Property Deposit Refund UAE: A Practical Guide for Tenants & Buyers

Recovering a property deposit begins with establishing why the money must be returned. A tenant may be entitled to repayment after handing back an apartment. A buyer may need to establish that a seller breached the sale agreement. An investor in a cancelled development may have to pursue repayment through a specific regulatory or judicial process.

These situations involve different legal rules. A payment receipt proves that money changed hands, but the agreement and subsequent events help determine who is entitled to keep it.

This guide explains the legal issues affecting a property deposit refund in the UAE, with particular attention to rental deposits, purchase deposits and off plan property in Dubai.

Which law applies to a property deposit refund?

Federal Decree Law No. 25 of 2025 introduced the new UAE Civil Transactions Law, which came into force on 1 June 2026. Its provisions address matters including earnest money, contractual performance, termination and compensation.

The date of the transaction matters. Article 4 establishes the general rule that legislation applies from its effective date and does not operate retrospectively unless otherwise provided. Earlier contracts and events therefore require a separate assessment of the applicable law.

Article 4 also recognises the continuing role of special legislation. Consequently, the general contract provisions must be considered alongside the relevant tenancy and property development laws.

The Dubai procedures discussed below should not automatically be applied to property in another emirate or a jurisdiction with separate rules.

When should a landlord return a rental security deposit?

For tenancies governed by Dubai Law No. 26 of 2007, Article 20 permits a landlord to collect a security deposit to ensure maintenance of the property when the tenancy expires. The landlord must return the deposit or its remaining balance upon expiry.

Article 21 requires the tenant to return the property in the condition in which it was received, allowing for ordinary wear and tear and damage arising from circumstances beyond the tenant’s control.

A rental security deposit refund therefore depends partly on distinguishing genuine tenant responsibility from deterioration associated with ordinary use.

For example, a broken fixture caused by misuse raises a different issue from an existing defect documented at the beginning of the tenancy. The age and previous condition of an item may also be relevant when assessing a replacement claim.

A tenant disputing deductions should request:

• An itemised explanation of each deduction.
• Photographs and inspection findings identifying the alleged damage.
• Relevant invoices, quotations or other supporting records.
• The contractual basis for any additional charge.

An invoice may help establish the cost of work, but the dispute may still concern whether the tenant was responsible for that work. Similarly, a general reference to “maintenance” does not explain which items required attention or why the tenant should pay.

Move in photographs, maintenance correspondence and a signed handover record can help resolve these questions.

Can a buyer recover a booking or purchase deposit?

Purchase deposits require careful examination of the agreement. A reservation payment, an instalment of the purchase price and earnest money may serve different purposes.

Article 137 of the new Civil Transactions Law provides that earnest money paid when concluding a contract generally indicates that the contract is final and cannot simply be withdrawn from, unless the agreement or custom provides otherwise.

The same article addresses an arrangement under which the parties agree that earnest money is the price of withdrawing from the contract. Where that arrangement applies:

• The party who paid the earnest money forfeits it if they withdraw.
• The party who received it must return it together with an equivalent amount if they withdraw.

Repayment of double the deposit is therefore not an automatic consequence of every unsuccessful property purchase. The contractual arrangement and the reason the transaction failed must be established.

A sale agreement may also contain a separate compensation clause dealing with seller default. That clause requires its own assessment. A contractual right to withdraw and a failure to perform an existing obligation are different legal questions.

What does a “non refundable” deposit clause mean?

A clause describing a deposit as non refundable is relevant, but it must be read with the rest of the contract.

The assessment should establish what event triggers retention. Does the clause concern a buyer changing their mind, failure to pay the balance, failure to obtain finance, or another specified event? Does the contract separately require repayment if the seller cannot transfer the property?

Article 120 of the Civil Transactions Law directs attention to contractual intentions and meaning. Article 221 requires performance consistent with the contract and good faith.

Where a retention clause operates as agreed compensation, Article 340 may also become relevant. It permits judicial reduction in specified circumstances, including where the debtor proves that the agreed assessment was excessive or the original obligation was partly performed. Its application should be distinguished from the agreed withdrawal arrangement addressed in Article 137.

Neither the label attached to the payment nor a single sentence in the agreement should replace analysis of the complete transaction.

Does mortgage rejection entitle the buyer to a refund?

A rejected mortgage application does not produce the same result in every property sale.

The first question is whether the purchase was expressly conditional on obtaining finance. The next questions concern the application deadline, the evidence required and the consequences specified if approval is refused.

The property sale contract published by Dubai Land Department includes provisions addressing a purchase conditional on a financial loan. Where the applicable condition is satisfied, the form provides for the deposit cheque to be returned if the buyer cannot obtain the loan within the specified period.

The signed agreement must be checked carefully. Relevant evidence may include the finance application, the bank’s decision and communications sent before the contractual deadline.

A buyer seeking a booking deposit refund should preserve these records as soon as a financing difficulty arises.

What if the seller fails to complete the transaction?

