute resolution.
This change is part of broader efforts to create a more investor-friendly legal framework. The Department of Municipalities and Transport (DMT) confirmed that the reforms will boost market efficiency, enhance protections, and support long-term growth in the real estate sector.
Termination process explained
Developers may now cancel SPAs if a buyer materially defaults on payment obligations. However, strict procedures must be followed to ensure due process. A notarised or registered notice must first be issued to the buyer, allowing a 60-day cure period. After 15 days, developers must notify the DMT and submit a certificate from the escrow trustee confirming continued default.
The DMT must then initiate an amicable settlement process before the 60-day period expires. If no resolution is reached and default continues, the developer may finalise termination after a 30-day cooling-off period.
Regulatory oversight & buyer protections
The Abu Dhabi Real Estate Centre (ADREC) will oversee all contract terminations, verify developer compliance, and mediate disputes. Escrow account funds remain protected—developers can only access funds proportionate to construction progress and default severity. Any surplus must be refunded to the buyer based on government-specified deductions.
Buyers retain the right to challenge terminations in court or through arbitration, safeguarding their legal recourse. The law mandates clear documentation at every stage to ensure transparency.
Broader sector reforms
In addition to contract terminations, the reforms restructure property management by replacing Owners’ Associations with Owners’ Committees. Professional firms will now handle daily operations of shared spaces, while owners’ bodies focus on oversight.
The new legislation introduces stricter licensing rules, sets out fines of up to Dh2 million, and aims to increase transparency and accountability in Abu Dhabi’s growing real estate market.