Law No. (14) of 2008
Concerning
Mortgage in the Emirate of Dubai[1]
ــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ
We, Mohammed bin Rashid Al Maktoum, Ruler
of Dubai,
After perusal of:
Federal Law No. (5) of 1985 Issuing the Civil Code and
its amendments;
Federal Law No. (8) of 2004 Concerning Financial Free
Zones;
Law No. (7) of 2006 Concerning Real Property
Registration in the Emirate of Dubai;
Regulation No. (3) of 2006 Determining Areas for
Ownership by Non-UAE Nationals of Real Property in the Emirate of Dubai;
Law No. (8) of 2007 Concerning Escrow Accounts for
Real Property Development in the Emirate of Dubai;
Law No. (27) of 2007 Concerning Ownership of Jointly
Owned Real Property in the Emirate of Dubai; and
Law No. (13) of 2008 Regulating the Interim Real Property Register of the Emirate of Dubai,
Do
hereby issue this Law.
This Law
will be cited as “Law No. (14) of 2008 Concerning Mortgage in the Emirate of
Dubai”.
The
following words and expressions will have the meaning indicated opposite each
of them unless the context implies otherwise:
|
Emirate: |
The Emirate of Dubai. |
|
DLD: |
The Land Department. |
|
Chairman: |
The chairman of the DLD. |
|
Real Property: |
Land and any fixed structure constructed on it which
cannot be moved without damage or alteration to its form. |
|
Real Property Unit: |
Any designated part of the Real Property, including
any designated part marked on the plan. |
|
Real Property Register: |
The set of documents which are created or maintained by the DLD in paper or electronic format and which record all Real Property rights and any variation
thereto. |
|
Interim Property Register: |
The set of documents which are created or maintained by the DLD in paper or electronic format and which record sale contracts of Real Property and other legal dispositions of off-plan Real Property prior to inclusion in the Property
Register. |
|
Mortgage: |
A
contract by which a creditor acquires a Real Right in Real Property or in a
Real Property Unit, by which he obtains preference over ordinary creditors
and creditors of lower rank, for the repayment of his claim out of the price
of the Real Property, no matter in whose possession the Real Property may be. |
|
Mortgagor: |
An Owner of Real Property or holder of a Real Right
or personal right under a sale contract signed by the Owner of the Real
Property which is sold off plan and registered in the Property Register or
Interim Property Register. |
|
Mortgagee: |
A creditor who lends money to a Mortgagor against
the security of Real Property which exists physically or legally. |
This Law
will apply to the
Mortgage of Real
Property or Real Property Units as a security for debt, whether the debt is
secured by the whole Real Property, by a common interest therein, or by a Real Right or personal right in the Real
Property which is sold off plan.
A creditor-Mortgagee must be a bank, or a financing company or institution, that is duly licensed and registered with the UAE Central Bank to provide Real Property financing in the UAE.
1.
A
Mortgagor must be the Owner of the mortgaged Real
Property or Real Property Unit and must have the capacity to dispose of the
same.
2.
A Mortgagor may be a debtor, or a
real surety who concludes a Mortgage in favour of a debtor.
3.
Subject to Articles (22), (23), and (24)
of this Law, the mortgaged Real Property or Real Property Unit must physically
exist or legally exist off-plan at the time of concluding the Mortgage.
4.
A Mortgage may be created only on
Real Property or Real Property Units that may be subject to valid transactions.
A Mortgage will cover all appurtenances to the mortgaged Real Property or Real Property Unit, including buildings, plants, Real Property by destination, and any facilities constructed after the Mortgage contract is concluded.
1.
A
Mortgage will come into effect only when it is
registered with the DLD, and any agreement to the contrary will be null and
void.
2. A Mortgagor will be liable for the Mortgage contract registration fees unless otherwise agreed by the parties.
1. Mortgage applications will be submitted to the DLD signed by the Mortgagor and the Mortgagee, or real surety if applicable, and will include the following:
a. all information related to the Real
Property;
b. the value of the Real Property;
c. the value of the debt;
d. the mortgage term; and
e. particulars of the Mortgagor,
Mortgagee and real surety, including their domiciles and places of residence.
2.
A Mortgage contract will be executed
in the form prescribed by the DLD, and the Mortgage will be registered in the Real
Property Register or Interim Real Property Register, as the case may be. The
rank of Mortgage will be determined in accordance with the date of its
registration.
3.
The DLD will deliver to the
contracting parties a Mortgage deed signed by the competent officer, and
stamped with the seal of the DLD.
4. A Mortgage deed may be in electronic form, in which case it will have the same evidential value of a written Mortgage deed.
A Mortgage must secure a specified debt which
is incurred or promised at the time of Mortgage.
A
Mortgagor may sell, donate, or dispose, in any other manner, of the mortgaged
Real Property Unit or Real Property, or create any Real Right or personal right
on the same only with the approval of the Mortgagee and provided that the
person to whom the Real Property is disposed of agrees that all obligations of
the Mortgagor under the Mortgage contract will be transferred to him. A Mortgagee
may stipulate in the Mortgage contract that the Mortgagor and person to whom
the Real Property is disposed of will be jointly liable for such obligations.
Where
a Mortgage contract includes a provision which stipulates that the ownership of
mortgaged property be transferred to the Mortgagee if the Mortgagor fails to
settle the debt by a fixed date, or stipulates that the mortgaged property be
sold without following proper legal procedure, the Mortgage will be valid but,
in both cases, such provision will be null and void. The provision will also be
null and void even if it is included in a subsequent agreement.
