The call you don’t want to get three weeks after booking
You’ve booked an off-plan unit. The developer has your client’s cheque, or the bank transfer has cleared. You’ve already done the hardest part: researching the project, walking the client through the payment plan, co-broking with the listing agency, agreeing a split, getting it papered — or at least confirmed over WhatsApp. You’re mentally moving on to the next deal.
Then the client calls. They can’t complete the second instalment. A job change, a currency hit, a change of heart. The unit is going back to the developer.
What happens to your commission?
The honest answer is: it depends on factors most agents never nail down before they close the deal. This article explains exactly what those factors are, what the law says about the transaction unwinding, how your commission gets exposed, and what the only reliable defence looks like.
How off-plan commission actually flows — before anything goes wrong
Buyers do not pay commission on off-plan properties in Dubai, as developers usually pay the brokerage directly to market and sell the project. That is the structural baseline. The commission comes out of the developer’s marketing budget, not the purchaser’s pocket — which means the moment the purchaser exits the deal, the entire payment chain is called into question.
For off-plan properties, the developer pays the broker after the Sales and Purchase Agreement (SPA) is executed and payment milestones are met. That phrase — “payment milestones are met” — is doing a lot of work. It means the commission is almost never paid in a single lump sum at booking. The standard payment schedule ties commission release to buyer payment milestones. Most developers release 50% of the commission after the buyer’s first payment clears and the remaining 50% after the second or third instalment. This creates a 30 to 90 day lag between the sale and full commission receipt.
That lag is where risk accumulates. If a buyer defaults in the first 30 to 90 days — arguably the most common window for early cancellations — they may default precisely when the developer has not yet released the second half of your commission.
And if they default before your agency has even invoiced the first tranche? The developer has no commission liability to honour at all.
What the law says about a buyer default — and why it matters to your fee
Understanding what legally happens when a buyer defaults is not just the client’s problem. It directly determines whether a commission has crystallised, and whether any developer clawback clause bites.
When a developer notifies DLD of a buyer’s payment default, DLD serves the buyer a 30-day written notice to either fulfil their contractual obligations or reach a settlement with the developer. This is a mandatory step under Article 11(a) of Law No. 19 of 2020. If the buyer does not respond within 30 days, DLD issues a report authorising the developer to proceed with termination and SPA deregistration.
So the legal process of termination has a mandatory notice period built in. That 30-day window is not dead time for the agent — it is the window in which to understand whether the deal can be salvaged or whether to start addressing the commission question.
Once the contract is formally terminated, the developer’s right to retain funds from the buyer is capped by construction progress. The deduction depends on the project’s completion percentage. For projects above 80% complete, the developer may retain up to 40% of the unit’s contractual value. For projects between 60% and 80%, the cap is also 40%. Below 60%, the cap is 25%. If the project has not commenced for reasons beyond the developer’s control, the developer may retain up to 30% of amounts paid. These thresholds are set by Law No. 19 of 2020 and cannot be overridden by the SPA.
These caps protect the buyer. They say nothing about the agent. The law that governs what a developer keeps from the buyer’s payments says nothing about whether the commission already paid to the brokerage must be returned, or whether a commission not yet paid must be withheld. That is entirely a matter of the brokerage agreement between your agency and the developer.
The clawback clause: the real exposure most agents overlook
Every reputable Dubai developer includes a clawback mechanism in their brokerage appointment letter or agency agreement. Read yours carefully. Clawback clauses protect developers from commission fraud. If a buyer cancels within 30 to 60 days of booking, the developer claws back 100% of the commission paid. If cancellation occurs within 60 to 180 days, the clawback is typically 50 to 75%. After 180 days, commissions are generally non-refundable.
These figures are not law — they are contractual terms that vary by developer. Some are more generous, some are harsher. But the principle is consistent across the market: the earlier the cancellation, the more exposure the agent carries.
There are three scenarios worth pulling apart:
Scenario 1: Commission not yet paid, buyer defaults before milestone
This is the cleanest scenario for the developer and the most painful for the agent. The buyer books, pays the down payment, then fails on instalment two. The developer has not yet hit the trigger point in the brokerage agreement that would release the second tranche of commission. The developer simply does not pay. There is no clawback, because there was nothing to claw back yet — there is just non-payment. Your agency has done the work of bringing a buyer who then walked, and you are left without the fee.
Whether you have any legal basis to claim is determined entirely by your brokerage agreement. If the agreement says commission is payable upon SPA execution and first payment, you have a claim. If it says commission is tied to each buyer instalment being cleared, you may have earned only the first tranche.
