Badr signs trust deal with land dept
Dubai , July 31, 2007
Badr Al-Islami, the Islamic Financial Division of Mashreq, recently signed an agreement with Dubai’s Land Department governing trust account conditions for real estate developments.
The trust account service will ensure that payments made by investors towards “off plan” property purchases are protected until residential units are registered in the buyer’s name. This agreement comes as a response to Decree No. 8 issued by Shaikh Mohammad Bin Rashid Al Maktoum, UAE Vice-President, Prime Minister and ruler of Dubai.
Sultan Butti Bin Mijrin, director general of Dubai Lands Department said: “Our decision to partner with Badr Al Islami comes as a result of its position as a major player in the banking industry in the UAE. Badr was the first financial institution we signed this agreement with on June 16th 2007 and we are confident that it has the expertise and capabilities needed to carry out the provisions of the new law and in turn positively influence its introduction into the market”.
“We are delighted to be one of the three dedicated financial institutions who are partnering with Dubai’s Land Department. Since we signed the agreement in June 2007, we have been working closely with Dubai’s Land Department to ensure consistency with subsequent partner banks and that the necessary resources and processes are in place,” said Mubashar Khokhar, CEO of Badr Al-Islami.
Property developers across Dubai now have to hold a guarantee account with one of three financial institutions that are in partnership with Dubai’s Land Department; of which Badr Al Islami was the first. Money paid by buyers or financiers towards properties will be deposited into a trust account with the respective institution. Developers can then apply for the money to be released by the trust account manager by producing a certificate from a consultant certifying that the project has reached an agreed stage.
With this agreement, Badr Al Islami will be committed to opening trust accounts for any developer after they submit a written authorisation from the Land Department. Opening the trust account will include signing an official agreement between Badr Al Islami and the developer. Each project will then have a separate account, even when there are multiple projects conducted by one developer.
The new regulation marks a new the level of maturity for the real estate sector and contributes to enhancing confidence in one of the fastest growing sectors in the UAE. The new agreement will ensure transparency and security for the investors in the real estate sector in Dubai.
Badr Al Islami will send quarterly status reports that show all the incomes and disbursements on each trust account under its custody to the Land Department. It will also appoint civil engineers and specialists to oversee the developments of the project on a regular basis to assist its progress and compare it to the original plans. One of the security elements will be reserving 5 per cent of the total value of the project in the trust account for any major emergencies that may accrue to the project or developer.-TradeArabia News Service
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