Under-Construction Penalty Clauses
Under-construction penalty clauses specify financial consequences for developer delays, requiring compensation to buyers for late completion beyond agreed handover dates.
| Penalty Structure | Dubai Standard |
| Delay calculation | Days past contractual handover date |
| Penalty rate | AED 10 per square meter per day typical |
| Maximum cap | Often 10% of purchase price |
| Trigger date | After grace period (30 to 90 days common) |
| Automatic application | Should be automatic, often requires claim |
| Force majeure exception | Developer not liable for acts of God |
| Example Calculation | 1,000 sq ft Unit |
| Contractual handover | June 1, 2024 |
| Actual handover | December 1, 2024 (6 months late) |
| Delay days | 183 days (6 months) |
| Unit size | 1,000 sq ft (93 sq m) |
| Daily penalty | AED 930 (93 sq m times AED 10) |
| Total penalty | AED 170,190 (183 days times AED 930) |
| Buyer action | Claim through RERA or deduct from final payment |
Related Terms
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