Short answer. Under Dubai Law No. 8 of 2007 on escrow accounts for real estate development, every payment an off-plan buyer makes is deposited into the project's escrow account managed by a bank accredited by the Dubai Land Department. The money is protected from attachment by the developer's creditors and can only be released against verified construction progress. Violations are punishable by imprisonment and/or a fine of at least AED 100,000.
What Law No. 8 of 2007 actually does
The law was introduced after the 2008 crisis exposed off-plan buyers to developer insolvency. Its four pillars are:
- One account per project. Every real-estate development project has a separate escrow account. Money for one project cannot be used to fund another.
- Bank-managed by an accredited agent. The account is held by a financial or banking institution accredited by the Land Department, not by the developer.
- Ring-fenced from the developer's other creditors. Deposits in the account cannot be attached to satisfy debts unrelated to the project.
- 5% retention after completion. After the completion certificate is issued, the escrow agent retains 5% of the account value and only releases it one year after the units are registered in purchasers' names — the final quality warranty period.
What that means for you as a buyer
When you sign an SPA and start paying instalments, your payment plan is disbursed into the escrow account. The developer draws down from the account only as they hit verified construction milestones. If the developer goes bust, the money in the account belongs to the project — not the developer — and is protected from other creditors.
This is enforceable, not decorative. The law provides criminal penalties (imprisonment and a fine of at least AED 100,000) for anyone who diverts escrow money.
How to verify escrow details before paying
- Look up the project on Dubai REST. The DLD app shows the registered project, the developer and the escrow bank. If the project is not on Dubai REST, do not pay.
- Read the SPA. The Sale and Purchase Agreement must name the escrow account and the escrow bank. The exact account number should also appear on your payment receipts.
- Insist on paying into the escrow account only. Cheques should be written to the escrow account name — never to the developer's operating account, and never to a broker or agent.
- Cross-check receipts. Every instalment receipt should show the escrow account details. Store them digitally.
Common misunderstandings
- "The developer will use my money to buy the land." Land that the project is built on is inside the escrow protection, but funds are only released against construction progress verified by DLD.
- "I paid the agent, that counts as escrow." No. If the money is not sitting in the escrow account, it is not protected. Every dirham should go into the escrow account.
- "The 5% retention is lost." No. It is released one year after the units are registered in the buyers' names, effectively a defects warranty period.
What escrow does NOT protect against
Escrow protects your money from misuse; it does not eliminate delivery risk, quality risk or market risk. Even with a fully compliant escrow, a developer can still hand over late, and a market downturn can reduce the value of a completed unit. The escrow law is a strong safety net, not a guarantee of returns.
Practical checklist for off-plan buyers
- Buy only from RERA-registered developers whose project appears on Dubai REST.
- Read the SPA and confirm the escrow bank and account number.
- Pay each instalment directly into the escrow account and archive every receipt.
- If a broker asks for a payment outside the escrow account, walk away.
How Eylül Estate handles off-plan
Before we introduce you to any off-plan launch, we verify: RERA registration, escrow bank details and the developer's on-time delivery record on previous projects. Every instalment your client account processes is traceable to the escrow account — no exceptions.
