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Dubai Property Deals Are Collapsing. What Happens to Your Security Deposit?
2026
Updated: April 2026
Dubaiâs real estate market has entered a period of acute turbulence. Deals that were agreed months ago are now freezing. Buyers who were weeks away from closing are pulling out. And thousands of people are looking at security deposit cheques worth hundreds of thousands - sometimes millions - of dirhams, wondering what their situation actually means for them.
If youâre one of them, hereâs whatâs useful to understand
If youâre one of them, hereâs whatâs useful to understand
Whatâs Happening in the Market Right Now
Investor confidence has fractured sharply. Buyers who had committed to purchases are finding that their funding has dried up - investors have pulled out, mortgage approvals have stalled, and the financial assumptions behind many deals no longer hold.
Across Dubaiâs secondary market, agreements that looked solid six months ago are collapsing at an accelerating rate - and both buyers and sellers are left navigating a dispute process most people have never had to deal with before.
Investor confidence has fractured sharply. Buyers who had committed to purchases are finding that their funding has dried up - investors have pulled out, mortgage approvals have stalled, and the financial assumptions behind many deals no longer hold.
Across Dubaiâs secondary market, agreements that looked solid six months ago are collapsing at an accelerating rate - and both buyers and sellers are left navigating a dispute process most people have never had to deal with before.
What Is a Security Deposit?
In Dubaiâs secondary market, when a buyer and seller agree on a deal, the buyer typically issues a cheque equal to 10% of the purchase price as a security deposit. This is designed to lock in the buyerâs commitment to close.
In most standard agreements, if the buyer exits without a recognised basis for doing so, the seller may be in a position to retain those funds. But the specifics depend heavily on what the SPA actually says - and the circumstances of how the deal broke down.
In Dubaiâs secondary market, when a buyer and seller agree on a deal, the buyer typically issues a cheque equal to 10% of the purchase price as a security deposit. This is designed to lock in the buyerâs commitment to close.
In most standard agreements, if the buyer exits without a recognised basis for doing so, the seller may be in a position to retain those funds. But the specifics depend heavily on what the SPA actually says - and the circumstances of how the deal broke down.
What Factors Typically Matter in These Disputes?
Every case is different, but the factors that tend to shape the outcome include:
Whether the seller met their obligations. If the seller failed to obtain key documentation - such as a No Objection Certificate - or left an undisclosed mortgage on the property, this changes the picture considerably.
How the SPA is drafted. Some agreements include exit clauses, conditions precedent, or provisions that apply when circumstances change materially. Others donât. The wording matters.
Whether there was any misrepresentation. If key facts about the property were inaccurate at the time of signing, this is typically relevant to how the dispute is assessed.
How the parties have communicated since. Every message exchanged after a deal starts breaking down becomes part of the record. Informal conversations can affect outcomes in ways people donât anticipate.
Every case is different, but the factors that tend to shape the outcome include:
Whether the seller met their obligations. If the seller failed to obtain key documentation - such as a No Objection Certificate - or left an undisclosed mortgage on the property, this changes the picture considerably.
How the SPA is drafted. Some agreements include exit clauses, conditions precedent, or provisions that apply when circumstances change materially. Others donât. The wording matters.
Whether there was any misrepresentation. If key facts about the property were inaccurate at the time of signing, this is typically relevant to how the dispute is assessed.
How the parties have communicated since. Every message exchanged after a deal starts breaking down becomes part of the record. Informal conversations can affect outcomes in ways people donât anticipate.
Whatâs Worth Doing Now
The most common mistake in these situations is waiting. The longer a dispute remains unresolved, the narrower the options tend to become - on both sides.
Speaking with someone who understands how these cases typically unfold - before taking any further steps - is usually the most valuable thing you can do at this stage.
We work with specialists who handle Dubai real estate disputes daily. If youâd like to understand your situation better, get in touch and weâll connect you with the right person.
The most common mistake in these situations is waiting. The longer a dispute remains unresolved, the narrower the options tend to become - on both sides.
Speaking with someone who understands how these cases typically unfold - before taking any further steps - is usually the most valuable thing you can do at this stage.
We work with specialists who handle Dubai real estate disputes daily. If youâd like to understand your situation better, get in touch and weâll connect you with the right person.