WHAT YOU SHOULD KNOW ABOUT ESCROW ACCOUNT?
Most of the people shows hesitation when it comes to investing in an off-plan unit, One of the major reasons is that they fear that their invested money will go down the drain if the project gets delayed or cancelled. The authorities have taken some measures to safeguard the interests of both buyers and developers, i.e., escrow accounts.
An Escrow Account is a safekeeping account established in UAE by real estate authorities like RERA Dubai and TAMM Abu Dhabi to protect both the buyer and the seller throughout the home-buying process. This is managed by the government authorities until the project is handed over.
Escrow serves as a third-party secured account that manages and withholds funds until the transaction is completed. That said, with this account, no one holds funds, and protects the rights of both parties, making the transaction process smooth.Â
After registering the contract, the buyers are required to deposit the remaining amount in this account as per the payment plan. The developers are not permitted to use any amount from the account, excluding the finances required for sales, marketing, consultancy, construction, and land payments.
(Law No. 8 Concerning Escrow Accounts for Real Property Development in the Emirate of Dubai, dated June 28, 2007)
BENEFITS OF HAVING AN ESCROW ACCOUNT
- The biggest benefit is that you’ll be protected during a real estate transaction, whether you’re the buyer or the seller.
- Escrow account provides a level of security. The buyer’s funds are held in the escrow account until certain conditions are met, such as the completion of construction or the transfer of ownership, by protecting the rights of both parties and making the transaction process smooth.
- Escrow accounts allow RERA to closely monitor the funding and the progress of the project. This ensures enhanced satisfaction for buyers and investors.
- It limits the chances of delays and cancellations, as developers know that they are being monitored by the concerned authorities.
