WE, Mohammed bin
Rashid Al Maktoum, Ruler of Dubai
After taking cognisance of
Federal Law No. 5 of 1985 regarding civil transactions, as
amended;
Federal Law No. 8 of 2004
regarding financial free zones;
Law No. 7 of 2006
regarding real estate registration in the Emirate of Dubai;
Regulation No. 3 of 2006
designating the areas in which non-UAE nationals may own
freehold property in the Emirate of Dubai;
Law No. 8 of 2007
concerning real estate development trust accounts in the
Emirate of Dubai;
Law No. 27 of 2007 on
ownership of jointly owned properties in the Emirate of
Dubai; and
Law No. 13 of 2008
regulating the interim real estate register in the Emirate
of Dubai
Issue
the following Law:
Section One
Definition & General Provisions
Article (1)
This Law shall
be called "Law No. (14) of 2008 Concerning Mortgages
in the Emirate of Dubai".
Definition
Article (2)
The following
words and expressions shall have the meanings set out
opposite them unless the context otherwise requires:
Emirate:
Emirate of Dubai.
Department:
Department of Lands & Properties.
Head:
Head
of the Department.
Property:
Land
and permanent structures erected on it which may
not be moved without suffering damage or
alteration.
Property Unit:
The
subdivided part of the Property including any
subdivisions shown off-plan
Real Estate
Register:
A
set of documents kept in written or electronic
form at the Department which provide an
up-to-date record of real rights in Property.
Interim Real
Estate Register:
A set of documents kept in written or electronic
form at the Department in which all contracts
for the sale of Property and other legal
dispositions off-plan are recorded first before
being transferred to the Real Estate Register.
Mortgage:
A contract whereby a creditor acquires security
over Property or a Property Unit for the
repayment of his debt, ahead of ordinary
creditors and lower ranking creditors, from the
value of the Property wherever located and by
whomsoever held.
Mortgagor:
The owner of the Property or the holder of the
right in-rem or personal right under the
contract of sale signed with the owner of the
Property which is marked as sold off-plan and is
registered in the real estate register or the
interim real estate register.
Mortgagee:
A creditor who lends money to a mortgagor
against the security of Property that exists
ipso facto or ipso jure.
Article (3)
The provisions
of this Law apply to the Mortgage of Property and Property
Units as security for debt. It makes no difference whether
the debt is secured by a charge over the whole of the
Property or over an undivided interest therein or by right
in-rem or personal right over a Property marked as sold
off-plan.
Article (4)
The
Mortgagee/creditor should be a bank, company or financial
institution that is duly licenced and registered with the
UAE Central Bank to provide finance for Property in the UAE.
Article (5)
The Mortgagor must be
the owner of the Mortgaged Property or Property Unit and
in a position to dispose of the same.
The Mortgagor can be
the debtor or guarantor in rem who executes a Mortgage
on behalf of the debtor.
Subject to Articles
22, 23 & 24 of this Law, a Mortgage over Property or a
Property Unit must be shown to exist ipso facto or ipso
jure off-plan when the Mortgage is made.
A Mortgage may only
be created over Property or a Property Unit that is
capable of being disposed of.
Article (6)
A Mortgage
includes all appurtenances to the Property or Property Unit
including buildings, plants, assigned/apportioned properties
and any improvements made after the Mortgage contract.
Article (7)
A Mortgage is not
valid unless it is registered with the Department and
any agreement to the contrary is void
The Mortgagor shall
bear the costs of the contract unless otherwise agreed
by the parties.
Article (8)
Mortgage applications
shall be filed with the Department and shall be signed
by the Mortgagor and Mortgagee or the guarantor in rem,
if any, including the following particulars:
All
information related to the Property
Value of
the Property
Value of
the debt
Mortgage
term
Personal
details of the Mortgagor, Mortgagee and guarantor in
rem including domicile and place of residence.
The mortgage contract
shall be signed using the standard form of the
Department and the Real Estate Register or Interim Real
Estate Register, as the case may be, shall be updated
accordingly. The ranking of the Mortgage is determined
by its date of registration.
The Department shall
give the contracting parties a mortgage deed bearing the
signature of the competent officer and the seal of the
Department.
The mortgage deed can
be in electronic form and is admissible as evidence on
the same basis as a written mortgage deed.
Article (9)
The Mortgage
must secure a debt that is owing or promised at the
conclusion of the Mortgage.
Section Two
Legal Effects of Mortgage
Article (10)
The Mortgagor
shall not sell, gift or otherwise dispose of the Mortgaged
Property Unit or Property or create any right in-rem or
personal right over the Mortgaged Property Unit or Property
without the approval of the Mortgagee and subject to the
assignee agreeing to take over the obligations of the
Mortgagor under the mortgage contract. The Mortgagee may in
the mortgage contract stipulate joint liability of the
mortgagor and assignee for those obligations.
Article (11)
If a clause in
the mortgage contract gives the Mortgagee title to the
Mortgaged Property when the Mortgagor fails to pay the
mortgage debt within the specified period or provides for
the sale of the mortgaged Property without taking the
statutory steps, the Mortgage shall be considered valid but
in either case the clause is void. The clause is also void
if included in a subsequent agreement.
