In 2007 Escrow Law was introduced in Dubai, UAE. It is a financial process where an uncertain transaction about the fulfilment of obligation takes place between two parties. Escrow can be used in the situation involving banking transaction, intellectual property, real estate property, banking and many more.This law has passed to secure the buyers right and to have a control over the Real Estate Construction projects and sale off plans. An escrow account acts as a third-party medium. Third party holds assets or money on behalf of two other parties that are involved in completion of a particular transaction. The account is managed by an escrow agent, mortgage servicer, and escrow company. The assets and money are only released subject to fulfilment of predetermined contract with the escrow. Escrow accounts play a major role in the Real Estate Industry.
While dealing in property always must check with the developer’s escrow account. Basically, a real estate developer receives funds from many sources of accounts and is kept in an escrow account. RERA has a watch on this account. The Escrow account maintains the reliability of the real estate market.
Escrow account law applies to all the Real Estate Developers in Dubai. The Account Trustee manages the escrow account. The account trustee can be a bank, or the financial institutions approved by the Central Bank of the UAE. The approved financial institution list is already on the Dubai Land Department Portal. It gives full protection during real estate transactions.
The owner can be relaxed by opening an escrow account as he doesn’t have to remember any taxes and insurance dates to pay. Escrow account servicer do everything on owners’ behalf and if suppose there is shortage of funds in the escrow account the escrow account servicer takes care of the same. In this way there are no late payment fees to be paid.
Suppose the buyer gives a deposit to the seller to purchase an agreement and somehow the deal fails then it might happen that the buyer will not return deposit money. But the Escrow account protects you from this fraud as it acts as a third party and your money will be returned according to your agreement.