Decree No. (31) of
2016
Concerning the
Mortgage of Granted
Land in the Emirate of Dubai[1]
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We, Mohammed bin
Rashid Al Maktoum, Ruler of Dubai,
After perusal of:
Law No. (7) of 2006 Concerning Real Property Registration in the
Emirate of Dubai;
Law No. (14) of 2008 Concerning Mortgage in the Emirate of Dubai;
Law No. (4) of 2011 Establishing the Mohammed bin Rashid Housing
Establishment and its Implementing Bylaw;
Law No. (7) of 2013 Concerning the Land Department;
Decree No. (4) of 2010 Regulating Grant of Title of Land Allocated
for Industrial and Commercial Use in the Emirate of Dubai;
The Order Issued on 14 May 1996 Authorising the Mortgage of Land
Granted by the Government of Dubai for Which Title Deeds Are Issued by the Land
Department;
The Instructions Issued on 20 September 1994 Concerning Land
Granted by the Government to UAE Nationals in the Emirate of Dubai; and
The Instructions Issued on 5 June 1996 Concerning the
Implementation of the Order Issued on 14 May 1996 Concerning the Mortgage of
Granted Land,
Do hereby issue
this Decree.
The following words
and expressions, wherever mentioned in this Decree, will have the meaning
indicated opposite each of them unless the context implies otherwise:
|
Emirate: |
The Emirate of Dubai. |
|
Government: |
The Government of Dubai. |
|
DLD: |
The Land Department. |
|
MRHE: |
The Mohammed bin Rashid Housing Establishment. |
|
Board of Directors: |
The board of directors of the MRHE. |
|
Director General: |
The director general of the DLD. |
|
Beneficiary: |
A natural or legal person who has a usufruct right to Granted Land. |
|
Granted Residential Land: |
A land plot owned by the Government and granted to a Beneficiary for
residential use. |
|
Granted Commercial or Industrial Land: |
A land plot owned by the Government and granted to a Beneficiary for
commercial or industrial use. |
|
Granted Land: |
Granted Residential Land, Granted Commercial or Industrial Land, or
any other land granted by the Government. |
|
Mortgaged Land: |
Granted Land mortgaged together with any buildings or structures
thereon. |
|
Mortgagor: |
A Beneficiary who has a usufruct right to Granted Land. |
|
Mortgagee: |
A creditor who lends money to a Mortgagor against Granted Land
provided as collateral. |
|
Competent Entity: |
The competent entity in the Emirate in charge of licensing the
construction of buildings and other structures. |
a.
A Beneficiary is authorised to mortgage Granted
Land in favour of any of the banks or financing institutions licensed to
operate in the Emirate. This mortgage will be legally valid and binding on both
parties.
b.
For
the mortgage referred to in paragraph (a) of this Article to be valid and
legally effective, the following conditions must be met:
1.
the purpose of
mortgaging the Granted Commercial or Industrial Land must be to invest the loan
in exploiting the land for the purpose for which it is granted;
2.
the purpose of
mortgaging the Granted Residential Land must be to invest the loan in the
maintenance, expansion, construction, or reconstruction of an existing
building;
3.
the
mortgage must be registered in accordance with the provisions and procedures
stipulated in the above-mentioned Law No. (14) of 2008; and
4.
any
other conditions prescribed, in coordination with the MRHE, by the DLD pursuant
to a resolution issued by the Director General in this regard.
a.
The DLD may not register any mortgage that does not
meet the conditions stipulated in paragraph (b) of Article (2) of this Decree.
b.
When registering the mortgage of
Granted Land, the DLD must ensure that the mortgage agreement:
1.
stipulates
that the loan be used to achieve the purpose for which the land is granted;
2.
is accompanied by a
building permit submitted by the Mortgagor which is issued by the Competent
Entity; and
3.
is accompanied by any
other documents or information the DLD may require the Mortgagor to submit to
verify the authenticity of the information included in the mortgage agreement
and to ensure the implementation of such agreement.
a.
