Escrow Poll

[Datum1m]

I would like to propose a poll of how many investors would have bought into Dubai, if they had been made aware that money they were paying into escrow accounts would be used by Developers to cover the following costs without even starting the on site construction work.

Advertising and Marketing 5% of Development Value
Developer Administration Costs 5% of Development Value
Land Acquisition

Also how many of you are aware that if a Developer, (who as failed to pay for the Land in full), becomes insolvent and cannot deliver our units, that any money felt in the escrow account will first be used to pay the Land owner for the Land, before we get to see any of it.

[eyeC]

Originally Posted by Datum1m

I would like to propose a poll of how many investors would have bought into Dubai, if they had been made aware that money they were paying into escrow accounts would be used by Developers to cover the following costs without even starting the on site construction work.

Advertising and Marketing 5% of Development Value
Developer Administration Costs 5% of Development Value
Land Acquisition

Also how many of you are aware that if a Developer, (who as failed to pay for the Land in full), becomes insolvent and cannot deliver our units, that any money felt in the escrow account will first be used to pay the Land owner for the Land, before we get to see any of it.

developers....if you know what other tricks they can do what you state is nothing but angels

escrow accounts are there to make your heart stronger when you buy

[TommyC]

Originally Posted by Datum1m

I would like to propose a poll of how many investors would have bought into Dubai, if they had been made aware that money they were paying into escrow accounts would be used by Developers to cover the following costs without even starting the on site construction work.

Advertising and Marketing 5% of Development Value
Developer Administration Costs 5% of Development Value
Land Acquisition

Also how many of you are aware that if a Developer, (who as failed to pay for the Land in full), becomes insolvent and cannot deliver our units, that any money felt in the escrow account will first be used to pay the Land owner for the Land, before we get to see any of it.

I wouldn't even consider, I was trying to make sure I paid to the escrow account when I bought. I'm not sure I did after all, seems to be one of those "business" accounts put up the developer. Checking the amount in the escrow account is next to impossible, since you can't get hold of the responsible people and you get thrown around in a never ending circle of persons when you try to sort it out...delay tactics in it's worst form. Probably put in place to cover up the facts you've just mentioned: More or less empty escrow accounts where the money have been used to buy land, ads and construction materials "in advance" which is no more than a paper put in place between developers and their friends owning the hardware stores/suppliers.

There is just to much fishy things going on here for me to even consider buying....if I would have known at the time I signed the papers.

[RERA Official]

It only covers construction costs . advertising and marketing not part of it

we are strict on money to be out from escrow

each developer had to give us construction program and we will be sebding teams to inspect

[escrow_officer]

Originally Posted by RERA Official

It only covers construction costs . advertising and marketing not part of it

we are strict on money to be out from escrow

each developer had to give us construction program and we will be sebding teams to inspect

Marketing = 5% of Project Value

Management = 5% of Construction contract

Land = Due installment to master developer only

Construction = Contract value

Nothing else would go out from Escrow.

Regards

[antond1tower]

the facts are never told when buying,so it is impossible to get them now,

[TommyC]

Originally Posted by RERA Official

It only covers construction costs . advertising and marketing not part of it

we are strict on money to be out from escrow

each developer had to give us construction program and we will be sebding teams to inspect

Originally Posted by escrow_officer

Marketing = 5% of Project Value

Management = 5% of Construction contract

Land = Due installment to master developer only

Construction = Contract value

Nothing else would go out from Escrow.

Regards

So which one is it, and most of all....WHEN did you possibly change the rules to only allow construction costs to be withdrawn from escrow? Because it has certainly not been like that until fairly recently. To sum it up:

RERA Official: When did you change the rules to say that you only can withdraw money from escrow for construction costs? Because, according to escrow_officer and other sources, they have been able to do it to quite recently.

(There's probably where my money is right now, in the advertising campaign Schon (The PAKISTANI, _not_ german, developer) has put up together with Emarat. With some luck I might win some of my money back )

[Datum1m]

Originally Posted by escrow_officer

Marketing = 5% of Project Value

Management = 5% of Construction contract

Land = Due installment to master developer only

Construction = Contract value

Nothing else would go out from Escrow.

