Insights
How escrow protects your money when you buy off-plan in Dubai
What happens to your deposit and instalments, who checks the building is really going up, and what you can verify yourself from Canada.
The first question most Canadian investors ask about off-plan property is a simple one: if I send money for a building that doesn’t exist yet, what stops the developer from spending it elsewhere? In Dubai the answer is the escrow system. Here is how it works, in plain English.
What an escrow account is
Since Law No. 8 of 2007, every developer selling off-plan property in Dubai must open a dedicated escrow account for each project, held at a bank approved for the purpose and overseen by the Dubai Land Department (DLD) and its regulator, RERA. Your booking deposit and every instalment go into that project’s account, not to the developer’s general bank account, and never to a broker.
When you pay, the developer gives you the project’s escrow details and a payment reference. That reference ties each payment to your unit, so there is a clear record of what you have paid.
How the developer gets paid
Money is released to the developer in stages, as construction moves forward. Before each release, the developer submits progress reports and an independent engineer approved by RERA inspects the site and confirms the work has been done. Only then is the next tranche released. In practice that means your money follows the concrete: if the building stalls, the funds stay locked.
The law also protects the account from the developer’s creditors, so money held in escrow for your project cannot be seized to pay the developer’s other debts.
A safety margin after handover
A portion of the escrow balance, commonly cited as 5%, is held back for about a year after units are registered to buyers. It acts as a defects guarantee, so there is money available if problems show up after you move in or rent the unit out.
What if the project is cancelled?
Developers who fail to start or progress a project can have it cancelled by the regulator. When that happens the case goes to the DLD’s liquidation process: a trustee audits what is left in escrow and the developer is instructed to refund buyers. Refunds are typically ordered within a set period after the cancellation decision. It is not instant, and it is not something any buyer wants to go through, but it is a very different position from having paid a developer directly with no oversight.
Your Oqood: proof the unit is yours
Within 90 days of signing your Sale and Purchase Agreement, the developer must register the sale with the DLD. You then receive an Oqood certificate, the off-plan equivalent of a title deed. It records your unit, the price and the payment plan, and it is what you would use to resell before handover. When the building is finished, the Oqood is replaced by a title deed in your name.
Five checks you can do from Canada
- Check the developer is registered with RERA, using the Dubai REST app or the DLD website.
- Ask for the project’s DLD registration number and escrow account details, in writing, before you pay anything.
- Pay only into the escrow account shown on your official payment instructions. Never pay a deposit to an individual or a broker.
- Confirm bank details by phone with the developer or with us before every transfer. Email fraud is the most common way overseas buyers lose money, and it has nothing to do with the project itself.
- Make sure your Oqood is issued after you sign the SPA, and keep every transfer receipt for your records (you will also need them for Canadian tax reporting).
The bottom line
Dubai’s escrow rules are one of the main reasons off-plan buying works for overseas investors. Your money sits in a regulated, project-specific account and is released only as independent engineers confirm progress. Do the five checks above, and buying off-plan from Toronto or Calgary is far safer than most people expect.
Want to see how the payments would fit your budget? Try our purchase and mortgage calculator, or compare off-plan projects side by side.
Sources: Betterhomes, legal requirements for escrow accounts in Dubai · LEOS, how RERA and DLD protect off-plan buyers. General information, not legal advice. Confirm details for your project with the DLD.
Buying off-plan from Canada?
We check the developer, the escrow account and the payment plan with you before you send a dollar.