A practical guide to Law No. (8) of 2007 and escrow-account compliance for off-plan projects
Last updated: 16 February 2026
Key takeaways
- Dubai Law No. (8) of 2007 requires developers selling off-plan units to deposit purchaser (and project finance) payments into a project-specific escrow account managed by an approved escrow agent.
- The escrow agent must retain 5% of the total value of the escrow account after the completion certificate, released one year after units are registered in purchasers’ names (Article 14).
- If a project is not completed, the escrow agent must consult the Department and take measures to preserve depositors’ rights and ensure completion or refunds (Article 15).
- Non-compliance can trigger severe penalties, including a minimum AED 100,000 fine and potential imprisonment (Article 16).
1. What is a real estate escrow account?
An escrow account is a bank account established for a specific real estate development project. Payments collected from purchasers of off-plan units (and, where relevant, financiers of the project) are deposited into this account and administered under Dubai Land Department oversight through the escrow framework set out in Law No. (8) of 2007.
2. Who does the law apply to?
The escrow law applies to developers who sell units off-plan in Dubai and, in consideration, receive payments from purchasers or financing parties. A developer must also be recorded in the Register of Real Estate Developers and licensed by the competent authorities before engaging in real estate development activity.
3. Core developer obligations (in practice)
For off-plan sales in Dubai, developers should expect the following compliance requirements:
- Developer registration and licensing (including registration in the Register of Real Estate Developers).
- Obtain approvals/authorisations for off-plan selling and advertising (as applicable).
- Open a dedicated escrow account for each project with an approved escrow agent (bank).
- Ensure all purchaser payments and relevant project financing amounts are deposited into the escrow account.
- Maintain clear project-level accounting and reconciliations for deposits and permitted disbursements.
4. Opening the escrow account (document expectations)
Law No. (8) of 2007 provides that a developer wishing to sell off-plan units must submit a request to open an escrow account and provide core documents such as trade licence, title deed of the land, and approved plans (Article 5). Additional requirements may apply based on DLD/RERA procedures and implementing by laws.
5. Escrow agent duties and transparency
The escrow agent safeguards funds in accordance with the law and implementing bylaws. Key transparency points include:
- The Department can request information and data from the escrow agent, and may seek assistance to audit statements and data (Article 11).
- Depositors (buyers) or their representatives can access their own accounting records and request copies (Article 12).
- Representatives from official authorities may access and obtain copies of escrow records (Article 12).
6. The 5% retention rule after completion
After the developer obtains the completion certificate, the escrow agent must retain five percent (5%) of the total value of the escrow account. The retained amount is released to the developer one (1) year from the registration of units in the purchasers’ names (Article 14).
7. If the project is not completed
In an emergency situation where the project is not completed, the escrow agent must, after consultation with the Department, take measures to preserve depositors’ rights and ensure that the project is completed or depositors are refunded (Article 15).
8. Penalties and enforcement risk
Non-compliance can be severe. The law includes:
- Criminal penalties including imprisonment and a fine of at least AED 100,000 (or either penalty) for certain violations, including fraudulent projects and misappropriation of funds (Article 16).
- Potential striking-off the developer from the Register in specific cases (Article 17).
9. Accounting and tax considerations (high-level)
- Project-level bookkeeping: maintain a separate project ledger for deposits, contractor payments, and retentions to support escrow compliance and financial reporting (IFRS).
- VAT timing: VAT obligations on property supplies depend on the nature of the supply (commercial vs residential) and tax point rules. Receiving payments can trigger tax points in certain cases – plan cash flows because escrow restrictions may not align with VAT payment timing.
- Audit trail: keep buyer-wise collection schedules, bank statements, withdrawal approvals, and contractor certification/progress reports.
10. Developer checklist (quick)
- Escrow account opened per project with an approved escrow agent.
- Sales proceeds and relevant finance deposited into the escrow account.
- Monthly escrow reconciliation (bank vs buyer schedules vs withdrawals).
- Documented approvals for withdrawals and progress reporting.
- Completion certificate tracked and 5% retention applied and monitored.
- Buyer record-access processes and data retention controls
11. References (official)
- Dubai Law No. (8) of 2007 Concerning Escrow Accounts for Real Estate Development.
- Dubai Land Department (DLD) – escrow account FAQs and eServices guidance (where applicable).
Disclaimer: This document is for general information only and does not constitute legal, tax, or financial advice. Dubai real estate escrow rules requirements can vary by emirate and project circumstances. Always confirm the current DLD/RERA procedures and obtain professional tax advice for your specific project.