There is a new regulation in Dubai that is related to mortgaging granted land in Dubai. So if you are one of those granted land by the government the following information may prove to be very useful for you.
UAE Vice President and Prime Minister His Highness Sheikh Mohammed Bin Rashid Al Maktoum has recently issued Decree No (31) of 2016 on mortgaging land owned by the government and granted to a person or organisation for commercial, industrial or residential purposes.
Under the decree, the beneficiary may mortgage the land to any bank or financial institution registered duly in Dubai. The mortgage is legally binding for all concerned parties if the monies arising from the pledge of the commercial and industrial land will be invested to achieve the purposes of the original grant; if the monies arising from the pledge of the residential land will be invested in maintaining, expanding or replacing the building and the pledge is registered duly as per Law No (14) of 2008 Concerning mortgages in the Emirate of Dubai.
The decree also specified that Dubai Land Department (DLD) will not be registering any mortgage on granted land until all these conditions are met. The new law was welcomed by the DLD and Sultan Butti Bin Mejren, Director General of DLD, viewed the decree as a major legislative initiative having a positive impact on Dubai’s property market.
Bin Mejren said that the decree would assist property developers and land owners in obtaining funding from trusted financial institutions and promote the growth of investments in the realty sector. The decree further answered many questions of investors and gave DLD further mechanisms to properly regulate the property market, he added.
As for the real estate properties granted to government-owned entities, the decree states that the land may be mortgaged unconditionally if the government or its subsidiaries own over 50% of the entity’s capital. The real estate granted to property developers will be considered freehold and could be mortgaged unconditionally and with discretion.
The decree makes the Civil Court as the entity responsible for settling any disputes related to the mortgage. In instances where the mortgagor defaults on the granted residential land, the land can only be sold if an approval is obtained from the Board of the Mohammed Bin Rashid Housing Establishment.