Guide: project escrow
Abu Dhabi project escrow: how the off-plan sale trigger applies
Project escrow is often discussed as if it applied to every development in Abu Dhabi. The law ties it to something more specific: a developer selling units off-plan, before they are built. This guide explains that trigger, what the project account is and what it may be used for, why some older summaries of the rules are out of date, and why a label such as development funding does not, on its own, tell you whether the escrow rules apply.
Start with the proposed sale and development model
The escrow question does not begin with the account. It begins with how the project will be sold and paid for. In one model, a developer sells units to buyers while the building is still on the drawings, and buyers' payments help fund construction. In others, the parties fund construction from their own capital and borrowing and sell on completion, or a building is developed for a known occupier, or the finished asset is kept and leased. These models raise different questions, and the statutory account rules described below are framed around the first.
That is why the partners in a joint real estate development need to settle early whether units will be sold before completion, when sales could start and which party would be the selling developer. Those answers decide whether the off-plan rules come into play at all, and they shape the structure and timetable of the development. This guide does not decide that question for any particular project; it explains what the law attaches to an off-plan sale.
The statutory off-plan sale trigger
Law No. (3) of 2015 regulating the real estate sector in Abu Dhabi sets the conditions under which a real estate unit may be sold off-plan. Article 15 lists them, and one of them is that the developer has opened a project escrow account. Article 18 then provides that a developer wishing to sell units off-plan applies to the Department, with the supporting documents it specifies, to open the account into which buyers' payments are deposited. Neither article was among those Law No. 2 of 2025 replaced or repealed.
The implementing regulation on the project escrow account, Administrative Decision No. 250 of 2015, makes the sequence explicit in Article 3. The Department issues a certificate approving the opening of the account, which allows the developer to sell once the account is open; the account trustee may not open the account before receiving that certificate; and no real estate unit may be sold off-plan unless the project escrow account has been opened.
So the trigger is the off-plan sale of units, and no unit may be sold off-plan until the project account has been opened.
Project account, trustee and restricted purpose
The law defines the project escrow account as the bank account of the development project into which amounts paid by buyers of units sold off-plan, or loan payments made by funders to finance the project, are deposited. The account trustee is a bank or financial institution accredited by the Department to manage it. Under Article 18, the developer and the trustee sign an escrow account agreement on the Department's form, and a separate account is opened for each project; where a development consists of several projects completed in stages, each has its own account.
The purpose is restricted. Article 18 allocates the deposited amounts to the construction of that project and the settlement of its financing payments. Article 19, as replaced by Law No. 2 of 2025, states that no amount may be paid out of the account except to establish and complete the project and to make its finance payments, in line with the escrow account agreement, and that the account may not be used to pay the price of the project land or brokers' commissions, in whole or in part.
Current amendments and why older thresholds mislead
The original Article 19 of Law No. 3 of 2015 linked any payment from the account to a minimum level of construction completion, stated as an absolute rule. Law No. 2 of 2025 replaced that article. Disbursement is still linked to construction progress, but the replacement text allows the Chairman of the Department to set a mechanism for paying out before that level is reached, against alternative bank guarantees.
Administrative Decision No. (24) of 2025 sets that mechanism. It lets the Abu Dhabi Real Estate Centre approve earlier disbursement in exchange for bank guarantees, subject to conditions on the developer and controls on the guarantee. Summaries written before these changes, which present the completion threshold as unconditional, therefore no longer describe the current law. This guide does not set out the thresholds, stages or guarantee terms; they are specific to each case and are confirmed with the Centre.
Questions before choosing a development funding route
A generic label such as development funding or partnership capital is not enough to decide whether the statutory account rules apply. The articles above attach to the off-plan sale of units, while the account's definition also covers loan payments from funders where an account exists, so the actual sale and financing arrangements matter more than the name given to them. The questions below help frame the conversation with the Abu Dhabi Real Estate Centre and the project's legal and financial advisers, who confirm how the rules apply to a specific model.
How landowners, investors and developers combine in a development is covered under real estate development partnerships; this guide deals only with the escrow gate that an off-plan sale introduces.
- Will any units be sold, or offered for sale, before completion? If so, from when, and by which party as developer?
- Is the developer registered, and is the project registered with the Abu Dhabi Real Estate Centre?
- If an account is needed, which party signs the escrow account agreement, and with which accredited account trustee?
- How will construction be funded before any sales begin, and how would any project lending relate to the account?
- Is the development a single project, or several projects delivered in stages, each needing its own account?
- What do the Centre and the project's advisers confirm about how the rules apply to this particular model?
Structuring a development or partnership?
Tell us about the site, the partners and how you expect the project to be sold or held. We can discuss the development and partnership model with you; how the escrow rules apply to a specific case is confirmed with the responsible authority and qualified advisers.
Discuss a partnership