What is the primary purpose of a project's escrow account?

The primary purpose of a project's escrow account is to safeguard the funds related to off-plan sales. When a buyer purchases property that is still under development, the payment is usually not transferred directly to the developer. Instead, it is deposited into an escrow account managed by a third party. This arrangement ensures that the buyer's funds are protected and used solely for the project as intended. The developer can only access these funds upon the completion of certain milestones or conditions set forth in the sales agreement.

This practice is vital in the real estate market, particularly in Dubai, to build trust between buyers and developers. It minimizes the risk for buyers since their money is only released when the developer meets specific requirements, thus promoting transparency and accountability in the construction process.

Other options, while related to various financial aspects of real estate, do not align with the specific role of an escrow account. Long-term deposits, maintenance costs, and security deposits serve different functions and do not specifically pertain to the protection of funds in the context of off-plan property transactions. Hence, focusing on off-plan sales highlights the critical function of an escrow account in the overall framework of real estate transactions.