Regards

Thank you for the minor correction on the percentage, but what happens when a Developer goes bust and as not paid all is instalments on the land purchase. I am told by my Solicitor that the land owner has what we in the UK would call a charge over the Land, so he is allowed to either claim the land back or take any money he needs out of the Escrow account to cover the cost of the land sale. This is before any other creditor (purchaser) is allowed a dividend from the Escrow account.

So Escrow Officer unless you have dealt with a bankrupt Developer, where he has not fully paid for the land, you may need to check this out with RERA.

I am also told of another scam that Developers have been doing which is to buy the land in another company name and then sell the land to the RERA registered Development company, but at a much higher price. However they are allowed to claim this money from the Escrow account, it may well still be in instalments, but they get to set the instalment amounts and for a Developer it is a way of getting profit out at the front end, even before they start construction.

[escrow_officer]

Originally Posted by Datum1m

Thank you for the minor correction on the percentage, but what happens when a Developer goes bust and as not paid all is instalments on the land purchase. I am told by my Solicitor that the land owner has what we in the UK would call a charge over the Land, so he is allowed to either claim the land back or take any money he needs out of the Escrow account to cover the cost of the land sale. This is before any other creditor (purchaser) is allowed a dividend from the Escrow account.
.

I havnt seen any such case so cant comment on that. Logically he should have his land back rather getting funds from Escrow.

Originally Posted by Datum1m

I am also told of another scam that Developers have been doing which is to buy the land in another company name and then sell the land to the RERA registered Development company, but at a much higher price. However they are allowed to claim this money from the Escrow account, it may well still be in instalments, but they get to set the instalment amounts and for a Developer it is a way of getting profit out at the front end, even before they start construction.

Not possible as it goes to Master developer only.

[Datum1m]

Originally Posted by escrow_officer

Point 1) I havnt seen any such case so cant comment on that. Logically he should have his land back rather getting funds from Escrow.

Why should the Land Owner be entitled to his land back, if he has received a number of instalments from the Escrow account then he would have the benefit of the land to resell plus our money, which could be anything from 10% to 90% of his selling price.

Point 2) Not possible as it goes to Master developer only.

Nakheel have sold many plots in JVS, which have then been sold on the secondary market for three or four times there original value. Are you saying Sub Developers buying plots on the secondary market are not allowed to use escrow account money to pay premiums over and above the Master Developers original prices? If this is the case I don’t know how the scam mentioned by my Solicitor works, because the Sub Developers were definitely getting their money out of at the front end.

The other thing that concerns me is that if you are correct with Point 2) why does the Escrow account system allow money to be paid to Master Developers for the sale of the land. The Master Developers are going to use our money to pay for the infrastructure of the overall Master Planed Development, which will include drainage and service roads. While I know these costs are going to be built into the cost of our units, I do not see why the Master Developer should be in a position to fund this work, through the use of our money.

It is clear that the Escrow system is all wrong we are being told that from the 1st January 2008, the Developers can no longer accept more than 20% of our money without construction work starting, but the Master Developers still get the use of our money to pay for the infrastructure, by indirectly claiming it from the Escrow accounts of their Sub Developers clients. So then what happens when the Sub Developer goes bust, our 20% is no longer in the Escrow account the land goes back into the ownership of the Master Developer and the infrastructure is paid for by us and our money is totally lost, but its all legal and above board because it as all been done through Escrow.

If this analogy is correct then both the Master and Sub Developers are speculators using our money and not theirs, but the Master Developer has come out on top because he can resell his land and go through this process time and time again until one day we get a Sub Developer with some real money, who can afford to pay for the land up front without using our money from the Escrow account. However will this ever happen because where in the Escrow system is the incentive for a Sub Developer to use his own money.

It would seem this country is built using our money, with very little input of cash from the Developers, but now the wheel as fallen of the wagon and the prices are coming down at an alarming rate, the laws are being changed to make sure we get very little of our money back, should a Sub Developer go bust and the Master Developers are in a win, win position, because they get the infrastructure paid for with our money and can hold on to the Land until the market picks up.