Can Mortgaged Property Be Sold In Dubai?

Buying and selling property in the UAE can be complex, but with the right resources and correct procedure, issues should not arise. The legal requirements for property sales in Dubai and elsewhere across the UAE vary depending on the type of property being sold. Provided the vendor adheres to the UAE's mortgaged property rules, there should be no issues with selling a villa or apartment.

In this article, we’ll take a look at the Dubai property sale process and help to clarify the finer points with some essential Ghaf Woods property tips from the experts.

 

Is It Possible to Sell a Mortgaged Property?

Put simply, yes. As long as you follow due process and adhere to all the legal requirements for property sale in Dubai, there should be no issues selling a mortgaged property. Before proceeding with the actual sale, the first step is to request a liability letter from your mortgage provider or lender. This document clearly outlines the outstanding mortgage balance and any other charges or fees that are due. Without this letter, you cannot sell your mortgaged property, so it’s essential to arrange this before you do anything else.

The Dubai Land Department (DLD) is the regulatory body that oversees all property transactions in Dubai and ensures that they comply with all current legislation. The Liability letter from your lender must be submitted to the DLD for processing. This is necessary to receive confirmation that the mortgage has been paid off or transferred to the new owner, and that the sale can be completed. There are fees to pay too, with the seller required to pay a transfer fee of 4% of the property’s value to the DLD, as well as proof of identity, including passports, visas and Emirates IDs.

 

Step-by-Step Guide to Selling a Mortgaged Property

1. Obtain the Letter of Liability from the lender. This also allows the seller to calculate the total cost of selling the property, including any fees for early repayment of the outstanding mortgage amount.
2. Clear any outstanding payments – This includes all service and maintenance fees, as well as utility bills.
3. Getting a No Objection Certificate – This is required if the property is part of a development, or if you have an Islamic mortgage. It confirms the developer’s or mortgage lender’s approval for the sale of the property.
4. List the property – Listing is usually done through an agent, who will take extensive notes and photographs of the property, including any information on upgrades, location, and features.
5. Finalising the agreement – Your buyer must understand that they are purchasing a mortgaged property in the UAE and agree to settle the mortgage as part of the process. If this is not the case, then the seller must repay the outstanding mortgage using personal funds before the sale can be completed. The seller must ensure the mortgage release is issued by the lender and processed by the DLD as part of the sale documentation.

 

Once the seller and buyer have agreed on the sale, a Memorandum of Understanding (also known as a Form F) has to be completed. This is a written agreement that clearly outlines the terms and conditions of the sale and is submitted to the DLD for authentication. The form has to be signed by both parties at the Registration Trustee’s Office in front of a witness. At this point, the buyer pays a 10% security deposit, which will be refunded once the transfer is complete.

 

Legal Considerations and Bank Approvals

Selling a property with a mortgage in the UAE entails legal considerations and bank approvals throughout the process. These are crucial to the successful completion of a sale. You must liaise with your lender from the outset, ensuring No Objection Certificates and Letters of Authorisation are issued before you move onto the next step in the chain.

 

Ghaf Woods Property Tips for a Smooth Sale

• Because selling a property with a mortgage in the UAE can be complex, it's crucial to employ the services of a real estate agent who has a thorough understanding of the process.
• Understand your obligations. It’s best to review your mortgage agreement to know exactly what fees you’ll have to pay for an early settlement.
• Get the Liability Letter sorted out early. But bear in mind that it only lasts for 30 days, so you’ll need to time your sale to coincide with the duration of the letter.
• Block the property in the buyer's name. This is done at the DLD, ensuring the buyer can settle the mortgage and preventing 'double-selling'.
• Ensure you have all necessary documents sorted, including title deeds, a liability letter, a Memorandum of Understanding, the NOC from the developer, all fees, and required ID.

 

If you’re planning to sell your home and are looking to move to a Ghaf Woods development, browse our online catalogues or contact us directly and talk to one of our friendly, professional advisors today.