Abu Dhabi’s real estate sector is governed by a comprehensive legal framework regulating the activities of all stakeholders, including property developers. A series of laws, regulations and resolutions defines the roles, responsibilities and rights of property developers. Understanding these legal requirements is essential for developers to ensure compliance with the legal system.
Abu Dhabi Real Estate Laws for Developers
Some of the key developers’ laws and regulations in Abu Dhabi are as follows:
Administrative Decision No. (24) of 2025: Escrow Accounts
Administrative Decision No. (24) of 2025 regulates the disbursements of funds from real estate escrow accounts before a project reaches 20% completion. It sets clear controls for early withdrawals under the Real Estate Sector Regulation Law.
Administrative Decision No. (25) of 2025: Management of Jointly Owned Properties
Administrative Decision No. (25) of 2025 regulates jointly owned properties in Abu Dhabi. It establishes a comprehensive framework for the management of common parts, real estate assets and shared facilities. The decision also defines the roles and responsibilities of developers, property management companies and owners in jointly owned properties.
Administrative Resolution No. (165) of 2025: Refunds for Cancelled Off-plan Projects
The refund of amounts paid by the buyer of off-plan units is regulated by the Administrative Resolution No. (165) of 2025. The resolutions set out the role of developers, Abu Dhabi Real Estate Centre (ADREC), mortgage creditors and escrow account trustees.
- Off-plan Resale Procedure: Upon the developers’ request, ADREC will write off the unit from the initial register and notify the buyer and mortgage creditor (if any) within five working days.
- Developer Compensation: The developer may deduct compensation from the escrow account as per the project’s construction progress. Buyers receive a full refund if construction has not started yet. Developers may retain 10% for projects below 10% completion, 15% for 10% to 30% completion, 25% for 30% to 60% completion and 40% for projects above 60% completion.
- Refund Timeline: The escrow account trustee must return the amount due to the developer or buyer within 15 business days.
- ADREC Discretion: If the buyer has paid more than 60% of the total amount, ADREC may determine the applicable compensation percentage.
- Amounts Received Outside Escrow: If the developer has received any payment outside the escrow account in violation of the law, the amount must be refunded within 30 days.
- Mortgage Units: If the off-plan unit is mortgaged, the buyer must provide a No-Objection letter from the mortgage creditor.
Law No. (2) of 2025: Real Estate Market Regulation
Amending the Law No. (3) of 2015, the Law No. (2) of 2025 introduces a clear provision for regulating Abu Dhabi’s real estate market. The key provisions of the law are as follows:
- Real Estate Activity: Engaging in real estate activities without a licence can result in imprisonment for up to six months or a fine between AED 50,000 and AED 200,000.
- Developer Registration: The department is responsible for maintaining a record and registering all the real estate developers operating in the emirate.
- Off-plan Default: If the buyer of an off-plan unit defaults, the developer may terminate the Sales and Purchase Agreement (SPA) without resorting to court or arbitration. However, the developer must notify the buyer and allow 60 days to fulfil the obligations, then notify the department after 15 days. If no settlement is reached, the department may remove the buyer’s name from the initial register, allowing the developer to resell the unit after 30 days.
- Escrow Account Use: Funds from the project escrow account can only be used for the construction and development of the project. The amount can only be disbursed if the project is 20% completed or the developer provides a bank guarantee for the same amount.
Law No. (3) of 2015: Real Estate Laws and Compliance
Law No. (3) of 2015 governs multiple real estate activities ranging from project registration to marketing approvals. The key provisions include:
- Project Registration: Developers must register development projects with the Department of Municipal Affairs and no deposition of the land is allowed without the department’s approval.
- Off-plan Advertisement: Developers are not allowed to advertise off-plan projects without the approval of the department.
- Off-plan Sales: Developers can only sell off-plan properties in Abu Dhabi after meeting key requirements like approved plans, land rights, escrow account and disclosure statement.
- Escrow Account: A dedicated escrow account must be opened for each project.
- Registration Fee: Developers are not allowed to collect registration or other real estate disposition charges from the buyers, except for the approved administrative fee.
Law No. (30) of 2019: Establishing DMT as the Key Authority
Law No. (30) of 2019 establishes the Department of Municipalities and Transport (DMT) as the key authority in Abu Dhabi overseeing municipal affairs and urban planning. It can issue policies, standards, circulars, regulating the real estate activities in the emirate.
FAQs
How does Law No. (2) of 2025 protect off-plan property buyers?
Law No. (2) of 2025 protects off-plan buyers by requiring developers to follow clear notification, settlement and resale procedures when a buyer defaults. Aside from the law, multiple executive council resolutions in Abu Dhabi also protect the off-plan buyers.
What is the ‘20% Rule’ for escrow account withdrawals in Abu Dhabi?
The ‘20% Rule’ means developers cannot withdraw funds from a project escrow account until at least 20% of the construction work is completed. Early withdrawals are only allowed under specific conditions, such as approved guarantees and cost estimates.
How can an investor verify a project’s escrow account in Abu Dhabi?
Investors can verify a project’s escrow account by checking with the developer and the relevant Abu Dhabi real estate authority, such as ADREC or DMT. People paying for new proejcts and developments in Abu Dhabi, buyers should also confirm that the escrow account is project-specific.
These are some of the key developer laws and regulations in Abu Dhabi. The emirate’s real estate executive resolutions and administrative decisions strengthen market transparency while protecting the rights of all stakeholders. This comprehensive framework continues to earn the investors’ trust in the market, attracting them to buy properties in Abu Dhabi and invest in its growing and stable market.
Stay tuned to dubizzle’s property blog to learn about ADREC-approved management companies.
