By Mohamed Ghanem
Lawyer I LLM I Lecturer I Speaker I DIAC Arbitrator
May 26, 2025
Dubai Cassation Obligates Successor Developer and Its Manager to Jointly Refund a Property Owner After Fraudulent Gift of Property to Itself Despite Escrow Payment and Land Department Registration
In one of the most telling and powerful property disputes to reach Dubai’s highest court, the Court of Cassation has reaffirmed investor protection and the rule of law in real estate development by ordering a successor developer and its owner/manager to jointly refund a buyer not only for the full purchase amount paid into escrow but also an additional AED 1 million in damages.
🏗️ A Dream Bought, Then Delayed
Back in 2007, a buyer entered into a sales agreement with a prominent developer to purchase a residential unit in a Dubai real estate project. The agreed purchase price was AED 1,994,971, which the buyer fully paid. The buyer expected handover of a completed, fully finished unit, a dream home or a sound investment for the future.
However, as with many off-plan projects during that period, things took a turn. The original developer failed to complete construction, and the project was eventually classified as incomplete and canceled.
🔁 The Project Is Taken Over
In 2021, Dubai’s Special Judicial Committee for Incomplete and Canceled Real Estate Projects issued a formal ruling: a new developer would take over the project, complete its construction within two and a half years, and assume all the rights and obligations of the original developer. This was not just a handover, it was a legal replacement, approved and supervised by the authorities.
Among the new developer’s obligations was to engage with existing purchasers, finalize their registrations, and honor their paid investments, especially if those investments were proven by escrow deposits or registration with the Dubai Land Department (DLD).
📩 A Buyer Ignored
Despite these clear obligations, the new developer never contacted the original buyer. It was the buyer who proactively reached out, sharing his original agreement and evidence of payment. He also provided proof of having deposited AED 1,755,573 into the project escrow account, a critical step that reflects serious intent and financial commitment.
The buyer’s name was also listed in the DLD escrow statement as the official purchaser of the disputed unit.
And yet, the buyer’s requests were ignored.
🎭 A Shocking Move by the Manager
What happened next was not only surprising, it was fraudulent.
The owner and manager of the new developer, referred to as the second appellant, donated the exact same unit, already paid for by the buyer to his daughter through a gift deed. This gift was then registered with the DLD. Shortly after, the daughter sold the unit to a third party.
All this occurred while the new developer was fully aware of the buyer’s payment and rights over the unit.
⚖️ The Courts Step In
The Dubai Court of First Instance found that the successor developer, despite knowing of the buyer’s existing contractual rights and escrow payments, failed to register or deliver the property. Instead, its manager gifted the unit to his daughter, who then sold it, effectively rendering the execution of the contract impossible.
The court ruled that this was a clear breach and terminated the contract as a result. It ordered:
1) The successor developer and its manager to jointly refund AED 1,755,573 (escrowed amount).
2) The original developer to pay the remaining AED 239,458.
3) A further AED 1 million in moral and material damages due to emotional distress, lost opportunity, and the buyer’s 17-year wait.
The Court of Appeal upheld this judgment in full.
Finally, the Court of Cassation affirmed that both lower courts were right in finding bad faith and fraudulent conduct by the developer’s manager, whose gift of the unit, knowing it had already been sold was a deliberate and unlawful act.