UAE Law and Practice Contributed by: Duncan Pickering, Nicola de Sylva, Sean Cope and Marta Almeida, DLA Piper Middle East LLP
3.6 Formalities When a Borrower Is in Default A lender is entitled to satisfaction of the debt from the mortgaged property when the debt falls due, provided that the mortgage has been prop - erly registered. Upon a default in payment by the borrower, and provided that the mortgage has been registered, the lender must give 30 days’ notice to the debtor by registered mail (Abu Dhabi) or through a nota - ry public (Dubai) before commencing execution proceedings. If the payment is not made within such 30-day period, the magistrate of summary justice (in Abu Dhabi) or the execution judge (Dubai) shall, at the request of the lender, order an attachment against the mortgaged property and shall, at the request of the lender, issue a decision enabling the mortgaged property to be sold at public auction. The court may postpone the sale of the property by public auction for a period of up to 60 days if it is of the opinion that the mortgagor may be able to settle the debt within this period, or that the sale of the property would cause “serious damage” (Abu Dhabi) or “substantial damage” (Dubai) to the mortgagor. If the real estate is insufficient to satisfy the debt, the mortgagee may have recourse against the mortgagor’s other assets as an ordinary creditor. The mortgagee must follow the statutory proce - dure, and provisions in the mortgage document attempting to circumvent this procedure would be held to be void. 3.7 Subordinating Existing Debt to Newly Created Debt If a security interest is required to be registered, the date of registration determines its ranking. If it is not registrable, it will rank in order of the date
• restrictions or measures designed to counter - act money laundering and/or the funding of terrorist activities; and • transactions involving certain sanctioned countries or blacklisted entities. The UAE Central Bank may impose additional restrictions. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security There are no specific taxes that would apply in the UAE; however, the following fees are payable in relation to granting and enforcing security over real estate: • a bank property valuation fee; • notarial fees; • a mortgage registration fee; • notarial fees to give notice of default (Dubai); • a publication fee and a public auction fee if a secured asset is sold by public auction; and • court fees for enforcement of a security inter - est. 3.5 Legal Requirements Before an Entity Can Give Valid Security It is not possible for a commercial company, or any of its subsidiaries, to provide any financial aid (such as loans, security or guarantees) that will assist a buyer in acquiring its shares. Prior to the issuance of the Federal Decree Law No (32) of 2021 on Commercial Companies, the UAE Ministry of Economy issued guidance by way of Ministerial Resolution No (272) of 2016 confirming that limited liability companies are exempt from such restrictions. In any event, as a matter of good practice, all companies would be advised to demonstrate that there is a cor - porate benefit to the company from granting any security.
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