Marina Vista: Marketing Before Registration
Sara, a broker at a RERA-licensed agency, is asked to market 'Marina Vista', a 40-storey off-plan tower. The developer's sales manager says the project registration certificate is 'in process' but provides an escrow account number at Gulf Bank and tells her booking fees may be paid to the developer's collection account until registration is issued. Sara advertises on Instagram, introduces three buyers, and each pays AED 50,000 to the developer's collection account against a one-page 'reservation form'. Six months later there is no construction, the developer's licence is suspended, and the buyers demand their money back from Sara. She had received 2% from the developer and 1% from each buyer.
1. What should Sara have verified before accepting the marketing instruction?
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Before marketing an off-plan project, the broker must verify: (a) the project is registered with RERA and the registration certificate is issued, not 'in process'; (b) the escrow account is project-specific, opened with an approved bank, and the account number matches the registered project; (c) the developer holds a valid developer licence; (d) the units are approved for sale and the sale will be registered in Oqood. Marketing before registration is prohibited. Sara should also have kept a copy of the registration certificate and escrow details on file. A sales manager's oral assurance is not verification. If she could not obtain the certificate, she should have declined the instruction, however attractive the commission. The reservation form is not a substitute for the standard sale contract and Oqood registration.
2. The buyers' money went to the developer's collection account rather than escrow. What are their remedies and who is exposed?
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Payments made to the developer's 'collection account' were not escrow payments. Under the escrow rules, off-plan proceeds must be deposited into the project escrow account and released only against certified construction milestones. The buyers' remedy is to complain to RERA, which can inspect the project, order the developer to regularise or refund, and take action against the developer's licence. If the project is cancelled, the escrow account is the fund from which buyers are repaid; money paid outside escrow is at much greater risk and may have to be recovered from the developer personally. The buyers should preserve receipts, the reservation forms and bank records. Sara's agency is not automatically the payer of refunds, but it may face disciplinary action and civil claims for marketing an unregistered project.
3. Assess Sara's commission position and her personal regulatory exposure.
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Sara's 2% developer commission and 1% buyer commission amount to dual agency. Dual agency is not automatically prohibited, but it requires clear written disclosure to both sides and their consent; otherwise the broker is in a conflict and RERA may find misconduct. Her bigger exposure is marketing an unregistered project and accepting booking money outside escrow. Practical steps: stop marketing immediately, preserve all advertisements and correspondence, disclose the commission structure in writing, cooperate with RERA, and do not use the buyers' complaints as a reason to hide documents. She should expect a fine or card suspension and should not assume the developer will indemnify her; the agency's own file is the best defence.