Wednesday, May 25, 2011

Dubai records its first sale of foreclosed property

Dubai has witnessed the sale of its first foreclosed property this week. Barclays Plc bagged the first foreclosure in Dubai last year, and has successfully sold a property at a public auction recently held by the Dubai Land Department (DLD).

The Barclays spokesperson, pointing out to Dubai's Mortgage Law No.14 of 2008 of Emirate of Dubai, mentioned that this is an important piece of legislation for development of real estate sector in Dubai.

The foreclosed property is a villa in the Springs Community. The villa was unveiled for auction last month at a reserve price of Dh.1mn by the Land Department. It is said to have been sold for Dh.1.22mn.

According to various sources, there are nearly 200 foreclosure cases that are now being handled by Dubai Courts and the numbers are likely to grow.

As per the Mortgage Law No.14 in Dubai, in case of default of a loan, the bank should give a 30-day notice to the borrower through the notary public before beginning execution proceedings. The judge, on reviewing the case, may issue a debt judgement, which may require the property to be handed over to the Dubai Land Department for auction. During this period, the creditors are permitted to administer mortgaged property and collect its revenue until it is sold at public auction.

However, a leading law firm in Dubai, in their latest newsletter, reported that although the Mortgage Law has been effective for three years now, its effectiveness and application is yet to be watched, as the Dubai real estate market is still fairly depressed.

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