Recent Dubai Court of Cassation Judgment on Delayed Real Estate Handover: Key Legal Insights and Considerations
Dispute Resolution / UAE
Khaled GamaleldeenSenior Counsel,Dispute Resolution
Jyothi VenugopalAssociate,Dispute Resolution
The Dubai Court of Cassation recently issued a significant judgment in Cassation Appeal No. 2 of 2025 (Real Estate Appeal), that provides guidance on the interpretation and enforcement of sale and purchase agreements in the context of delayed real estate handovers. The judgment addressed a developer's right to amend the anticipated completion date in a sale and purchase agreement (SPA) despite a delay in project completion and handover.
This article will discuss how the court, in this case, provided much-needed clarity on the legal consequences of such delays and the conditions under which developers may lawfully extend completion dates.
The dispute arose when a purchaser initiated legal proceedings against a real estate developer, seeking substantial compensation for the delayed delivery of a residential unit. According to the SPA, the anticipated handover date was set for 31 December 2020. The purchaser fulfilled all contractual obligations, including timely payment of the full purchase price. However, the developer did not deliver the unit until 5 October 2023, prompting the purchaser to claim damages for lost rental income and other alleged losses resulting from the delay.
The developer’s defence was rooted in the express terms of the SPA, which granted the developer the right to determine the actual completion date by issuing a formal notice to the purchaser prior to the anticipated completion date.
Furthermore, the agreement allowed the developer to extend the completion date by up to twelve months, provided that the purchaser was duly notified in advance. The developer maintained that it had strictly complied with all notification requirements under the agreement. Both the Court of First Instance and the Court of Appeal ruled in favour of the developer, finding no breach of the contract. The purchaser then appealed to the Court of Cassation.
The Court of Cassation upheld the lower courts’ decisions. In its reasoning, the Court relied on Articles 246, 257, and 265 of the UAE Civil Transactions Law, which collectively require contracts to be performed in good faith and interpreted according to the parties’ shared intentions—rather than solely by the literal wording of the agreement. The Court reaffirmed that the trial court has discretion to assess facts, interpret agreements, and determine the parties' intentions, provided such interpretation is legally grounded and supported by the evidence.
The Court emphasised that the SPA’s provisions were clear. The SPA stipulated that the actual completion date would be determined by notice from the seller to the purchaser. In addition, the SPA explicitly allowed the developer to extend the actual completion date by up to 12 months, provided the buyer was notified. The Court found that the developer had complied with these requirements by issuing a series of timely notifications: (i) first, on the 26 August 2020, informing the purchaser that the completion date would be 31 August 2022; then, on 27 May 2022, extending it to 30 April 2023; and finally on 22 February 2023, extending it further to 30 August 2023. The actual handover occurred on 5 October 2023, resulting in a delay of only 35 days beyond the final notified date- a delay the Court deemed reasonable and acceptable in the context of real estate development. Accordingly, the Court concluded that the developer had exercised its contractual right. The Court rejected the appeal filed by the purchaser and upheld the lower court rulings.
The ruling also highlights the judiciary’s willingness to recognize the practical realities of real estate development, including the acceptability of minor delays when justified and properly communicated.
This judgment reinforces the importance of adhering to the express terms of SPAs in real estate transactions in the UAE. While the project was completed nearly three years after the original anticipated date, the Court held there was no breach because the developer acted in accordance with the agreed contractual mechanisms. The ruling also highlights the judiciary’s willingness to recognize the practical realities of real estate development, including the acceptability of minor delays when justified and properly communicated. In contrast, the Court noted that compensation may be awarded to purchasers in cases where developers fail to comply with notification requirements or otherwise breach the terms of the SPA.
It is worth highlighting that the developers should ensure that their SPAs clearly outline the right to extend the completion dates, and the requirement to notify purchasers of any such extensions before the deadline mentioned in the contracts. Where the right to extend is exercised, developers must strictly follow notification procedures and comply with applicable time limits.
In contrast, prospective buyers should conduct a thorough review of all SPA clauses before buying a real estate. Understanding the scope of the developer's authority to delay handover, and the associated notice obligations, will help buyers make informed decisions and manage expectations regarding potential delays.
The Dubai Court of Cassation’s judgment in Cassation Appeal No. 2 of 2025 provides authoritative guidance on the interpretation and enforcement of real estate sale and purchase agreements in the UAE. The decision reinforces the necessity for both developers and purchasers to act in accordance with the express terms of their contracts and to fulfill all procedural requirements, particularly in relation to project delays and handover extensions.
For further information,please contact Khaled Gamaleldeen and Jyothi Venugopal.
Published in June 2025
