Your Property Is Smaller Than Agreed: What Dubai Law Says About Area Shortfalls

Recent months have seen an increase in disputes arising from real estate transactions. These disputes have generally involved delayed project handovers, disagreements over property specifications and finishing standards, and discrepancies between the contracted size of units and the actual size delivered to buyers.

This article focuses on one specific issue: receiving a property that is smaller than the area agreed in the Sale and Purchase Agreement (SPA). Whether the property is a studio apartment, a villa, or a commercial unit, discovering that its actual area falls short of what was contracted for can be both frustrating and financially significant.

The good news is that Dubai law addresses this issue directly. The less favourable news, however, is that the remedy available to buyers is compensation rather than termination of the contract.

The Legal Framework: Executive Council Decision No. 6/2010

The key legislation governing area discrepancies in Dubai real estate is Dubai Executive Council Resolution No. 6 of 2010, which approved the Executive Regulation of Dubai Law No. 13 of 2008 concerning the regulation of the Interim Real Estate Register in the Emirate of Dubai. Article 13 of that Resolution sets out the principal rules buyers should understand in relation to the size of a property.

Net area is the benchmark. Under Article 13(1), the relevant measure is the net area recognised for registration purposes in the property register. This is distinct from the gross area, which may include a proportionate share of common areas.

Increases do not entitle the developer to additional payment. Article 13(2) provides that if the unit is larger than the area stated in the SPA, the developer may not claim any additional payment from the buyer unless the contract expressly provides otherwise.

Decreases beyond 5% trigger the developer’s obligation to compensate. Under Article 13(3), the developer must compensate the purchaser for any reduction in the area of the unit where that reduction exceeds 5% of the unit’s net area. This is a mandatory obligation from which the developer cannot contract out. The 5% threshold appears to reflect a reasonable margin for minor discrepancies that may arise in the course of development and registration.

Can You Terminate the Contract?

A question we frequently receive from clients is whether a shortfall in a property’s area entitles them to cancel the SPA and withdraw from the transaction entirely. The short answer is: generally, no.

Article 13 of Decision No. 6 of 2010 establishes a specific and self-contained remedy for area shortfalls: compensation. The apparent legislative intent is to balance the interests of both parties. This means that if your unit is, for example, 8% smaller than the area stated in your SPA, that discrepancy alone will generally not entitle you to terminate the agreement and demand a full refund. Instead, the remedy lies in seeking financial compensation from the developer for the portion of the area shortfall that is compensable under the law.

How Is Compensation Calculated?

Article 13(4) states that compensation shall be calculated based on the agreed purchase price of the unit as stated in the contract between the developer and the purchaser.

Importantly, the Dubai Court of Cassation clarified in Case No. 220 of 2018 that the first 5% of any shortfall is treated as a permissible margin and is excluded from the compensation calculation. In other words, the buyer is compensated only for the portion of the decrease that exceeds 5%.

Consider a buyer who purchased an apartment with a contracted net area of 1,000 sq. ft. for a total price of AED 2,000,000 (i.e. AED 2,000 per sq. ft.). Upon delivery, the actual net area of the unit is measured at 910 sq. ft., representing a 9% shortfall.

Under the Court of Cassation’s interpretation in Case No. 220 of 2018, compensation is calculated only on the portion of the shortfall that exceeds the 5% threshold. In this example, the compensable shortfall is 4% (9% minus 5%). Applied to the agreed purchase price, the buyer would be entitled to AED 80,000 in compensation.

Importantly, the buyer would not be compensated for the full 90 sq. ft. shortfall, but only for the 40 sq. ft. that falls beyond the permitted 5% margin.

What Should You Compare?

Article 13(5) specifies that the net area stated in the SPA and the blueprint attached to it are to be used as the baseline for calculating any increase or decrease. In practice, buyers should compare this contractual figure against one or both of the following:

• the area registered with the Dubai Land Department on the title deed, which is typically the most authoritative figure and the one the courts will generally rely upon; and
• the actual measured area of the unit, if the property has been built and handed over. If there is a discrepancy between the DLD-registered area and the physical measurements, a court-appointed expert may be instructed to determine the actual net area.

It is therefore essential for buyers to retain a copy of the signed SPA, together with the area specifications and any attached floor plans or blueprints. These documents form the contractual baseline against which any shortfall will be assessed.