Administrative Resolution No. (24) of 2025: New Mechanism Allows Qualifying Developers Earlier Access to Escrow Account Funds

Abu Dhabi's real estate sector continues to evolve through a series of regulatory measures designed to balance developer flexibility with purchaser protection. A central feature of this framework is the escrow account regime established under Law No. (3) of 2015 Concerning the Regulation of the Real Estate Sector in the Emirate of Abu Dhabi (the Real Estate Law). The Real Estate Law requires developers to deposit off-plan sale proceeds into dedicated project guarantee accounts and restricts access to those funds until prescribed construction milestones are met. 

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Abu Dhabi real estate sector continues to evolve through a series of regulatory measures designed to balance developer flexibility with purchaser protection. A central feature of this framework is the escrow account regime established under Law No. 3 of 2015 concerning the regulation of the real estate sector in the Emirate of Abu Dhabi, the real estate law. The real estate law requires developers to deposit off-planned sale proceeds into dedicated project guarantee accounts and restricts access to those funds until prescribed construction milestones are met. Under the previous escrow regime, developers were generally restricted from accessing project funds until 20% construction completion was achieved. Administrative Resolution No. 24 of 2025, the resolution, issued by the Abu Dhabi Department of Municipalities and Transport introduced a mechanism allowing earlier access to escrow funds, subject to the provision of an unconditional bank guarantee of equivalent value. This resolution allows eligible developers to access escrow funds earlier than previously permitted, subject to strict conditions designed to protect purchasers. Developer eligibility. To qualify, a developer must a have been registered as a developer in the Emirate for at least four years prior to the application date with a valid license at the time of submission. B have independently, or through any of its subsidiaries, completed and handed over at least three real estate development projects in the Emirate of Abu Dhabi either before or during their scheduled timelines, unless delay was due to reasons outside its control. And C not have been penalized for any violations or administrative sanctions under the real estate law for at least 12 months prior to the application date. The centre may impose additional conditions. Importantly, the DMT's chairman retains discretion to relieve any developer from any of these conditions. Application requirements. Under Article 4, the developer must submit an application to the Abu Dhabi Real Estate Center, ADREC, to replace the prescribed completion percentage with a bank guarantee accompanied by a details of the completion status of projects executed in Abu Dhabi and other Emirates, if any. b. The payment plan contained in the project's off-plan sale contracts. C. A detailed statement confirming that funds credited to the project's escrow account match payments made under the off-plan sale contracts registered in the interim register as of the application date. D. A technical report prepared by an accredited engineering firm specifying the estimated value of the project's construction works. And E. Any other documents requested by ADREC. Bank Guarantee Conditions. Article 5 sets out comprehensive requirements for the bank guarantee. It must be issued by a local bank or financial institution licensed in the UAE and approved by ADREC, with a value of not less than 20% of the total construction cost, based on a technical report issued no more than 30 days before the application date. The guarantee must be unconditional and capable of being immediately drawn upon, in whole or in part, upon the first written demand of DMT or ADREC, and payable by crediting the project's escrow account or through any other payment methods specified by ADREC. Neither the developer, the guarantor bank, nor any third party may reject, suspend, or delay payment of the guaranteed amount, or object to the same for any reason whatsoever. Additionally, the guarantee must be unconditional, unrestricted, and without a fixed term, be net of any deductions, fees or taxes payable by DMT and slash or a DREC, not be subject to cancellation by the developer, the guarantor bank, or any third party, and remain valid for as long as required for its intended purpose. The guarantee form must comply with the prescribed form attached to the resolution. Adjustments and safeguards. The resolution imposes ongoing obligations to maintain adequate guarantee coverage. Where a bank guarantee is issued based on the initial estimated cost for construction works, and it subsequently becomes evident through a later technical report or any other means that the estimate is significantly lower than the final cost determined by a DREC, the developer must provide an additional bank guarantee covering the difference. The same obligation arises where there is a partial drawdown or any reduction in the value of the bank guarantee for any reason. The original bank guarantee must remain with the account trustee, being the bank or financial institution approved by DMT to manage the project's escrow account throughout its validity period. The account trustee may not dispose of or release the bank guarantee to the developer without obtaining written notice from a DREC. Return of the bank guarantee. Under Article 6, a DREC may approve the release of the original bank guarantee after the developer has completed 100% of the project and obtained the project completion certificate. Alternatively, a developer may request early release prior to full completion, provided that the following two conditions are satisfied. a The project has reached an actual completion rate of at least 60% of construction works based on a technical report issued by an ADREC accredited engineering firm, and B. The balance available in the main escrow account is sufficient to cover the full cost of the remaining construction works required to reach 100% completion based on the estimated value specified in that technical report. Implications for stakeholders. For developers, this resolution provides a meaningful mechanism to improve project cash flow during the early stages of construction, which can be instrumental in accelerating project timelines and reducing reliance on external financing. Established developers with strong track records can leverage their compliance history to access funds earlier, giving them a competitive advantage. For financial institutions, the resolution creates a new category of demand for bank guarantee products tailored to real estate development, though the strict requirements, particularly the unconditional, irrevocable, and on-demand nature of the guarantees, may require careful risk assessment. For buyers and investors who have paid into escrow accounts, the bank guarantee mechanism serves as an additional layer of protection, ensuring that funds released to developers before the 20% milestone are fully backed by a guarantee of equivalent value, with clear pathways for our Drec to draw upon the guarantee if necessary. Conclusion. This resolution, which entered into force upon publication in the official Gazette, signals a willingness by Abu Dhabi authorities to adopt more nuanced, risk-based approaches to escrow fund management while maintaining robust purchaser protection by limiting eligibility to establish developers with proven track records and imposing stringent guarantee requirements. The resolution balances the need for developer flexibility with the imperative of safeguarding purchaser funds. As Abu Dhabi's real estate regulatory landscape continues to mature, stakeholders should review their compliance frameworks and banking relationships to take advantage of this new mechanism.