Escrow accounts have a specific function in Dubai real estate. When a developer launches a new residential project, they must open this account for it. It is a mandatory requirement they must follow according to the Escrow Account Law in UAE. If a developer is launching multiple projects, they must open an individual account for each project. The buyers of units in the said project must deposit the amount in this account.
How do Escrow Account Protect Buyers?
Well, some of its benefits are:
• It limits the chances of fraud from the developers; the funds are only released for them after they have completed the promised development phase.
• Escrow accounts allow RERA to closely monitor the funding and the progress of the said project. This ensures enhanced satisfaction and peace of mind for buyers and investors.
• It limits the chances of delays and cancellations as developers know that they are being monitored by the concerned authorities.
• This type of account urges developers to perform well as the project is monitored by RERA. The project can be canceled if their performance isn’t up to the mark.
• When a developer must get an escrow account approved, they are required to submit the architectural drawings and the final project budget. This way, investors and buyers can rest assured that there will be no changes made to the original plan.
• If a developer proceeds without an escrow account and RERA license, they can be penalized and imprisoned as well.
• An escrow account can only be opened in specific banks
• Each bank or financial institute approved for opening escrow accounts has a dedicated team that evaluates the management of these accounts.
• Each buyer is given a unique reference number by the developer at the time of the payment. They must use this reference number only.
• So as a final thought, make sure to verify the escrow account among other details of a project before selecting it for making an investment or buying a unit. Get in touch with me for helping you to invest in Dubai.