A
Mortgagor is entitled to manage his mortgaged Real Property and receive its
proceeds unless the mortgaged Real Property is foreclosed and sold by public
auction for failure to repay the debt.
Where
a mortgaged Real Property is totally destroyed or becomes defective, the
Mortgage will be on the substitute property and the Mortgagee may enforce his
rights against such property in accordance with the rank of Mortgage.
Before enforcement of a debt against the
mortgaged Real Property, a debt may not be enforced against any other property, and the real surety may not seek
recourse against the debtor’s property.
1.
A
Mortgagee may assign his rights to another person subject to the consent of the
debtor. The deed of assignment will be registered with the DLD.
2.
A
creditor-Mortgagee may, within the value of his debt, assign the rank of his
Mortgage against the mortgaged Real Property to another creditor.
A Mortgage will secure only the amount
specified in the Mortgage contract unless otherwise provided for by law or
agreement.
The rank of a Mortgage will be determined by
the serial number of registration with the DLD. Where more than one person
applies for registration of Mortgages against the debtor’s interest in the same
Real Property, such Mortgages will be registered under the same number and
creditors will rank equally for the purpose of distribution of the proceeds of
sale by auction.
A
creditor-Mortgagee will have the right to enforce his debt, on the maturity
date of such debt and in accordance with the rank of Mortgage, against the
mortgaged Real Property while in the possession of any person. A person will be
deemed to have possession of the Real Property if the ownership of the Real
Property or any Real Right or personal right therein is transferred to him
after the Mortgage is concluded.
A
Mortgagor will guarantee the safety and integrity of the mortgaged Real
Property until the date of repayment of the debt. A Mortgagee may object to any
impairment to the value of the mortgaged Real Property, take any legal action
to preserve his rights, and recover relevant costs from the Mortgagor.
A Mortgage will be terminated upon full repayment of the secured debt.
A holder of the right of Musataha (right to use and exploit land belonging to another person) may mortgage buildings or plants for the term of Musataha but will not be entitled to mortgage the land subject to the right of Musataha unless otherwise agreed.
A holder of a usufruct right or long-term lease of no less than ten (10) and no more than ninety-nine (99) years may mortgage his interest in the Real Property or Real Property Unit for the term of the usufruct or long-term lease.
A Mortgage of the right of Musataha,
usufruct or long-term lease will be terminated, and the relevant entries in the register will be struck
off, upon either repayment of the debt
secured by the Mortgage or termination of the term of Musataha, usufruct, or
long-term lease.
A purchaser of a Real Property Unit or Real Property which is sold off-plan or while under construction may mortgage the same to secure a debt, provided that such Real Property Unit or Real Property is registered on the Interim Real Property Register maintained by the DLD.
In the event of default in the payment of a debt or upon satisfaction of a condition under which early repayment of the debt is required, the creditor-Mortgagee or his universal or particular successors may commence foreclosure and forced sale procedures against mortgaged Real Property, on condition that the debtor or the person who has possession of the mortgaged Real Property or Real Property Unit will be served at least thirty (30) days’ notice through the Notary Public.
If
the debtor-Mortgagor, his universal or particular successors, or the real
surety fails to pay the debt within the period stipulated in the preceding
Article, the execution judge will, upon request of the creditor-Mortgagee,
issue an attachment order against the mortgaged Real Property in order to sell
it by public auction in accordance with the applicable procedures of the DLD.
Subject
to the preceding Article, the execution judge may, upon request of the debtor
or real surety, postpone the sale by public auction one time only for a period
not exceeding sixty (60) days if it is established to the satisfaction of the
execution judge that:
1. the debtor-Mortgagor can repay the debt within this grace period; or
2. the debtor may sustain gross damage as a result of sale of the mortgaged Real Property or Real Property Unit.
Subject
to Articles (25), (26), and (27) of this Law, in case of failure to repay the
debt within the specified period, the mortgaged Real Property will be sold by
public auction in accordance with the applicable procedures of the DLD no later
than thirty (30) days from the date of expiry of the period stipulated in the
relevant Article.
The debtor or his real surety may repay a debt secured by Mortgage and all amounts ancillary to such debt prior to its maturity date.
The
debts owed to creditor-Mortgagees will be paid out of the price of mortgaged
Real Property Unit or Real Property or out of the substitute property in
accordance with the ranks of Mortgages even if all Mortgages are registered on
the same day. Where the proceeds of sale are not sufficient to settle a debt,
the creditor will be entitled to claim the balance of such debt from the
debtor.
Federal
Law No. (5) of 1985 Issuing the Civil Code and its amendments and Federal Law
No. (11) of 1992 Issuing the Civil Procedures Code will apply to any matter not
provided for in this Law.
The
Real Property granted by the Government to UAE nationals or persons of similar
status for commercial and residential purposes will be exempt from the
provisions of this Law. Orders and instructions issued by the Ruler, and their
implementing resolutions, will apply to such Real Property.
Mortgage
deeds duly registered pursuant to this Law will be binding upon third parties.
The
Chairman will issue the resolutions required for the implementation of the
provisions of this Law.
This
Law will be published in the Official Gazette and will come into force sixty
(60) days after the date on which it is published.
Mohammed bin Rashid Al Maktoum
Ruler of Dubai
Issued in Dubai on 14 August 2008
Corresponding
to 13 Shaaban 1429 A.H.