Escrow account
An escrow account is a regulated, project-specific bank account into which off-plan buyers' payments must go, released to the developer only as building progresses.
What Escrow account means for a buyer
Under Dubai Law No. 8 of 2007, a developer selling off-plan must open a separate escrow account for each project with a bank approved by the Dubai Land Department. Every payment a buyer makes goes into that account, and the bank, acting as escrow agent, releases money only for that project's construction and as milestones are certified. Abu Dhabi imposes an equivalent requirement, supervised by ADREC.
Two safeguards follow. The developer cannot move buyers' money to another project, and when the building is finished the escrow agent holds back 5% of the account for a year as cover for defects. If RERA cancels a project, the remaining funds are used to refund purchasers.
For a buyer, the rule is simple: pay only into the escrow account named in your SPA and on the project's registration, by bank transfer or a cheque made out to that account. Never pay a broker, an individual or a developer's general company account. The escrow details for any registered project can be checked on Dubai REST.
Be realistic about what escrow does. It protects against the diversion of funds; it does not protect against delay, a change in the market or a developer running out of sales. If a project stalls with little built, the account may hold less than buyers have paid in, because money has properly been spent on construction.
Related terms
Guides that use this term
Where Escrow account comes up in practice, with the costs, rules and steps around it.
Questions about the buying process?
An adviser can explain how this applies to the property you're considering.
- Current price list and availability, direct from the developer
- No fee to you on off-plan purchases: the developer pays us
- One salaried adviser, not on commission, from first call to handover
