Law No. (8) of 2007
Concerning Guarantee Accounts of Real Estate Developments in the Emirate of Dubai.

Mortgage Financing - Dubai
Current Market Standard
  - Housing finance is based on MoUs between Banks and Developers.
  - Developers undertake to register title and mortgage when land registry is functional.
  - MoUs only provide for a contractual relief in relation to the Developer’s default.
  - Conditional Assignments over SPA is the only security in the absence of a mortgage under the MoU.

Selling Off Plan - Risks
  - Risk of Developers not having clear title to the Project or Development Land.
  - Currently Master Developer(s) seek ‘construction bank guarantee’ from Private Developer(s) or a
    private Escrow arrangement.
  - Inadequate Record Keeping or lack of an Internal Registry.
  - Mortgage over Land to Project Financiers and risk of encumbered sale of such Units by Developers.
  - Uncertainty and risk of non completion of Project.
  - End user financing for such Project being utilized for other Project(s) of the Developer.

Legal Issues
Guarantee Account
  - The Guarantee Account is opened in the name of the Bank (“Account Trustee”) for each
    distinctive Real Estate Development of the relevant Developer.
  - Project finance (excluding corporate finance) and each unit finance (representing the purchase
    price) shall be deposited in the Guarantee Account.
  - Payments are released to Contactors / Suppliers (directly) in accordance with the approved
    Guarantee Account Agreement between the Bank and Developer.
  - Priority given to depositors and safeguard measures by the Bank.
  - Upon Force Majure or Project abandonment payments are restricted and will only be released
    from Guarantee Account to depositors after consultation with the Lands Department.

Legal Issues
Account Trustee
  - Any approved bank may act as an Account Trustee as well as project/development financier with
    out any conflict of interest.
  - Account Trustee, if also project financier, cannot set off amounts from Guarantee Account on
    account of Event of Default by the Developer.
  - Low risk and value addition service as Account Trustee.
  - Control over funds deposited in the Guarantee Account.
  - Interest / Profit Payments.
   - Nature of the Guarantee Account Holder - Bank or Developer.
  - Know Your Customer (KYC) requirements.

Registered Account Trustees

Escrow Agreement – Salient Features
  - Establishment of Guarantee Account and any sub accounts.
  - Appointment of Account Trustee.
  - Mechanism of depositing Unit Finance (as purchase price) and Project Finance.
  - Appointment and Role of the Engineer/Consultant.
  - Structuring of Project Milestones, Completion stages and issuance of Completion Certificates.
  - Mechanism of withdrawal of deposits from the Guarantee Account and retention of deposits until
    final completion.
  - Rights of the Account Trustee (on the basis of the Agreement with the Lands Department.
  - Indemnity in favor of the Account Trustee.
  - Dispute Resolution and Conciliation through the Lands Department.
  - Schedules (would generally include Deposit Instructions Milestone Certificates, Completion
    Certificate etc.),