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Property downturn shows just how important it is to read the small print

Of course every contract is different and there can't be a general answer that covers all eventualities but it is undoubtedly a time when many property investors are looking closely at that small print.

Unhappily many may be examining the small print for the first time and finding, more often than not, that an escape route isn't as simple as they might have assumed.

Such is the state of the property slowdown in some markets like Dubai, that property investors are willing to loss a percentage of their deposit simply to get out.

But what do you do if the developer turns round and says no? This issue is highlighted in the forum where one real estate investor wants to cancel having paid a 20% deposit on a one bed apartment. He claims there is nothing about cancellation on his SPA but the booking form states that he would lose 5%, which he is prepared to do. But the developer says he can't cancel.

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Of course not much detail is available but it does raise the issue of examining your paperwork. Another property investor wonders at what stage he can seek a refund having paid 20% on a two bed apartment in Dubai.

It would appear that this particular case involves a project that has been frozen and could end up being cancelled, according to other posters. It raises the issue of whether or not contracts that were put in place some time ago are relevant to what is happening now in terms of projects being delayed, cancelled etc.

The same thread mentions another project where an investor bought three years ago, has now paid 40% with another instalment due in July. According to the poster it is still a hole in the ground with no main contractor appointed to actually build.

He wants his money back but his contract states that he would lose 24% of the contract value which would mean getting 15% of the 40% already paid a massive hit he doesn't want to take.

As is usual with legal documents, the answer is in the small print. Many contracts state that if a development is still unfinished six months after the completion date on the contract, then investors have the right to ask for their money back and could possibly have a case for compensation if it drags on beyond this.

But in the case of Dubai contracts that were drawn up some years ago, as in the case mentioned above, may not be as specific and also regulations have changed since then with the Real Estate Regulatory Authority in Dubai having brought in new rules.

Also contracts that were drawn up some years ago didn't envisage the current economic problems and therefore don't have any mention of the investor's rights should the project be stalled.

And it is not just in Dubai that property investors are suffering from the fact that glorious looking investments from three years ago just were not designed to cope with such a severe downturn.

In Cyprus one investor who bought three properties off-plan in 2005 is now finding it impossible to sell through the developer's re-sale department. This case also highlights the problem of dealing with these kinds of issues from a different country. You can't just pop down to the developers office.

Another poster who bought into the same Cyprus development writes: 'I am a single parent who is about to lose everything that I have worked for during the last 25 years.' And yet another, a lawyer by profession, claims that 100s of investors with this particular company have been taken for a ride.

In Bulgaria investors are currently battling with real estate company to get their deposits back. It would appear that this company has gone into liquidation with lots of investor's money and telephone calls, not unsurprisingly, and emails are not answered.

And in Romania there are a lot of property investors who want to 'get out' as they can no longer keep up the payments or just want to stop putting money into an investment that is now worth less than they will eventually be paying for it on completion.

In one particular development in Bucharest some property investors paid for their furniture packs over a year ago and it has still not been delivered or installed. And guess what the contract says? – that the developer is not responsible for delays in delivery!

It is an all too familiar story of phone calls not being returned and emails not being answered. Even those investors who are willing to sell and make a loss can't sell as there is no demand.

Perhaps it can all be summed up by one investor who simply states: 'I am tired of being stressed.'