A seller’s failure to provide the necessary documents or complete a promised transfer may create grounds for legal action. However, the buyer must establish the obligation, its due date and the relevant failure.

Article 234 of the Civil Transactions Law allows a party to a reciprocal contract, after giving the required notice, to seek judicial performance or rescission when the other party fails to perform an obligation that has become due.

The court retains powers under the provision, including granting additional time and refusing rescission where the unperformed obligation is of minor importance. Compensation may be awarded where justified.

Article 237 provides for the parties to be restored to their previous position when the contract is rescinded or dissolved, with compensation where restoration is impossible.

A property deposit refund claim may therefore require a request to rescind the sale agreement as well as a request for repayment.

Notice requirements also matter. Under Article 235, an agreement providing for automatic rescission does not itself dispense with notice unless the parties expressly agree to waive it. The wording of the contract should be reviewed before treating the sale as terminated.

What happens to deposits paid for off plan property?

An off plan property refund requires an assessment of the project’s status and the parties’ performance.

A delayed project, a formally cancelled project and a contract terminated because of buyer default are legally different situations.

Dubai Land Department recorded 132,500 off-plan property sales in 2025. Its market overview also reports approximately AED 917 billion in real estate transactions. These market-wide figures provide context for the scale of property dealings; they are not deposit refund statistics or recovery rates.

In Dubai, Article 11 of Law No. 13 of 2008, as replaced by Law No. 19 of 2020, establishes procedures where a purchaser fails to fulfil contractual obligations. These include notification to Dubai Land Department, a 30 day notice to the purchaser and confirmation of the project’s completion percentage.

The developer’s available remedies depend on the statutory conditions. Retention should not be calculated using an assumed universal percentage of the deposit. Certain statutory retention limits refer to the property’s contract value.

Where RERA cancels the project through a final reasoned decision, Article 11 requires repayment of all purchaser payments in accordance with the applicable escrow legislation and procedures.

That repayment obligation should not be confused with a guarantee that every purchaser will receive funds immediately. The project’s financial position and the applicable liquidation or enforcement process remain relevant.

Decree No. 33 of 2020 also regulates the Special Tribunal for Unfinished and Cancelled Real Property Projects. Where a dispute falls within its jurisdiction, the decree restricts other courts and judicial entities from hearing it. Project status and jurisdiction should therefore be established before commencing proceedings.

What if a broker is holding the deposit cheque?

The person holding a cheque is not necessarily entitled to decide who receives its value.

The sale contract published by Dubai Land Department contains a provision treating the deposit cheque as held in trust. It restricts disposal or encashment without joint written instructions and addresses the need for a court order where entitlement is disputed.

The actual agreement should be examined to establish the holder’s authority, the conditions for release and the identity of the party legally responsible for repayment.

Brokerage commission should also be identified separately from the purchase deposit. A claim concerning one payment does not automatically resolve entitlement to the other.

How can a tenant claim a withheld deposit through the RDC?

Dubai’s Rental Disputes Center identifies a payment writ as an available route for recovering a rental security deposit, subject to the applicable requirements.

The service requires written evidence of a specified amount that is immediately due. Its published terms also require a payment demand through a notary public or registered mail, followed by five days without payment before the application is filed.

Supporting documents must be submitted in Arabic or accompanied by the required legal translation.

This procedure requires an assessment of the evidence. Where the amount due depends on resolving substantial disputes about damage or contractual liability, the appropriate rental claim procedure should be considered.

A rental dispute lawyer in Dubai can assess whether the documents support a payment writ or whether the dispute requires fuller examination.

What should a formal repayment demand contain?

A demand should identify the legal and factual basis of the property deposit refund. It should explain:

• The property and the parties involved.
• The amount paid, payment date and recipient.
• The agreement governing the payment.
• The event giving rise to repayment.
• Any disputed deductions and the reasons for disputing them.
• The amount requested and the applicable response period.

The supporting file should contain the complete agreement, amendments, payment records and relevant correspondence. Tenants should add condition reports and handover evidence. Purchasers should include completion notices, financing records where relevant and any written acknowledgment that repayment is due.

The method and timing of service must match the procedure being pursued. An informal reminder may assist negotiations, but it may not satisfy the requirements of a formal legal notice.

How can a property lawyer assist with recovery?

A property lawyer in Dubai can determine whether repayment is already due or whether the claim first requires termination of a contract, resolution of disputed deductions or participation in a project liquidation process.

That assessment helps identify the correct defendant, the appropriate forum and the evidence needed to support the claim.

For anyone seeking a property deposit refund in the UAE, the practical starting point is to establish the payment’s purpose, identify the event triggering repayment and document why the other party’s continued retention is disputed. Those findings provide the basis for a focused demand and, where necessary, legal proceedings.

Related Links

• What Legal Steps Can Tenants Take for Apartment Malfunctions Caused by Building Flaws?
• How to File a RERA Complaint for Off-Plan Property Issues: Your Legal Options Explained
• Facing Challenges With Security Deposit Refunds in the UAE?