Off-Plan SPAs in the UAE – Can Buyers simply walk away?

Can buyers simply walk away from an off-plan property agreement because of regional uncertainty?

In most cases, the answer is not that simple.

The UAE’s off-plan real estate market continues to show strong momentum, with recent launches demonstrating sustained investor confidence and demand for high-quality developments. At the same time, some buyers may be questioning whether current regional conflict gives them the right to terminate their Off-Plan Sale and Purchase Agreements and recover payments already made.

 Andrew Thomson and Anna White explain why this assumption can be risky.

While war may be recognised as a potential force majeure event under UAE law, relying on it successfully requires a buyer to meet a high legal threshold. The event must make performance impossible, not merely more difficult, expensive or commercially unattractive.

This podcast looks at the key tests for force majeure, why regional conflict alone is unlikely to be enough, how payment obligations are usually treated under Off-Plan SPAs, and why UAE courts generally prefer to preserve contracts where possible.

Click here for article version.

Transcript

SPEAKER_00 0:00

The off-plan real estate market in the UAE continues to demonstrate remarkable resilience and investor confidence, notwithstanding the regional conflict. This week, Hudariat Golf Estates, by the top-tier UAE developer Moden, launched a new off-plan development which sold out immediately, underscoring the sustained appetite for high-quality real estate investment in the UAE. Notwithstanding this positive news, many buyers who have signed off-plan sale and purchase agreements, off-plan SPS, still assume that they can terminate their off-plan SPS and obtain a refund of all their payment instalments from the developer solely on the basis of the current regional conflict. This assumption is wrong, at least not without clearing some very high legal hurdles. While war is recognized as a potential force majeure event across the UAEE, invoking it successfully requires far more than simply pointing to a headline. Further, seeking to terminate an off-plan SPA now appears to be very premature. Given that most off-plan properties will not hand over for another three to four years, by which time the market will have bounced back, as was the case after the COVID-19 pandemic. What is force majeure? Force majeure is a legal doctrine that can excuse a party from performing its contractual obligations when unforeseeable events beyond its control make performance impossible. In the UAE, this doctrine is codified under Article 236 of Federal Law No. 25 of 2025, the Civil Transactions Law, which provides that where a force major event makes performance impossible, the contract shall be terminated. However, the critical word here is impossible, not inconvenient, not more expensive, and not commercially undesirable. The three tests you must pass. UAE courts have consistently held that to successfully claim force majeure, a party must establish three elements. Unforeseeability. The event could not have been reasonably anticipated when the contract was signed. Unavoidability. The event was beyond the party's control and could not have been prevented through reasonable measures. Impossibility. The event must have rendered contractual performance absolutely impossible, not merely more difficult or costly. This is an intentionally high bar. The burden of proof falls squarely on the party seeking to walk away. Regional conflict alone is not enough. The existence of the regional conflict does not automatically excuse a buyer's obligations under an off-plan SPA. The buyer must demonstrate that the specific conflict has rendered its obligation to pay impossible to perform. The fact that the regional conflict has reduced a buyer's income or lead to an increase in its cost of living will not suffice. Additionally, the buyer must prove that the regional conflict was not reasonably foreseeable at the time the buyer signed the off-plan SPA, and that the buyer could not have avoided or mitigated its effects. Obligations remain. For buyers of off-plan property hoping that the regional conflict might excuse their obligation to pay the developer the payment instalments, there is a further obstacle. As most off-plan SP as in the UAE explicitly provide that force major does not excuse the buyer from its liability to pay the payment instalments to the developer. The fact that a property is off-plan and has not yet been constructed, whether development has not yet commenced or is currently in progress, does not in itself entitle a buyer to terminate the off-plan SPA on force majeure grounds. The buyer remains bound by the terms of the off-plan SPA unless it can be demonstrated that the relevant event has rendered performance of the specific contractual obligations genuinely impossible. Market uncertainty, construction delays, or general apprehension arising from geopolitical events do not meet this threshold. Without a contractual right of termination or a successful force major claim satisfying the tests set out above, a buyer who seeks to walk away from an off-plan ASPA risks forfeiting the payment instalments it has paid, subject to any statutory thresholds. For example, in Dubai, Article 11 of Law 13 of 2008 is amended. Courts prefer to preserve contracts. UAE courts have shown a clear preference for preserving contracts rather than terminating them. The experience of the COVID-19 pandemic demonstrated that courts will adjust contractual obligations under the hardship provisions of Article 224 of the new civil transactions law rather than allow parties to exit agreements entirely. This judicial approach reinforces the principle that walking away from a contract requires truly exceptional circumstances. What should you do? If you are a buyer seeking to terminate your off-plan SPA, you should seek legal advice before taking any action. Attempting to terminate a contract without proper justification could expose you to significant liability. Developers should also be aware that although force major may not apply to buyers, there are a number of other possible termination routes available to buyers, and developers should obtain legal advice to mitigate the risk. The bottom line the regional conflict is serious, but it is not a magic word that dissolves a buyer's contractual obligations.