Scenario 2: First commission tranche paid, buyer defaults before second
This is the most common scenario. The developer has released 50% of the commission, the buyer defaults on instalment two or three, and the developer invokes the clawback clause to recover the first payment. Your agency receives a debit note. If the brokerage agreement allows this and it is within the clawback window, you will likely have to return it.
The practical consequence: if you have already paid your agent their portion of that first tranche, your agency absorbs the loss unless you had the foresight to hold the agent’s share until the clawback window closes.
Scenario 3: Full commission paid, buyer defaults after clawback window
This is the scenario that agents are targeting when they survive the early risk period. After 180 days, commissions are generally non-refundable. Once the clawback window closes, the developer’s right to reclaim the fee typically expires. The unit goes back to the developer, the SPA is deregistered from Oqood, and your commission stays where it is. You earned the fee for bringing a qualified buyer and executing a valid transaction; the fact that the buyer later defaulted does not retroactively erase that work, provided the clawback window has closed.
The co-broke dimension: where the split becomes a dispute
In a market where shared listings are the default and exclusive mandates are rare, most off-plan sales involve two agencies — a listing agency or developer-authorised agency, and a buyer’s agent. The commission the developer pays goes to one brokerage. The split to the other is a private commercial arrangement between the two agencies.
This is where defaults create a second, entirely separate problem. The developer’s clawback or non-payment affects the agency that holds the brokerage relationship. That agency must then determine what it owes the co-broker. If nothing is agreed in writing before the deal closes, that determination becomes a negotiation — and in a default scenario, negotiations tend to go badly.
Here is what typically happens in a co-broke that hits a buyer default:
The listing agency receives a clawback demand from the developer. Its first instinct is to pass the pain downstream to the co-broker. The co-broker argues that the split was agreed, the work was done, and the failure was the buyer’s, not theirs. Neither position is wrong on its merits. The dispute exists because no written co-brokerage agreement defined what happens when the deal unwinds. No split agreement in Dubai is legally enforced by RERA if it exists only as a WhatsApp message. Always ensure that the final agreed commission is recorded in your Form A or Form B contract to avoid disputes.
A co-brokerage agreement that only addresses the split percentage on a successful completion is incomplete. It needs to address what happens if:
- The buyer cancels before the developer releases commission
- The developer claws back part or all of the commission
- The deal closes but the developer delays payment beyond a defined period
- There is a VAT dispute on the invoice (agency commissions attract 5% VAT in Dubai, and both agencies need to invoice correctly)
Without answers to those questions in a signed document, both agencies are in a grey zone the moment the deal cracks.
What “the developer pays the agent” actually means in a co-broke
In Dubai, Law No. 85 of 2006 governs the terms of brokerage fees and when agents are entitled to remuneration. But this law governs the relationship between agent and principal — not the internal split between two brokerages. The split between a listing agency and a buyer’s agent is a private commercial contract.
The practical consequence: the developer does not care about your split. They have a brokerage agreement with one agency. The other agency is legally invisible to them. If there is a clawback, the developer recovers it from the agency they contracted with, full stop. That agency then has to deal with the co-broker based on whatever they agreed — or didn’t.
This asymmetry is the root cause of most co-broker commission disputes in off-plan sales. The buyer’s agent, who found and converted the client, has no direct claim against the developer. Their only claim is against the listing agency. And if the listing agency is itself fighting a clawback, paying a co-broker is not their priority.
For disputes with developers, brokers, or property management companies, you must first file a complaint with the DLD, which will attempt to mediate a settlement. For broker-to-broker disputes that escalate beyond informal resolution, the DLD’s mediation function is the first step before any formal proceeding. These processes take time and money, and no amount of DLD involvement recovers months of relationship damage between two agencies.
The timeline problem: payment lag and cash flow reality
This lag between sale and full commission receipt means maintaining working capital to cover agent payouts and operational expenses before developer payments arrive. In practice, agencies fronting agent pay before commission arrives are common. When a clawback hits, the loss is double: the agency has already paid the agent, and now it has to return money to the developer.
The payment lag also creates a practical problem for the agent on the ground. An agent who closes a deal in January may not receive full commission until April or May, assuming no default. If the buyer defaults in February, the agent may have already received an advance on the expected commission from their agency — money that has to be clawed back internally, or written off.
Agents who work for brokerages with no clear internal policy on advances and clawbacks are in a particularly exposed position. The commission policy between agent and agency — how advances are handled, what happens to the agent’s share if there is a developer clawback — is a conversation that should happen before the first off-plan deal closes, not after.
The registration chain: Oqood and what a cancelled SPA actually means
Once a buyer signs the SPA and pays the first instalment, the developer is obliged to register the SPA in the Interim Real Estate Register (Oqood) maintained by DLD. When a buyer defaults and the SPA is cancelled, the DLD deregisters the property from Oqood and reregisters it in the developer’s name, at which point developers typically resell the property to another buyer.