Article (12)
The Mortgagor
has the right to administer his mortgaged Property and
collect its yield and revenue until it is foreclosed and
sold at a public auction upon default of paying the debt.
Article (13)
Where loss or
damage occurs to the mortgaged Property, the Mortgage shall
attach to substitute assets and the Mortgagee may cover his
claim from those assets in the order of its priority
Article (14)
The debt may
only be covered out of the mortgaged Property and the
guarantor in kind may not seek recourse against the debtor's
assets before enforcement against the mortgaged Property.
Article (15)
The Mortgagee may
assign his rights subject to the consent of the debtor.
The assignment deed shall be registered with the
Department.
The
Mortgagee/creditor can, up to the value of his debt,
assign the rank of his Mortgage to another creditor
having a security interest in the same Property.
Article (16)
A Mortgage
secures only the amount specified in the mortgage contract
unless otherwise provided by law or agreement.
Article (17)
The rank of a
Mortgage is determined by the serial number under which it
is registered with the Department. In case several
applications are submitted at the same time to register a
Mortgage against the same debtor and over the same Property,
the Mortgages shall be registered under the same number and
those creditors shall rank equally in the distribution of
auction proceeds.
Article (18)
A
Mortgagee/creditor may follow the mortgaged Property into
the hands of any person in possession thereof in order to
obtain payment of his claim when due according to rank. A
person shall be deemed in possession of the Property if he
acquires title to the Property after it has been mortgaged
or acquires any other right in- rem or personal right over
the Property.
Article (19)
The Mortgagor
will guarantee the mortgaged Property and keep it in good
condition until the debt is repaid. The Mortgagee may
protest any deficiency in the guarantee and take whatever
legal action is necessary to protect his rights and recover
the costs from the Mortgagor.
Article (20)
A Mortgage
terminates upon repayment of the secured debt.
Section Three
Special Mortgages
Article (21)
A Musataha
holder may mortgage buildings or plants over the term of the
Musataha without having the right to mortgage the land that
is to be developed unless otherwise agreed.
Article (22)
The holder of
usufruct or long term lease for a term between 10 and 99
years may Mortgage his interest in the Property or Property
Unit for the term of the usufruct or long term lease.
Article (23)
A Mortgage over
rights of musataha, usufruct or long term lease shall
terminate and be deleted from the register upon repayment of
the debt secured by the Mortgage or upon expiry of the term
of the musataha, usufruct or long term lease.
Article (24)
The purchaser of
Property Units or Property that are marked as sold off-plan
or are under construction may mortgage them as security for
the debt provided that those units or Property are
registered in the Interim Real Estate Register maintained by
the Department.
Section Four
Execution Proceedings on the Mortgaged Property
Article (25)
Upon default in
payment of the debt when due or upon fulfillment of a
condition granting early repayment status, the
Mortgagee/creditor or his universal or singular successor
must provide the debtor or person in possession of the
mortgaged Property or Property Unit 30 days notice through
the Notary Public before commencing execution proceedings.
Article (26)
If the
Mortgagor/debtor or his universal or singular successor or
the guarantor in rem fails to pay the Mortgage within the
period specified in the preceding Article, the execution
judge shall, upon request of the Mortgagee/creditor order an
attachment against the mortgaged Property so that it can be
sold by public auction in accordance with the applicable
procedures of the Department.
Article (27)
Subject to the
preceding Article, the execution judge may, upon request of
the debtor or his guarantor in rem, postpone the sale by
public auction for up to 60 days and for one time only if he
finds that:
the
Mortgagor/ debtor will be able to repay his debt if
given this period.
sale of the
mortgaged Property or Property Unit will cause the
debtor substantial damage.
Article (28)
Subject to
Articles 25, 26 & 27 of this Law, failure to pay the debt
within the stipulated period will cause the mortgaged
Property to be sold by public auction in accordance with the
applicable procedures of the Department within 30 days after
the end of the relevant period referred to in either
article.
Article (29)
The debtor or
his guarantor in rem may repay the secured debt and its
ancillaries before the due date.
Article (30)
The claims of
Mortgagees/creditors shall be paid out of the price of the
Property Unit or Property or out of the substitute assets in
order of priority even if the Mortgages had all been
registered the same day. If the sale proceeds are not
sufficient to cover the claim of a creditor, such creditor
can claim the difference from the debtor.
Section Five
Closing Provisions
Article (31)
The Civil
Transactions Code (Federal Law No. 5 of 1985), as amended,
and the Civil Procedure Code (Federal Code No. 11 of 1992)
shall apply to any matter for which no provision is made in
this Law.
Article (32)
Property granted
by the government to UAE citizens and such-like persons for
commercial and residential purposes is excluded under this
Law and is subject to the applicable orders and directives
of the Ruler and the decisions in implementation thereof.
Article (33)
Mortgage deeds
that are duly registered pursuant to this Law are binding
upon third parties.
Article (34)
The Head of the
Department shall issue the decisions necessary for
implementing this Law.
Article (35)
This Law shall
be published in the Official Gazette and shall take effect
60 days after publication.
MOHAMMED BIN RASHID AL MAKTOUM
RULER OF DUBAI
Issued in Dubai
on 14th August 2008
13 Shaban 1429 Hegira
