Can I Pull Out of My Dubai Property Purchase Due to the Current Middle East Tensions?

The current Middle East tensions have caused major concern for nationals and expatriates in the region for a variety of reasons, but what happens to those individuals who are in the middle of making one of the most important (and often expensive) purchases they will ever make – their next home? If you are buying a property located in onshore Dubai (not in the DIFC), the Unified Form F additional conditions (or the Sale and Purchase Agreement/Reservation Agreement/Booking Form if purchasing off-plan) and Federal Law No. (5) of 1985 as amended (the ”Civil Code”) will contain the terms, conditions and law which govern the position, until 1 June 2026 when the Civil Transactions Law (Federal Decree-Law No. 25 of 2025) comes into force.    

Article 273 of the Civil Code sets out the legal position regarding a force majeure event. 

Article 273

1. In contracts binding on both parties, if force majeure supervenes which makes the performance of the obligation impossible, the corresponding obligation shall cease, and the contract shall be automatically cancelled. 
2. In the case of partial impossibility, that part of the contract which is impossible shall be extinguished, and the same shall apply to temporary impossibility in continuing contracts, and in those two cases it shall be permissible for the obligee to cancel the contract provided that the obligor is so aware. 

Only if the contract becomes impossible or partially impossible to perform and three further conditions are met will force majeure apply, whereafter the contract will be automatically terminated. 

1. Unforeseeable – the event must have been unforeseeable at the time that the contract was formed.
2. Unavoidable- the event must have been unavoidable even when reasonable efforts to mitigate have been taken by the party relying on force majeure.
3. Impossible – the event must render contractual performance impossible not just inconvenient or more costly. 

Article 249 of the Civil Code sets out the legal position where exceptional circumstances or hardship applies, but performance of the contract is not impossible.

Article 249

If exceptional events of a public nature which could not have been foreseen occur as a result of which the performance of the contractual obligation, even if not impossible, becomes oppressive for the obligor so as to threaten him with grave loss, it shall be permissible for the judge, in accordance with the circumstances and after weighing up the interests of each party, to reduce the oppressive obligation to a reasonable level if justice so requires, and any agreement to the contrary shall be void.

Here, there is no automatic termination of the contract, but upon application to the court a judge may reduce or adjust the obligations so as to address an imbalance between the parties which was caused by the exceptional circumstances.

There may also be occasion where the Dubai property contract itself provides indirectly for the right to terminate or for the contract to be deemed null and void e.g. where the parties have agreed that the property will be valued at a minimum amount, or that it is a condition of the contract that the buyer’s bank will offer a final offer letter, and these conditions precedent are not met.

The above is a general overview of the legal position under Dubai property law, but there are contractual considerations to be taken into consideration as well. For individually tailored Dubai property legal advice on this subject please do not hesitate to contact Nichola Reece-Burton or Umme Mohamed at [email protected]