The land granted to entities
affiliated to the Government, or to companies in which the Government or its affiliated entities hold at
least fifty percent (50%) of the capital, may be mortgaged without any
conditions or limitations.
b.
The land granted to real estate developers for the
purpose of real estate development is granted on a freehold basis and may be
mortgaged or disposed of in any manner whatsoever without any conditions or
limitations.
a.
Notwithstanding
the provisions of Article (2) and Article (4) of this Decree, the income of the
real property constructed on Granted Commercial or Industrial Land may be
pledged, exclusive of the land, in favour of any of the banks or financing
institutions licensed to operate in the Emirate. In such a case, the pledgee
will manage the real property and collect its income until the repayment of the
loan, or as agreed by both parties.
b.
For the purpose of implementing the provisions of paragraph
(a) of this Article, the DLD will mark an entry on the folio of the Granted
Commercial or Industrial Land in the register denoting that the income of the
real property constructed on that land is pledged in favour of the pledgee.
Where a Mortgagor or his successor fails to perform his
obligations under the mortgage agreement, the Mortgagee or his successor may
initiate foreclosure proceedings on the Mortgaged Land and sell the same at
public auction under the supervision of the DLD and in accordance with its
adopted procedures, provided that the Mortgagor or his successor is served a
notice, through the notary public, at least thirty (30) days before the commencement
of foreclosure proceedings, to perform his obligations.
a.
Courts will hear any applications or claims relating to
the mortgage of Granted Land.
b.
Where
a Mortgagor or his successor defaults on repayment of his debt within the grace
period prescribed in Article (6) hereof, the execution judge will issue, upon
the Mortgagee’s request, a foreclosure order over the mortgaged real property
in order to sell the same at public auction in accordance with the relevant
procedures adopted by the DLD.
a.
Without prejudice to the rights of the MRHE as a preferential
creditor, the Mortgagor’s debts will be paid from the proceeds of the
foreclosure sale of the Mortgaged Land after deducting the following amounts:
1.
court fees and
costs;
2. the fees and costs of the sale of
the Mortgaged Land at public auction and fees and costs for the registration of
the sale with the DLD; and
3. the fees payable in accordance with
the above-mentioned Law No. (4) of 2010 for the grant of title of land
allocated for industrial and commercial use, where such fees are not paid upon
the registration of the mortgage.
b.
The balance of the price of sale of
Granted Commercial or Industrial Land at public auction, if any, will be paid
to the Mortgagor.
c.
The balance of the price of sale of
Granted Residential Land at public auction, if any, will be paid towards the
purchase of a house that will be registered as a grant in the name of the
Beneficiary or towards providing him with any other housing services as the
MRHE deems appropriate. However, if the remaining amount is not sufficient to
purchase a house, that amount will be paid to the Mortgagor.
Notwithstanding the provisions of Article (6) hereof and where a
Mortgagor or his successor defaults on repayment of his debts, Granted
Residential Land may not be sold without first obtaining the approval of the
Board of Directors. This approval will be issued in accordance with the
relevant rules and conditions adopted by the Board of Directors.
All
mortgages registered with the DLD on the land granted by the effective date of
this Decree are hereby considered valid and effective.
Any
disposition or agreement concluded in breach of the provisions of this Decree
will be void, will have no legal effects, and may not be registered with the
DLD.
The Director General will issue the resolutions required for the
implementation of the provisions of this Decree.
The above-mentioned Order issued on 14 May 1996 and the instructions
issued in implementation thereof on 5 June 1996 are hereby repealed. Any
provision in any other legislation will also be repealed to the extent that it
contradicts the provisions of this Decree.
This Decree comes into force on the day on which it is issued, and
will be published in the Official Gazette.
Mohammed bin Rashid Al Maktoum
Ruler
of Dubai
Issued
in Dubai on 1 November 2016
Corresponding to 1 Safar 1438 A.H.
©2017 The Supreme Legislation Committee in the
Emirate of Dubai
[1]Every effort has been made to produce an
accurate and complete English version of this legislation. However, for the
purpose of its interpretation and application, reference must be made to the
original Arabic text. In case of conflict the Arabic text will prevail.