What happens if you don’t pay off your property debt in the UAE
At different points of our lives, for a variety of reasons, we may need loans to move ahead in life. Property loans are common as people strive to buy or build their dream home. Especially, in a country like the UAE, where there is a huge population of expats, who don’t inherit properties from their parents. But what happens if you don’t pay off your property debt in the UAE?
If you are also pondering about this question, read on as we list down the possible repercussions of leaving a debt behind in the UAE.
WHAT HAPPENS IF YOU DON’T PAY OFF YOUR PROPERTY DEBT IN THE UAE: THE POSSIBLE REPERCUSSIONS
The government of the UAE enforces rules and regulations which protect the rights of all the stakeholders involved in the real estate market. In a case of a loan, the rights of both the lender and the borrower have to be protected.
Therefore, the answer to the question, what happens if you don’t pay back your loans in the UAE is two-fold. First, we can look at the things that happen after leaving a property debt behind in the UAE or even if you are still in the country, in terms of legal consequences.
LEGAL CONSEQUENCES
The creditor may take the case to court. Here is what you can expect in such a scenario.
POTENTIAL ARREST
Would one be arrested for failing to pay back debt in the UAE? This was the case until recently. However, a landmark judgement by the Court of Cassation has changed the landscape. Now, to get the person arrested, the creditor has to prove in court that the debtor has sufficient wealth to make the repayment but is failing to do so.
CASE AGAINST THE MORTGAGED PROPERTY
The lender can file a case against the mortgaged property. Depending on the initial agreement, the mortgaged property may serve as a security for the bank in case of failure to pay back the loan. This means that the property could be taken over and sold to recover the money.
Article 25 of the Mortgage law number 14 of the Emirates of Dubai is relevant in such cases.
“The Mortgagee and its universal and private successors may commence procedures to expropriate and sell the Mortgaged property in case the debt is not settled on date, or if a condition that the due date shall fall prior to the elapse of this period accrues, provided that the debtor or the possessor of the Mortgaged property/unit is served a notarial notice within a period not exceeding thirty (30) days.”
A TRAVEL BAN
What happens if you don’t pay off your property debt in the UAE? Well, the bank could file a case in the court, which can lead to a travel ban. You will not be able to leave the country until you clear your dues.
FINANCIAL PENALTY
Failure to pay could also mean you may end up paying extra in interest rate and penalties. The court will decide the amount of penalty you will have to pay, depending on your case and circumstances.
For further details regarding legal consequences, read our guide on punishment for not paying back a loan in the UAE.
PRIOR ACTIONS BY THE CREDITOR
Before the case goes to court, there are other alternative measures a creditor may take to push the borrower to pay back.
DEBT COLLECTION AGENCIES
What happens if you don’t pay off your property debt in the UAE? Well, one of the initial steps is for the bank to hire debt collection agencies, who can be on your case quite persistently. They can reach you at your home or the work place and that might not be a pleasant exchange. Even if you are unable to pay right away, the solution is usually to have a discussion and bring about an amicable agreement between all parties.
NEGATIVE IMPACT ON CREDIT SCORE
Not paying back your loan will negatively impact your credit score. This will lead to a multitude of problems, including denial or temporary prohibition of any further loans.
FAQS ABOUT WHAT HAPPENS IF YOU DON’T PAY OFF YOUR PROPERTY DEBT IN THE UAE
WHAT HAPPENS IF YOU LEAVE THE UAE WITHOUT PAYING OFF DEBT?
As discussed, one may face a travel ban, a financial penalty and/or the mortgaged property may be taken over by the bank.
HOW CAN I APPLY FOR HOME LOANS IN THE UAE?
Planning to take out a home loan? Read our guide to home loans in the UAE to get clarity about the subject.
WHAT TYPES OF MORTGAGES CAN I APPLY FOR IN DUBAI?
Read our guide to the different types of mortgages in Dubai to learn about the options you may have.
So, now you know what happens if you don’t pay off your property debt in the UAE. The most feasible course of action generally is to sit across the table with your lender and find a suitable solution. Often banks can come up with a workable plan depending upon your situation.
