What is an Escrow Account in Dubai?

Buying an off-plan property in Dubai? Then you’ve probably come across the term “escrow account.”  In simple terms, an escrow account in Dubai is a special bank account created specifically for off-plan real estate projects.

According to Law No. 8 of 2007 Concerning Escrow Accounts for Real Estate Development in Dubai, all payments made by buyers (or financers) for off-plan properties must be deposited into this account, not directly to the developer.

The account is managed by a bank or financial trustee approved by the Dubai Land Department (DLD) and RERA (Real Estate Regulatory Authority). This system ensures your money is secure, developers can use funds only for the registered project, and construction moves forward in verified stages.

How Does an Escrow Account Work?

When you sign an agreement with a developer (like Emaar, DAMAC, or Sobha) to buy an off-plan property in UAE, you’ll make installment payments as per a set payment plan. Here’s what happens next:

1. Account creation – The developer must open a new escrow account for each project through DLD’s Oqood portal, managed by an approved escrow agent or trustee bank.
2. Payment deposits – As a buyer, you deposit your payments into this escrow account, rather than directly to the developer.
3. Controlled fund release – Developers can only access the funds after completing verified construction phases, such as foundations or structure completion.
    
4. Use restrictions – Funds can only be used for sales, construction, land acquisition, and marketing expenses directly related to the same project. They cannot be diverted to other business activities.
5. Final handover – Once the project is completed and handed over, the remaining amount (except 5% retention) can be released to the developer.

In short, the escrow accounts in Dubai ensure that every dirham you pay goes exactly where it should, into the safe construction of your home.

The Legal Framework Behind Escrow Accounts in Dubai

Dubai’s real estate market is tightly regulated to protect buyers, investors, and developers alike. These are the key laws governing escrow accounts:

• Law No. 7 of 2007 – Covers land registration and includes clauses about escrow protection.
• Law No. 8 of 2007 Concerning Escrow Accounts – Makes escrow accounts mandatory for all off-plan developments and explains how they should operate.
• Law No. 13 of 2017 Regulating the Real Estate Sector – Updates earlier rules and strengthens buyer protections.

Under these laws, off-plan developers must:

• Open a separate escrow account for each project.
• Register the project and account with DLD/RERA.
• Use the funds only for the specific project.
• Submit regular financial reports to the escrow agent and DLD.

Failure to comply can lead to heavy penalties or project suspension. In recent years, several developers have been fined up to AED 500,000 for violating escrow laws.

Importance of Escrow Accounts for Buyers and Investors

Escrow accounts are one of the most important safety measures in Dubai’s real estate market. Here’s why:

• Protection against fraud: Developers can’t misuse buyer funds or abandon projects midway.
• Transparency: All fund releases follow a structured approval process, ensuring clarity between all parties.
• Buyer confidence: Your investment is backed by RERA-monitored escrow trustees.
• Security in case of cancellation or bankruptcy: If a project is canceled or a developer faces bankruptcy, your money in escrow remains safe and can be refunded.
• Legal record: Every transaction in the escrow account is logged, leaving no room for hidden dealings or mismanagement.

How to Set Up an Escrow Account As a Developer?

Many off-plan property buyers often ask, “How to set up an escrow account?”

The process is easy and can be completed in just a few steps. However, it’s important to know that developers must open a separate escrow account for each off-plan project, and the rules may vary between Emirates. In Dubai, a real estate developer can set up an escrow account by following these steps:

1. Log in to the Oqood portal and select the “Escrow Account Link” option.
2. Submit the application to the trustee bank with the required documents, including the project payment plan.
3. The trustee reviews and forwards it to the TAS system (part of DLD’s internal approval process).
4. The escrow department verifies, approves, or rejects the application.
5. Once approved, the result is updated in the system, and the project is officially registered with its dedicated escrow account.

Note: Developers must open a new escrow account for every off-plan project, and the rules may differ slightly across the Emirates.

Benefits of Escrow Accounts in Dubai Real Estate

Setting up an escrow account in Dubai offers the following advantages for both buyers and developers:

• Enhanced security: Buyer payments are legally protected under the Dubai Property Law.
• Higher transparency: All parties know the payment release terms upfront.
• Official record: Every transaction is logged by escrow trustees monitored by RERA.
• Simplified transactions: Escrow services simplify complex deals involving multiple stakeholders.

Conclusion 

So, before you invest in an off-plan property and start paying into an escrow account, make sure you:

• Verify the developer’s reputation and previous track record.
• Check the DLD registration of the project and escrow account through the Dubai REST app.
• Review the developer’s financials and delivery history.
• Ensure your payment plan and Oqood registration are properly documented.
• Confirm that your payments are made only to the official escrow account mentioned in your sales contract.

To make this process easier and more transparent, platforms like Xploon.com let you search, compare, and connect directly with verified developers, so you can invest confidently without worrying about fake listings or unauthorized payments.

FAQs

1. What is the concept of an escrow account?

An escrow account in Dubai is a secure, government-regulated bank account where buyer payments for off-plan properties are held until specific construction milestones are met. This ensures funds are used solely for the project's development. 

2. How to check an escrow account in Dubai?

To verify an escrow account in Dubai, visit the official Dubai Land Department (DLD) website or use the Dubai REST app. There, you can access the "Approved Escrow Account Trustees" service to view registered escrow accounts for off-plan projects.

3. Which bank provides an escrow account in Dubai?

Several banks in Dubai offer escrow account services for off-plan property transactions. Notable institutions include:

• Dubai Islamic Bank (DIB)
• Emirates Islamic Bank (EIB)
• Mashreq Bank
• First Abu Dhabi Bank (FAB)
• Commercial Bank of Dubai (CBD)

These banks are approved by the DLD to manage escrow accounts for real estate developments.

4. Who owns the money in an escrow account?

The buyer retains legal ownership of the funds in an escrow account. However, the developer can access these funds only upon completing verified construction milestones, ensuring the money is used exclusively for the project's development.