Payment by cheque in the real estate sector in Dubai

Payment in cheques is a widely used means of payment in the Dubai real estate sector. This payment method offers both buyers and sellers a number of advantages related to both the security and traceability of property transactions.

What is payment by cheque?

Payment by cheque is a cashless payment method where the buyer issues a cheque to the seller. This cheque is then deposited into the seller’s bank in the seller’s name. There are two main types of cheques commonly used in Dubai: personal cheques and bank cheques. Both types have their own advantages and disadvantages, which usually influence the decision of the buyer or seller.

Advantages of paying by cheque

• Security: Cheques offer a secure method of payment as they provide written confirmation of payment.
• Traceability: All cheques are documented by the bank, making it easy to track the transaction.
• Flexibility: Buyers can be more flexible with the timing of payments as they can adjust the cheque amounts according to the agreements in the lease.

Disadvantages of paying by cheque

• Risk of returns: In the event of insufficient funds on an account, a cheque may be returned, which can result in additional legal action and costs.
• Delays: The process of cashing a cheque can take varying amounts of time depending on the bank.

Legal aspects of payment by cheque

In Dubai, payment by cheque is subject to a specific legal framework. It is important to understand the local laws and regulations, especially the Dubai Court regulations. When using cheques in real estate transactions, buyers and sellers should ensure that they properly complete all required documents and adhere to the relevant deadlines to avoid legal issues.

Tips for buyers and sellers

• Make sure the cheque has sufficient funds to avoid returns.
• Keep copies of all cheques issued for your records.
• Take into account the deadlines for cashing the cheque, especially for property transactions.

Illustrative example on the topic: Payment in cheques

Let’s assume Ahmed wants to buy a flat in Dubai. After negotiations with the seller, Ahmed agrees to issue a cheque for AED 20,000 as part of the down payment. The seller accepts this method of payment as he has already had positive experiences with payment by cheque. Ahmed issues the cheque and hands it to the seller, who takes it to the bank.

A few days later, the seller calls Ahmed and informs him that the cheque could not be cashed because Ahmed did not have sufficient funds in his account. As a result, Ahmed had to take legal action to secure the deal and resolve the issue. This experience teaches Ahmed the importance of properly reconciling the financial aspects before making a payment in cheques.

Overall, this example shows that there are olle risks and benefits of paying in cheques and it is important to plan and understand this method well before using it in property transactions in Dubai.

For more information on the various aspects of the Dubai property market, visit our property market and buyers market pages.