Escrow, Oqood & SPA Sequencing, How To Avoid Common Errors in Dubai Off-Plan Deals

Why sequencing matters in off-plan transactions

In an off-plan sale, the buyer pays before ownership can be transferred. The law tries to balance that risk by controlling when money can be taken and how the buyer’s interest is recorded. If those controls are ignored or misunderstood, the buyer can lose leverage or protection without realising it.

Sequencing is simply the order in which things happen. In practice, it means knowing when funds can be paid, when a contract becomes binding and when the buyer’s interest is formally registered with the authorities. When those steps are mixed up, it becomes harder to enforce rights later on.

The role of escrow accounts

Dubai requires most off-plan projects to use a regulated escrow account, and enforcement around this has become more active in recent years as transaction volumes have increased. The account is opened in the project’s name and withdrawals are tied to verified construction progress. In simple terms, buyer funds are meant to be ringfenced and released only as the building is actually delivered.

Problems arise when buyers assume that any account described as “escrow” provides full protection. In reality, the account must be properly registered and linked to the specific project. Payments made to the wrong account, or before the account is active, can fall outside the protection regime.

We often see buyers paying booking amounts directly to a developer or to a holding account on the promise that the funds will later be transferred. If the project stalls or the developer faces financial issues, tracing and recovering those funds becomes much harder.

What Oqood actually does

Oqood is the interim property registration system used for off-plan units. It’s operated by the Dubai Land Department (DLD) and records the buyer’s interest before title deeds can be issued. Think of it as a temporary ownership record that sits between contract signing and handover.

Registration in Oqood isn’t automatic. It depends on the project being approved, the developer being compliant and the correct documents being submitted. Until registration is completed, the buyer’s interest is largely contractual rather than proprietary.

A common error is assuming that signing an SPA alone secures the unit. Without Oqood registration, the buyer may struggle to assert rights against third parties, especially if the developer encounters difficulties or restructures the project.

Understanding the SPA in context

The SPA is the core contract in an off-plan deal. It sets out the unit details, price, payment plan, completion date and remedies for delay or default. However, its legal effect depends heavily on timing and compliance with regulatory steps.

An SPA signed before escrow and Oqood requirements are properly met can leave the buyer exposed. In some cases, the contract may be enforceable only as a private agreement, limiting access to statutory protections designed for regulated off-plan sales.

We also see SPAs issued with missing schedules, unclear unit descriptions or open-ended completion clauses. These issues are often overlooked at signing but become central when disputes arise later.

How the sequence should work in practice

In a well-structured off-plan deal, the project is first approved by the regulator, including the Real Estate Regulatory Agency under the DLD. A compliant escrow account is opened and linked to that project. Only then should buyer funds be requested into that account.

The SPA should be issued in its final form, signed by both parties and aligned with the approved project details. Following that, the buyer’s interest should be registered through Oqood within the prescribed timeframe. Each step reinforces the next, creating a clear audit trail.

When this order is respected, buyers have stronger statutory rights and clearer remedies if things go wrong. When it isn’t, enforcement often depends on negotiation rather than law.

Common mistakes buyers make

One frequent mistake is paying money too early. Developers sometimes push for quick payments to secure a unit, especially in popular launches. Buyers may feel pressure to comply, assuming paperwork will catch up later. That assumption carries risk.

Another issue is relying on marketing summaries instead of the full SPA. Brochures and term sheets are not legally binding in the same way. If the SPA differs, the contract usually prevails.

We also see buyers failing to follow up on Oqood registration. They assume the developer has handled it, only to discover years later that registration never occurred due to missing documents or unpaid fees.

Risks created by poor sequencing

When escrow, SPA and Oqood steps are out of order, several risks arise. Refund rights may be limited if a project is cancelled. Delay penalties may be harder to claim if completion dates are loosely defined. In extreme cases, buyers may rank alongside unsecured creditors if a developer becomes insolvent.

These outcomes are rarely obvious at the start. They usually only emerge when something goes wrong, which is often years after the initial purchase. By then, correcting early errors can be complex and costly.

Practical steps to reduce exposure

At the most basic level, the first check should be where your money is going. Before paying anything, you should confirm that the escrow account is active and tied to the specific project, not just the developer’s name. Payment confirmations should clearly show the correct account and unit reference, because that paperwork often becomes important much later.

When you receive the SPA, it needs to be read in full rather than skimmed for price and payment dates. Clauses dealing with completion, delay and termination are usually where disputes start, and they only work in your favour if they’re clear at the outset.

After signing, you should receive confirmation that your unit has been registered on Oqood. Keep that record. If registration doesn’t appear or is delayed, it’s better to ask why at the time than assume it’ll resolve itself. These steps don’t remove all risk, but they do reduce uncertainty and leave you in a stronger position if problems surface later.

How Prestige Portfolios can help

Prestige Portfolios is an award-winning, locally owned real estate firm, certified by RERA and regulated by the DED, working with international families and investors active in Dubai’s prime and luxury off-plan market.

In off-plan transactions, we focus on getting the sequence right from the outset. That means checking escrow arrangements before any funds are paid, confirming Oqood registration is completed on time and reviewing the SPA so it reflects the approved project and payment structure. We work alongside developers, banks and legal advisers to make sure each step follows the correct order and is properly documented.

For buyers managing multiple acquisitions or investing from overseas, we provide on-the-ground oversight so practical details aren’t missed during the build period. To discuss a current off-plan purchase or review an existing contract, contact info@prestigeportfolios.com.