How the UAE Escrow Law Protects Off-Plan Property Buyers

Off-plan property sales have become a mainstay of Dubai’s real estate market. More than 20,000 new units sold in the first quarter of 2024 alone and developers are launching projects at a pace not seen since the pre-Expo boom. With demand from both local and overseas buyers keeping prices and volumes climbing and so much capital tied to projects still under construction, the way those funds are handled matters more than ever. Dubai’s escrow law, first introduced in 2007, is the main safeguard for buyers, ensuring that payments are released only when real progress is verified. The sections below look at how the system works today and how it continues to protect investors in the off-plan market.

Legal foundation and purpose
When Dubai’s off-plan market first took off, most developments were funded almost entirely by buyers paying in stages. It worked well while projects stayed on schedule, but when delays or defaults occurred, investors had little protection. To restore confidence, Dubai issued Law No. 8 of 2007 under the Ruler’s authority, creating a regulated structure for how funds must be held and used. It placed the Dubai Land Department in charge of registration and oversight, with the Real Estate Regulatory Agency (RERA) responsible for day-to-day supervision. The law’s purpose was simple: to make sure money paid for one project stays with that project and to give the government a mechanism to step in if things go wrong. Over time, this framework has become one of the main reasons off-plan investment in Dubai feels safer and more predictable than it once did.

How escrow accounts work in practice
The way escrow accounts operate today is far more structured than when the system first came in. Early on, oversight was still finding its footing and developers were adjusting to stricter cash controls. Now, every off-plan project must be registered with the Dubai Land Department and linked to a licensed bank approved by RERA before sales can even begin. Buyer payments move directly into that account and are released only after an engineer verifies progress on site. Each stage is logged, signed off, and reviewed, which gives regulators a live picture of where every dirham goes. This has helped keep the market stable. Developers plan builds around milestone approvals, and buyers can see how their money tracks the work, which has really changed the level of trust people have in off-plan projects.

Oversight and compliance
Oversight of Dubai’s escrow system sits mainly with the DLD and its regulatory arm, RERA. Every new project must be registered before sales can start, and both the developer and the escrow bank have to file regular reports showing how funds are received and used. RERA audits those accounts and can call for site inspections if progress doesn’t match what’s been reported. These checks stop money from being diverted to other projects and give regulators an early warning if a developer is struggling or falling behind schedule. When serious breaches occur, RERA can freeze withdrawals, impose fines, or suspend the project entirely. In some cases, licences have been revoked and developments reassigned to new management. This level of supervision keeps funds ring-fenced, protects buyers from insolvency risks, and helps the authorities step in early when signs of trouble appear.

Buyer safeguards and due diligence
For buyers, the protections built into the escrow system only work if they’re checked and used properly. The first step before signing anything is to confirm that the project is registered with the DLD and that its escrow account number appears on RERA’s database. This can be done easily through the DLD’s online portal or its smartphone app. Each project has a unique account, and every payment should go directly into it, never to a sales agent or third party. Buyers can also confirm progress and title registration through DLD services, which show whether the property is officially recorded in their name once handover is complete. These checks don’t take long, but give the reassurance of a clear trail for every payment and a way to verify what’s happening behind the scenes.

Wider impact on market stability
The escrow system has done more than just tighten rules; it’s changed how the off-plan market works day to day. Developers plan their cash flow around milestone releases, banks monitor progress more closely, and buyers know their money isn’t moving until real work is done. That structure has cut down on misuse and helped the market shake off the reputation it once had for unfinished or stalled projects. It’s also created a shared sense of accountability and renewed trust in Dubai’s real estate market.