How to Transfer an Escrow Account Through Dubai Land Department (DLD)

When dealing with escrow accounts in Dubai, especially for off-plan projects, it’s crucial to understand the role the Dubai Land Department (DLD) plays in regulating these accounts. An escrow account in Dubai is essential for ensuring that the financial transactions between property developers and buyers remain transparent and secure. If developers need to transfer their escrow accounts—whether due to project delays or to finance the project directly—DLD provides a clear procedure for doing so.

In this blog, we will walk you through the escrow account transfer application in Dubai, explain the process, outline key requirements, and discuss the benefits of escrow accounts. Let’s explore what is escrow and how to initiate the transfer with the DLD.

What is an Escrow Account, and How Does It Work?

An escrow account is a secure financial account where buyers deposit instalments for off-plan property purchases. Governed by the Real Estate Regulation Authority (RERA), escrow accounts in the Dubai real estate sector ensure that funds are managed correctly until the property project is completed and handed over. It is one of the many legal procedures to buy a property in Dubai. These accounts add benefits and transparency in real estate transactions, protecting buyers from misuse of their payments by developers.

For developers, transferring an escrow account to Dubai may be necessary if they want to restructure the project financing or manage any delays. The transfer process requires adherence to strict procedures and conditions, ensuring transparency at every step.

Benefits and Transparency in Real Estate Transactions

One of the main purposes of using an escrow account in Dubai is to ensure that all financial transactions between developers and buyers are secure and transparent. Here are a few ways these accounts enhance the real estate sector:

• Buyer Protection: Funds are only released to developers upon the achievement of project milestones.
• Transparency: Both buyers and authorities can monitor the flow of funds through the escrow system.
• Accountability: Developers are held accountable for the progress of the project.
• Reduced Risk: Buyers can cancel the purchase agreement and receive their money if the developer fails to meet obligations.

Escrow Account for a Mortgage in Dubai

In Dubai, escrow accounts also play a significant role in property mortgages. Buyers opting for a mortgage for off-plan properties deposit their payments into a dedicated escrow account for a mortgage in Dubai. This ensures that the funds are securely managed until the project is complete, providing further protection for buyers and lenders alike.

How to Apply for Escrow Account Transfer With DLD in Dubai

Applying for an escrow account transfer application in Dubai involves a systematic online process through the Oqood portal. Here is a step-by-step guide:

Step I: Log in to the Oqood Portal

Access the Oqood system and select the “escrow account” option.
Choose the escrow account transfer service and submit your application.

Step II: Approval by Current Account Trustee

The application will be sent to the trustee managing the current escrow account for approval.
Once approved, the request will be forwarded to the DLD for review.

Step III: Application Audit

The DLD will conduct an audit to ensure compliance with the project’s financing and milestones.
Based on the audit, the application will be approved or rejected.

Step IV: Data Entry for New Escrow Account

If approved, the trustee of the new account will receive the request.
The new trustee must input all financial data and account details into the system.

Step V: System Update and Final Approval

Upon successful transfer, the Oqood system will update the records to reflect the new escrow account.
Developers can now manage project payments through the new account.

How Do I Set Up an Escrow Account in Dubai?

Setting up an escrow account in Dubai requires developers to submit specific documentation to DLD. Below are the key requirements:

• Membership certificate from the Dubai Chamber of Commerce and Industry
• Trade licence of the developer
• Title deed of the land or property
• Developer-sub-developer agreement (if applicable)
• Approved initial architectural designs and engineering plans
• Certified financial statements of the project
• Undertaking to start the project once off-plan sales are registered
• Sales and purchase contract between the developer and buyer

Terms and Conditions for Escrow Account Transfer in Dubai

Developers must meet specific criteria when applying for an escrow account transfer application in Dubai. The following are the key terms and conditions to follow:

• Active Project Status: The project must be under development and have an active status with RERA.
• Recent Technical Report: A technical report from the DLD must be provided, and it should not be older than four months.
• Project Milestone Compliance: There should be no red flags related to the project’s progress and achieved milestones.
• Purpose of Transfer: The transfer must aim to directly finance the project through the new account.
• Provision Approval: A written provision approval for financing must be obtained.
• NOC from the Trustee: A No-Objection Certificate (NOC) must be submitted to open the new account.
• Account Maintenance: An undertaking must be signed stating the new account will remain open for at least three months and not more than one year.
• Fund Transfer: Developers must transfer all collected funds from the old escrow account to the new trustee.
• Inactive Old Account: The old escrow account must remain inactive until all transactions and fund transfers are completed.
• Complete Transfer: All assets must be moved from the old account to the new one within three business days.
• RERA Approval: RERA must approve the new escrow account for the transfer to be valid.