The central issue in this case revolved around the discrepancies between the property’s actual size upon handover vs. the stipulated in the Sale Purchase Agreement (SPA). Our client had purchased a residential property, with the SPA explicitly detailing the apartment’s size, along with an adjacent garden and terrace areas. However, upon delivery, it became evident that the actual square footage of the property significantly differed from what was agreed upon in the SPA. This variance in the property’s size from the contracted specifications formed the basis of the legal dispute and necessitated our intervention on behalf of the client.
We share this success story as we wish to reinforce the importance of meticulous legal scrutiny in property transactions. Our ability to secure substantial compensation for our client in this case is a testament to our dedication and proficiency in addressing and resolving intricate legal challenges in the real estate sector.
Case Background: Discrepancy in Property Size Leads to Legal Action
Our client engaged in the purchase of a residential property – an apartment in Dubai, for which they paid over AED 5million. The SPA outlined the property as encompassing an 1859 sqft. apartment, alongside a 1769 sqft. garden, and a 162 sqft. terrace. However, upon taking possession of the property, a significant discrepancy in the size of each area was revealed in stark contrast to the SPA’s details. Upon receiving the property from the developer, the apartment was measured to have a variation of 8.4% less, the garden was reduced by 33.25%, and the terrace area was 32% smaller than what was contractually agreed upon.
This discrepancy prompted our client to approach the developer and seek resolution through direct negotiations. However, these efforts did not yield a satisfactory outcome, leaving legal recourse as the only remaining option to address the disparity of the contracted vs the actual size of the property at the time of handover. Consequently, our client was compelled to initiate legal proceedings to seek rectification and compensation for the variances from the SPA’s terms.
The Legal Battle: Sale Purchase Agreement vs Reality
The crux of our legal strategy rested on Law No. 13 of 2008 Regulating Initial Property Registration in the Emirate of Dubai, Executive Regulations No. 6 of 2010, Article 13.3, which provides that The developer must indemnify the buyer if the area of the unit is less than the agreed area by more than five percent (5%) of the net area of such unit.The SPA, a legally binding document, was at the heart of our argument. The developer’s stance, distinguishing between the apartment and its supplementary areas in terms of pricing, was effectively challenged by us. We contended that in the absence of distinct pricing for the garden and terrace in the SPA, they should be valued akin to the apartment itself.
The Court’s Decisive Verdict
The Dubai Court’s ruling was a triumph for our client, establishing critical legal precedents:
- Obligation to Deliver as Agreed: Developers must honor the terms outlined in the SPA.
- Inclusivity of Supplemental Areas: All areas, including added amenities, are integral to the contractual agreement.
- Developer Accountability: Developers bear the responsibility for any shortfall in the property’s size or its supplements.
Compensation and Key Takeaways
The Court ruled in favor of our client, affirming the importance of fair compensation in real estate disputes. The developer was ordered to compensate our client an amount of AED 706,890.79. Recognizing the time and stress involved in legal proceedings, the court also deemed it fair to apply a 9% interest to this amount from the date the case was filed until the full payment was completed. Consequently, our client received a total sum of AED 852,418.79.
This ruling reinforces the fundamental principle that buyers’ rights are of utmost importance. The decision underscores the court’s commitment to fairly addressing grievances of real estate investors and ensuring that buyers are justly compensated for any discrepancies or deviations, factoring elements like time and emotional investment involved in pursuing legal recourse to seek justice.
Recommendations for Prospective Buyers
This case highlights the vital importance of diligence in property transactions. We strongly recommend that property investors:
- Thoroughly Review the SPA: Understand every clause and specification detailed in the SPA prior committing.
- Recognize the SPA’s Significance: Acknowledge the weight the SPA carries in real estate transactions.
- Seek Legal Counsel: Navigating the complexities of a Sale Purchase Agreement (SPA) can often be daunting, especially for individuals who may not be familiar with legal jargon and the nuances of real estate transactions. The SPA contains numerous clauses, terms and conditions that are crucial to both parties involved in the property deal. Misunderstanding or overlooking any of these elements can lead to significant consequences that may be hard to rectify afterwards. This is why seeking professional legal assistance is not just advisable, but essential for anyone who finds themselves uncertain about the contents of an SPA.
Conclusion: The Critical Role of Sale Purchase Agreements (SPA) in Real Estate Transactions
This case serves as a powerful reminder to our clients of the immense importance of the Sale Purchase Agreement (SPA) in any real estate transaction. The SPA is not just a formal document; it is the foundation that sets the conditions of the property deal, binding both parties to its terms and preventing any form of unilateral deviation or coercion, regardless of either party’s status.
The significance of the SPA was underscored in our recent legal win, where the court’s ruling hinged on discrepancies between the SPA and the actual property delivered. This demonstrates the legal weight of the SPA and emphasizes the need for both buyers and developers to understand and respect the terms agreed upon within signing it.
For buyers, particularly, the SPA is a crucial document that safeguards their investment. It is essential to thoroughly review and understand every aspect of the SPA, and if necessary, seek legal advice in advance of committing and to ensure that their interests are adequately protected.
For developers, adhering to the SPA’s terms is not only a legal obligation, but also a matter of ethical business practice. Compliance with the SPA terms ensures transparency and fosters trust, which is indispensable for maintaining reputation and credibility in the real estate market.
In conclusion, this case serves as an educational cornerstone for both buyers and developers, highlighting the SPA’s role as a definitive guide and protector in real estate dealings. It is a testament to the notion that a well-crafted SPA can be the strongest defense against discrepancies and disputes in property transactions.
Should you have any questions or may need a legal opinion or advice, please feel free to reach out to our Managing Partner, Mr. Ashraf El Motei, at contact@motei.com.
