A buyer paid an AED 180,000 deposit for a property in Abu Dhabi. However, due to exceptional circumstances and the cancellation of international flights, she was unable to travel to the UAE and complete the transaction on time.

The contract did not provide an automatic or undisputed right to recover the deposit. Court proceedings could have involved significant costs, taken considerable time and offered no guarantee of a favourable outcome.

After reviewing the documents, Make Fortune’s legal team recommended an alternative approach: negotiate with the parties involved and seek the return of at least part of the deposit without initiating court proceedings.

The client’s situation

The client lived in Europe and planned to purchase an apartment in Abu Dhabi for investment purposes.

To confirm her intention to proceed with the transaction, she paid an AED 180,000 deposit through a broker, representing approximately 10% of the property value.

After the payment was made, circumstances beyond the buyer’s control arose. International flights were cancelled, preventing her from travelling to the UAE and continuing the transaction.

For approximately one month, the client attempted to contact the other parties. She:

• sent emails;

• called the broker;

• explained the reasons for the delay;

• tried to agree on the next steps remotely.

She later decided not to proceed with the purchase and contacted Make Fortune to determine whether the deposit could be recovered.

Why recovering the deposit through court would have been difficult

Before taking any action, our lawyers reviewed the contractual documents, the circumstances surrounding the payment and the available dispute-resolution options.

The preliminary legal assessment indicated that the client’s litigation position was not particularly strong. A buyer’s decision not to continue with a transaction does not, by itself, always create a legal right to recover a deposit.

In property-related disputes, the outcome may depend on several factors, including:

• the wording of the contract;

• the legal nature and purpose of the payment;

• the cancellation and termination provisions;

• the obligations of the buyer and seller;

• whether any party committed a documented breach;

• the circumstances that prevented completion of the transaction.

We explained the potential risks, costs and likely duration of court proceedings to the client. Based on that assessment, the client chose to pursue a negotiated settlement instead of filing a claim.

Make Fortune’s strategy: negotiation instead of litigation

Make Fortune’s legal team, together with a partner, entered into negotiations with the broker in Abu Dhabi.

During the discussions, we explained:

• why the client had been unable to travel to the UAE;

• the steps she had taken to remain in contact;

• that her inability to proceed was connected to exceptional circumstances;

• why a negotiated compromise could be more beneficial for all parties.

The objective was not to escalate the dispute, but to identify a commercially reasonable solution.

A negotiated settlement could allow the client to recover part of the funds while helping the broker and seller avoid a lengthy and potentially costly legal dispute.

The broker presented the proposal to the seller, and further discussions followed.

Result: AED 85,000 refund agreed

Following the negotiations, the seller agreed to return AED 85,000 from the original AED 180,000 deposit.

This represented almost 47% of the amount initially paid.

At the time of publication, the parties are completing the documentation required to formalise the agreement. Once the settlement documents are signed, the agreed amount is expected to be transferred to the client’s bank account.

Although the full deposit could not be recovered, the negotiated solution preserved AED 85,000 for the client in a situation where the prospects of successful litigation were uncertain.

Why an out-of-court settlement may be more effective than litigation

Court proceedings are not the only way to resolve property disputes in the UAE.

Depending on the circumstances, negotiations may help the parties:

• reduce legal costs;

• reach a resolution more quickly;

• avoid an uncertain court outcome;

• preserve commercial relationships;

• recover at least part of the disputed amount;

• record the agreed terms in a written settlement.

However, an effective negotiation strategy should not be based only on personal circumstances or emotional arguments.

A lawyer should review the contract, assess the legal and commercial positions of the parties and identify the terms that may encourage the seller, broker or developer to consider a compromise.

What to do when withdrawing from a property purchase in the UAE

Do not sign a cancellation agreement or confirm that the deposit has been forfeited before obtaining legal advice.

Recommended steps include:

1. Collect all contracts, reservation forms and payment confirmations.

2. Preserve correspondence with the broker, seller or developer.

3. Review the termination and refund provisions.

4. Record the circumstances that prevented completion of the purchase.

5. Obtain a legal assessment before negotiating or starting court proceedings.

Even where a contract restricts the return of a deposit, the parties may still be able to reach a voluntary settlement in certain circumstances.