The moment the SPA is deregistered, the transaction is formally unwound. Any commission tied to a registered, active transaction is now tied to a cancelled, deregistered one. This matters because some agencies try to argue that commission was earned at SPA signing, not at completion. Whether that argument holds depends on the brokerage agreement — but a developer whose SPA has been deregistered and who has already initiated a clawback has little incentive to accept that argument voluntarily.
There is also the question of what happens to the DLD transfer fee already paid. The 4% DLD transfer fee applies to secondary market transactions. For off-plan, the equivalent registration fee (through Oqood) is a developer obligation at registration. When a deal unwinds, no agency commission is protected by the Oqood system — the system records the buyer’s interest, not the broker’s fee.
The assignment alternative: saving the commission by finding a new buyer
Before treating a defaulting buyer’s situation as a straight cancellation, consider the assignment route. Assigning the SPA to a new buyer is a common alternative to cancellation. You need a No Objection Certificate (NOC) from the developer, and most developers require you to have paid 30 to 40% of the purchase price before permitting resale.
If your client has met the developer’s minimum payment threshold, an assignment sale — where the original buyer sells their position in the SPA to a new investor before handover — avoids cancellation entirely. The original SPA stays alive. No clawback clause is triggered. And if you bring the replacement buyer yourself, you may earn a second commission on the assignment. The exception is a secondary sale of an off-plan unit, an assignment or resale before handover, where the buyer may still pay the standard 2%.
This is a smarter outcome for everyone involved: the original buyer recovers their payments (and potentially a profit if prices have risen), the developer avoids the clawback administration, and the agent potentially earns twice on one unit. The assignment route only works, however, if you identify the default risk early — during that 30-day DLD notice window — and move quickly. Once the developer begins formal termination proceedings, the window for a clean assignment typically closes.
The VAT wrinkle on disputed commission
Agency commissions in Dubai attract 5% VAT. Both the listing agency and the co-broker’s agency need to issue tax invoices correctly to recover VAT. When a commission is clawed back, the VAT position also reverses. An agency that issued a VAT invoice for a commission it then has to return will need to issue a credit note for the VAT component as well.
This is administrative, but it matters: agencies that run sloppy invoicing on co-broke splits — relying on informal confirmations rather than proper tax invoices — create a second problem on top of the clawback when deals unwind. The tax invoice is also part of the paper trail that proves the split was agreed, which matters if the dispute escalates to DLD mediation.
What the best-run agencies do differently
Watch how the high-volume off-plan agencies handle co-brokes in Dubai’s shared listing environment, and the pattern is consistent. They do not rely on the developer relationship to sort out agent splits. They treat the split as a separate commercial agreement that must be signed before the buyer pays, not after.
The signed co-brokerage agreement — covering the percentage, the VAT treatment, what happens on clawback, and what payment trigger applies — exists independently of whatever the developer pays and when. Both agencies have agreed to the economics of the deal in full, including the downside scenario. When a buyer defaults, there is no ambiguity about what is owed, what gets returned, and how any partial payment is divided.
The agents working within those agencies also know their internal commission policy before they close deals. They know what an advance means in terms of clawback liability, and they know that a commission on a deal inside the clawback window is provisional, not final.
None of this prevents a buyer from defaulting. It does prevent the default from generating a second dispute between the agents themselves.
The principle that ends the problem
The dispute that follows a buyer default is almost never about the law. Law No. 19 of 2017 defines strict procedures for contract termination and caps the amount developers can retain if buyers default, providing predictable financial exposure limits. The framework for what the developer keeps and what the buyer recovers is codified and reasonably clear.
What is not codified — and never will be — is the private commercial arrangement between two agents who split a deal. That arrangement is only as solid as the document that records it, signed before the client’s first payment clears.
The agent who walks into an off-plan co-broke with a signed split agreement that covers the clawback scenario, a proper tax invoice trail, and a clear internal policy on advances has done something simple and powerful: they have converted a verbal understanding into a binding commercial reality. When the buyer defaults and the developer invokes clawback, that agent knows exactly what position they are in, who is owed what, and what the path forward looks like.
The agent who relied on a WhatsApp confirmation and a handshake is starting a different conversation — with their co-broker, with their manager, and possibly with DLD mediation. That conversation is longer, more expensive, and never as satisfying as the original deal deserved to be.
The moment to agree the split, record it, and have every party’s position defined is before the client signs. Not after the client defaults. The work of protecting your commission is done in advance, or it is not really done at all.
