Dubai mortgages: When can banks repossess homes for missed loan payments?

Question: I am planning to buy a house in Dubai through a mortgage, but I am still exploring the idea and would like to understand the risks involved. Under what circumstances could I lose the property if I am unable to keep up with the mortgage instalments? Is there usually a grace or leniency period before legal action is taken? What options would a buyer have if they start facing difficulty with repayments? 

Answer: Pursuant to your queries, the provisions of Dubai mortgage law and the provisions of the UAE civil transactions law are applicable.

In Dubai, if a mortgagor (borrower) defaults in repaying a mortgage loan to a mortgagee (bank/financial institution), a mortgagee may commence the sale of a mortgaged property upon serving 30 days of notice through a Notary Public to a mortgagor (borrower). This is in accordance with Article 25 of the Law No. 14 of 2008.

Concerning mortgage in Dubai (the ‘Dubai Mortgage Law’), which states, “In the event of default in the payment of a debt or upon fulfilment of a condition under which early repayment of debt is required the creditor-mortgagee or his universal or particular successor may commence foreclosure and forced sale procedures against the mortgaged real property, provided that the debtor or the person who has possession of the mortgaged real property or real property unit is served at least a thirty-days notice through a notary public.”

If a mortgagor (borrower) fails to repay a mortgage debt within a prescribed period, a mortgagee (bank/financial institution) may apply to an enforcement court for an order to seize and sell a mortgaged property through a public auction in accordance with applicable procedures of the Dubai Land Department.

This is in accordance with Article 26 of the Dubai Mortgage Law, which states, “If a debtor-mortgagor, his universal or particular successor, or a real surety fails to pay the debt within the period stipulated in the  preceding Article (Article 25 of Dubai Mortgage Law), the enforcement judge shall, upon request of the creditor-mortgagee, issue an attachment order against the mortgaged real property in order to sell it by public auction in accordance with the applicable procedures of the Dubai Land Department.”

However, a mortgagor (borrower) or a person who has provided a property as security for the mortgage may request the enforcement court to delay the public auction of the mortgaged property. The enforcement court may grant this request only once and for a maximum period of 60 days, provided the court is satisfied that either:

1. the mortgagor (borrower) is likely to repay the outstanding mortgage debt within the additional 60-day period; or

2. an immediate sale of the mortgaged property would cause the mortgagor (borrower) significant financial loss.

If these conditions are met, the enforcement court has the discretion to grant a one-time grace period before allowing the sale of a property to proceed by public auction. This is in accordance with Article 27 of the Dubai Mortgage Law.

Further, in the event a mortgagor (borrower) does not repay the balance mortgage loan to a mortgagee (bank/financial institution), then based on the judgement passed by a court, the mortgaged property will be sold in an auction conducted by concerned auctioning authority within the grace period. This is in accordance with Article 28 of the Dubai Mortgage Law.

“Subject to Articles (25), (26), and (27) of this law, in case of failure to repay the debt within the specified period, the mortgaged real property will be sold by public auction in accordance with the applicable procedures of the DLD no later than 30 days from the date of expiry of the period stipulated in the relevant Article.”

Further, Article 1327 of the Federal Decree by Law No. (25) of 2025 Promulgating the Civil Transactions Law (the ‘UAE Civil Transaction Law’) states that:

“A mortgagee secured by a mortgage may initiate foreclosure proceedings and the sale of the mortgaged immovable if the debt is not paid upon maturity, after notifying the debtor and the possessor of the property, and after taking the legal procedures before the competent court in accordance with the applicable legislation.”

Based on the aforementioned provisions of Dubai Mortgage Law and UAE Civil Transactions Law, if you as a mortgagor (borrower) fail to repay the mortgage loan to the mortgagee (bank/financial institution), then the mortgagee (bank/financial institution) may file a case at the Dubai Court to sell your mortgaged house through a public auction conducted by any auctioning authority.

You may avail further independent legal advice from a legal counsel in the UAE.

Applicable laws:

• Law No. 14 of 2008 Concerning Mortgage in the Emirate of Dubai

• Federal Decree by Law No. (25) of 2025 Promulgating the Civil Transactions Law

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, media, PO Box 11243, Dubai.

Disclaimer: The information provided above is intended for general guidance and does not constitute legal advice. It is recommended to seek formal legal counsel.