Dubai, UAE · Written by Shoaib Idrees, Audit Partner · 6 min read
RERA escrow requirements have been in place for years, yet escrow-related findings remain one of the most common issues we see in Dubai real estate audits. The rules are well established. Where developers get tripped up is usually in the operational detail, not the headline requirement.
The Basic Requirement, and Why It Still Trips People Up
Under Law No. 8 of 2007 and the Dubai Land Department’s RERA framework, any developer collecting funds from off-plan buyers must deposit that money into a project-specific escrow account, not a general company account. Withdrawals against that escrow are tied to verified construction progress, which means the account is only ever as reliable as the completion percentage reported against it.
Where the Real Problems Show Up
Completion percentage mismatches
The single most common finding: reported completion percentage doesn’t match actual site progress, whether from optimistic reporting, delayed inspections, or simple miscommunication between site and finance teams.
Commingled project funds
Funds from different projects, or project funds and general corporate funds, ending up mixed at some point in the payment chain — even briefly — creates a real compliance exposure.
Service charge budget gaps
For completed projects under Jointly Owned Property rules, annual service charge budgets and audits are a separate, ongoing obligation that’s easy to under-resource once a project has actually sold out.
“Escrow compliance isn’t usually broken by bad intent. It’s broken by a completion percentage that was accurate six months ago and was never updated, while withdrawals kept being approved against it.”
— Shoaib Idrees, Audit Partner
What This Means Beyond the Escrow Account Itself
Escrow findings rarely stay contained to the escrow account. A mismatch in completion percentage usually points to a broader gap between site operations and finance reporting — the same gap that shows up later in cost-to-complete forecasts, contractor payment disputes, and delayed handovers. Getting escrow reporting right is as much about the underlying process as the account itself.
A Practical Compliance Checklist
- Reconcile completion percentage every reporting cycle — Not just at major milestones, against what’s actually been certified by the project engineer.
- Confirm fund segregation at every stage — From receipt through to disbursement, not just at the point funds enter the escrow account.
- Review contractor payment terms against escrow release conditions — Misalignment here is a common source of both compliance and cash-flow problems.
- Don’t treat service charge audits as an afterthought — Build them into the project timeline before handover, not after owners start asking questions.
- Get an independent review before DLD does — A pre-emptive escrow and completion review catches the same issues a regulator would, while there’s still time to fix them.
The Cost of Getting This Wrong
Escrow non-compliance carries real regulatory consequences — fines, restrictions on further withdrawals, and in serious cases licence action. But the quieter cost is reputational: owners and buyers increasingly ask about a developer’s compliance track record before committing to a project, and escrow findings have a way of becoming public knowledge in a market as connected as Dubai’s.
Confident in Your Escrow Compliance Position?
We conduct RERA compliance reviews covering escrow accounts, completion certification, and service charge budgets for developers and owners’ associations across Dubai.