What You Need to Know Before Buying a Home

The UAE mortgage laws concern the rights of mortgagees regarding real-estate properties in the Emirates. 

Emirates such as Dubai, Abu Dhabi, Sharjah and Ajman implement strict mortgage laws that property owners must adhere to. Here is a concise understanding of the laws imposed in these four emirates. 

• Dubai
• Abu Dhabi
• Sharjah
• Ajman
• FAQs

Dubai 

Mortgage Laws in Dubai has implemented the Law No. (14) of 2008 regarding mortgages in the Emirate of Dubai. The articles and clauses are discussed further.

Section One 

Section one covers article 3 to article 9, listed below: 

• Article 3: The law applies to the Mortgage of Property and the Property Units as security of debt. 
• Article 4: The mortgagee needs to be a bank or a company. 
• Article 5: The Mortgager should be the owner of the mortgaged property and can be the debtor or guarantor. 
• Article 6: Mortgages include all property units. 
• Article 7: Mortgages are not valid until registered with the Department. 
• Article 8: The application requires information such as the property value, debt value, mortgage term and the mortgagor’s details. 

Section Two (Legal Effects of Mortgage)

This section covers the Legal Effects of Mortgage: 

• Article 10: The mortgagor cannot sell or gift the property without the mortgagee’s permission. 
• Article 12: Mortgagee holds the right to sell if the debt is unpaid. 
• Article 15: The mortgagee can assign his rights with the consent of the debtor. 
• Article 16: A mortgage will secure the amount listed in the mortgage contract. 
• Article 19: The mortgage gets terminated upon repayment of debt. 

Section Three (Special Mortgages) 

This section is concerned with Special Mortgages: 

• Article 21: Musataha holders can mortgage buildings over the term of their Musataha agreement. 
• Article 24: Property unit purchasers who have off-plan properties can mortgage that as security of debt. 

Section Four (Execution Proceedings on the Mortgaged Property)

Section four imposes laws regarding execution proceedings on the mortgaged property: 

• Article 25: If debt is not paid, the mortgagee needs to provide the debtee 30 days before making a final decision. 
• Article 26: If the debt is still unpaid, the mortgage can be auctioned off. 
• Article 27: The auction can be postponed for 60 days if the mortgagor can pay within the timeframe. 

Abu Dhabi 

The Real Property Regulations 2015 issued by the ADGM (Abu Dhabi Global Market) regulates mortgages and exercises its laws. 

Right to Mortgage 

The right to mortgage section covers clauses such as: 

• Real property can be mortgaged under request. 

Requirements for a Mortgage 

They are listed as follows: 

• Real property description
• Interest Identification 
• The maturity date of the debt

Mortgage Variation 

Clauses regarding the variation of mortgage are covered as: 

• Registered mortgages can be varied. 
• A variation cannot add or remove a party from the mortgage. 

Mortgage Discharge 

Article 54 imposes clauses regarding mortgage discharge: 

• Mortgage can be discharged upon registration 
• Debt may be discharged. 

Mortgagee’s Rights and Powers 

The mortgagee holds power over the real property as said by these clauses: 

• The real property can be sold via public auction or a personal contract. 
• Privilege over real property can be solid. 
• Can enter into the possession of the real property. 

Right To Sale 

If the mortgagee decides to sell the property, the real market value is required for the real property. 

• The mortgagee deciding to sell should use the money received to pay off previous interests or pay the court. 
• The security deposit is used to pay expenses related to property sales, mortgage interest and future interests. 

Appointment of Receiver 

This clause is concerned with the appointment of the receiver and covers pointers such as: 

• If a mortgage allows the mortgagee to appoint a receiver, the receiver can act as the agent for the mortgage. 
• The receiver can make changes to the real property as the mortgagor would have done. 
• The receiver gets officially appointed by court orders. 

Sharjah 

The SRERD (Sharjah Real Estate Registration Department) is concerned with real estate development projects for Sharjah. It is governed under the Executive Council Resolution No. (34) of 2018 on selling real estate in Sharjah. 

Project Mortgage Restrictions 

Article 7 in the resolution is concerned with: 

• Finance allocated for property mortgages should be used only for the construction or the management of the project. 
• The finance value cannot exceed 50% of the total project value. The value can be increased under the consent of the Sharjah Executive Council. 

SRERD’s Rights

Article 8 states the SRERD’s rights over the mortgage: 

• The right to review the mortgage contract decided between the mortgagee and the developer before executing it. 
• The SRERD is allowed to contact the Central Bank to ensure that the decisions are put into effect. 
• The real estate mortgage only becomes valid after official registration. 

Ajman 

The Law No. (2) 2020 covers clauses regarding mortgages in The Real Estate Development of Ajman. 

Mortgaging the Real Estate Project 

Article 20 covers clauses regarding mortgaging the real estate project. The developer is allowed to mortgage units to finance new projects in the UAE. The terms and conditions for this article are as follows: 

• The total budget of the real estate project should exceed 50%. 
• The mortgage remains restricted to the units of the project registered under the developer. 
• The entire amount should be deposited into the Escrow account. 
• The mortgaged unit should be registered under the buyer’s name. 
• If the mortgaged unit is sold, it should be clearly stated.

FAQs

That concludes all there is to know about the mortgage laws in UAE. Knowing the mortgage laws can help find the perfect mortgage for UAE residents and foreigners.

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