Selling a property in Dubai that is still under mortgage can be challenging, but with the right knowledge and preparation, it can be managed smoothly. The process involves additional steps beyond a typical property sale, ensuring that all parties are protected and that the transaction complies with the legal requirements set by the Dubai Land Department (DLD). This guide provides an overview of the steps involved in selling a mortgaged property in Dubai.
1. Apply for a Liability Letter from the Lender
The first step in selling your mortgaged property is to obtain a liability letter from your lender. This document outlines the outstanding mortgage balance and any fees that need to be settled before the property can be sold. The liability letter is crucial as it informs both the seller and the buyer of the exact amount required to clear the mortgage.
2. Apply for a No Objection Certificate (NOC) from the Developer
Next, the seller must obtain a No Objection Certificate (NOC) from the property developer. The NOC confirms that there are no outstanding payments for service charges or other fees owed to the developer. This document is essential to ensure that the property can be transferred without any encumbrances.
3. Block the Property in the Buyer’s Name
To protect the buyer’s interests, the property must be blocked in the buyer’s name before the mortgage is cleared. This process involves the seller, buyer, and their respective banks visiting a Dubai Land Department (DLD) registration trustee’s office. Blocking the property prevents the seller from selling it to another party while the mortgage is being settled. Required documents include:
- The liability letter from the seller’s bank
- The signed Form F (Memorandum of Understanding)
- The NOC from the developer
- A copy of the title deed
- Cheques for the liability letter amount, the balance purchase price, and the 4% DLD transfer fee
- Original passport, visa, and Emirates ID for both the buyer and seller
4. Obtain a Clearance Letter and the Original Title Deed
Once the buyer has provided the cheque to the seller’s bank, clearing the mortgage, the bank will issue a clearance letter and return the original title deed. The clearance letter confirms that the mortgage has been fully paid, releasing the property from any financial obligations.
5. Transfer the Property in the Buyer’s Name
The final step involves transferring ownership of the property to the buyer. Both parties must visit the DLD registration trustee’s office again to complete this process. At this point, the seller’s mortgage is officially released, and a new title deed is issued in the buyer’s name.
Special Considerations
For Cash Buyers vs. Mortgage Buyers
If the buyer is paying in cash, the process is generally quicker. The mortgage is cleared, and the title deed is transferred directly to the buyer.
If the buyer is also financing the purchase through a mortgage, the process may take longer. The seller’s mortgage is only cleared after the buyer’s bank approves the loan. Additionally, the original title deed will be released to the buyer’s bank instead of directly to the buyer.
Islamic Mortgage Considerations
For properties under Islamic mortgages, sellers must obtain a no objection letter from the bank. This letter confirms that the bank has no objection to the sale and that the mortgage has been paid off. Sellers should be aware that Islamic mortgages may have different terms and conditions, so it’s important to consult with the bank to understand specific requirements.
Conclusion
Selling a mortgaged property in Dubai requires careful planning and adherence to legal procedures to ensure a smooth transaction. The experienced legal professionals at United Advocates have the necessary experience and understanding of the necessary steps—from obtaining a liability letter to transferring ownership—in order for you to assist you in navigating the process confidently.