Understanding Cooling-Off Periods in Dubai Off-Plan Contracts

Buying a home is one of the biggest decisions you will ever make. In Dubai, an increasing number of people are taking that step by investing in off-plan properties. Over 60% of all real estate transactions in Dubai were off-plan in 2024. However, with any major purchase, especially one involving a property that isn't quite ready, you want to be sure. What if you sign on the dotted line and wake up the next morning with second thoughts? Well, that's where the cooling-off period comes in.

In this blog, let's unpack what this means, how it works in Dubai, and why it's beneficial for buyers and the real estate market as a whole.

What Is a Cooling-Off Period?

A cooling-off period is a short time given to buyers to change their minds after signing a contract. During this time, you can cancel the deal without losing your money. In Dubai, for off-plan properties, this period is usually seven working days from the date you sign the Sales Purchase Agreement (SPA). 

Suppose you are at a property exhibition in Dubai. You see a spectacular model of an apartment building, the sales team pitches a beautiful picture of your future home, and the excitement is contagious. You might feel a bit rushed, or maybe you just get swept up in the moment. You sign a paper, pay a small deposit, and then you go home.

Later, sitting on your couch, you begin to think. Is this the right area for my family? Is the payment plan truly manageable? Did I understand all those legal terms? You may discuss your situation with a friend or financial advisor, and a few questions arise that you hadn't considered in the excitement.

Thanks to the cooling-off period, you can contact the developer the next day (or within the specified period) and request cancellation. If you complete the process within the timeframe and follow the steps correctly, you will receive your booking amount back without any issues. It's a legally defined period during which you have the right to step back from the deal without losing your money or facing serious penalties.

Why is the Cooling-Off Period Good for Dubai's Property Market?

A cooling-off period helps the market in many ways:

Builds Trust and Confidence

If you are purchasing a house in Dubai but reside elsewhere in the world, you do not want to be uncertain about your finances. The cooling-off period indicates that developers are truthful and not keen on forcing you into making a decision. It makes Dubai's market more trustworthy and attracts more people from around the world to invest in the city.

Helps Buyers Make Better Choices

When people have time to think and discuss with family or advisors, they make better decisions. They feel happy with their new home and don't regret buying it. Happy buyers help keep the property market strong and steady.

Improves Developers' Reputation

Developers who follow the cooling-off rule and clearly explain it are perceived as fair and customer-friendly. People trust them more and are likely to make repeat purchases. 

Avoids Future Legal Problems

If someone feels forced to buy, they might try to cancel later. The cooling-off period enables buyers to cancel their purchase early and easily, thereby reducing the likelihood of disputes later.

Matches World-Class Standards

Many top real estate markets around the world have similar rules to protect buyers. By implementing a cooling-off period, Dubai demonstrates its commitment to fair deals and safety, which makes it even more attractive to global investors.

What if I Miss the Cooling-Off Period?

When the cooling-off period ends, the contract becomes legally binding. If you then decide to pull out, the consequences can be quite different and depend on what's written in your Sales Purchase Agreement and the overall completion status of the project.

Dubai's real estate laws, enforced by the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA), have clear guidelines for when a buyer defaults on an off-plan payment after the cooling-off period. If you default on payments, the developer typically informs the DLD. The DLD then gives you a 30-day notice to resolve the issue. When the issue remains unresolved, RERA determines the level of project completion to assess the necessary action. The penalties differ according to Law No. (19) of 2017:

Project 80% or more complete: The developer may retain all the money you have paid and request the remaining payment. They could even ask the DLD to sell the property at auction to get their money. Alternatively, they may cancel your contract and retain up to 40% of the property's value. Any money you paid over the 40% will be returned within a year or 60 days if the unit is resold.

Project between 60% and 80% complete: The developer can terminate the contract and keep up to 40% of the property's value. Again, any extra money you paid would be returned within a year or 60 days of resale.

Project less than 60% complete (but construction started): The developer can cancel the agreement and keep up to 25% of the property's value. The remainder of your money will be returned within one year or 60 days of resale.

Project not started (due to reasons outside the developer's control): The developer may retain up to 30% of the amount paid, returning the remainder within 60 days.

Some Helpful Tips for Buyers

Here are some useful tips to help your off-plan property experience in Dubai go as smoothly as it can:

• Always verify whether your contract is subject to a cooling-off period, its duration, and the procedure for exercising it when necessary.
• Verbal promises don't count. Ensure that the cancellation terms are clearly outlined in your signed agreement.
• Don't wait till the last minute. If you have any doubts, please consult with your family or a trusted advisor immediately.

Conclusion

Dubai's property market is booming and continues to strengthen as more people and businesses relocate to the city. In just the first three months of 2025, there were almost 25,000 off-plan property deals worth over AED 53.8 billion. Dubai also ensures that the property buying process is safe and fair. One way they do this is through the cooling-off period, which gives buyers a few days to change their minds after signing a contract without incurring any financial loss. Cooling-off periods demonstrate Dubai's commitment to protecting buyers and maintaining a market that is honest and reliable. So, if you are planning to buy an off-plan home here, remember that the cooling-off time is your chance to think carefully and feel confident about your new investment.

Take your time, ask questions, and make sure you understand your cooling-off rights. If you need assistance, please don't hesitate to contact us. We are here to guide you every step of the way.