What is the foreclosure process, and how does it protect lenders?
Dubai foreclosure process is meant to safeguard the rights of the lenders and at the same time offer a systematic way of retrieving the defaulted loans from the borrowers. The following is a brief of the procedure of foreclosure and the rights of the lenders during the process.
Foreclosure Process Overview
- Notification Period: In case a borrower fails to make his or her payments on the mortgage, the lender is supposed to give the borrower a 30 days notice before taking any further action.
- Auction of the Property: Upon the expiry of the notice period the borrower is expected to clear the debt, however if he or she does not, the lender may proceed with selling the property. The auctioning process of these properties is done by the Dubai Land Department (DLD) making sure that everything is in the right manner.
- Legal Proceedings: Foreclosure is a legal process and that is why all the actions taken must conform to the laws and regulations of the area. This entails acquiring a mortgage release from the bank and this would involve filling some forms and paying some charges.
Protections for Lenders
Secured Debt:
Mortgages in Dubai are considered as secured debts in which the property asset is used as a guarantee. This legal framework allows the lenders to get back their money by selling the property in case the borrower fails to meet his or her obligation.
Public Auctions:
The DLD is responsible for the organizing of auctions of foreclosed properties, which enables the lender to sell the property and hence clear the debt. Such auctions are publicized in various forms such as through legal notices and other real estate websites to obtain interested parties.
Legal and Financial Safeguards:
Some of the legal steps that have been put in place to ensure protection of the lenders include the rights that enables one to appoint receivers and rights to vary mortgage under certain circumstances. Also, the money generated from the auction is employed to pay off the mortgage first, hence, ensuring that lenders are paid first in case of debt collection.
The process of foreclosure in Dubai has been systematically designed in such a manner to ensure that the rights of the lenders are well protected and at the same time the borrower gets a chance to come up with a solution to his or her debt. Thus, following the legal procedures and using public auctions, lenders will be able to get back their investments and, therefore, maintain stability and credibility of the mortgage market in Dubai.
Quiz: Understanding the Foreclosure Process in Dubai
Quiz based on content from 95dubai.com