Selling a mortgaged property in Dubai

Why a mortgage changes the process

When you bought with a mortgage, your lender registered a charge over the property with DLD. While that charge exists, DLD will not transfer clean title to a new owner. So the loan has to be paid off and the charge released as part of the sale.

That is routine in Dubai. It simply adds paperwork, a second bank (if the buyer is borrowing) and timing risk. Most problems come from starting the bank process too late. For the wider sale sequence, see how to sell property in Dubai.

Step 1: Find out what you owe and what it costs to exit

Before you set a price, ask your bank for an indicative settlement figure. Read your loan agreement for early settlement terms; many Dubai mortgages carry a fee for repaying early, and some have fixed-rate periods with different terms. Ask the bank to confirm in writing how the fee is calculated today.

Knowing your payoff amount tells you the minimum sale price that leaves you whole after the loan, agency fee, NOC fee and any service-charge arrears. If that number is above what the market supports, it is far better to find out now than after Form F is signed. See pricing your property to sell.

Step 2: The liability letter

Once you have a buyer, request a formal liability letter. It states the exact amount required to close the loan, the account to pay it into and how long the figure is valid. Banks usually need a written request from the borrower and may charge a small processing fee; ask yours.

Because the letter expires, time the request so it is still valid on transfer day. If transfer slips, request an updated letter.

Step 3: How the payoff is funded

Cash buyer

The buyer gives a manager's cheque to your bank for the payoff amount, often a few days before transfer, so the bank can release the original documents and issue a clearance letter. The balance of the price is paid to you at the trustee office.

Mortgage buyer

The buyer's bank issues cheques on transfer day: one to your bank to clear your loan, one to you for your equity. Both banks usually send representatives, so scheduling is tighter. This is often called a mortgage-to-mortgage or bank-to-bank transfer.

Seller pays off first

If you have the funds, you can clear the loan yourself before transfer and sell unencumbered. That simplifies transfer day but ties up your cash.

Form F should state which route applies. See Form F MOU explained.

Step 4: Release of the charge and transfer

When the bank receives the payoff, it issues a clearance or release letter and arranges removal of the mortgage registration with DLD, often on the same day as the transfer at the trustee office. DLD then registers the buyer as the new owner and issues the new title deed.

The buyer pays the DLD transfer fee of 4% of the price by custom, plus admin fees; the buyer's bank also has its own mortgage registration costs. Confirm the current fee schedule with DLD or the trustee office.

Common delays and how to avoid them

• Late liability letter. Request it as soon as Form F is signed.
• Low valuation for the buyer's loan. Agree in Form F what happens if the valuation falls short.
• Developer NOC held up by arrears. Clear service charges early. See developer NOC explained.
• Bank appointment availability. With two banks involved, fix the trustee appointment only when both confirm.
• Missing original documents. Your bank holds some originals; confirm what it will release and when.

If you are overseas, appoint an attorney who can deal with your bank and attend transfer, and confirm your bank accepts the power of attorney wording.