RERA Mortgage & Finance in Dubai Real Estate 2 — Questions and Answers
Question 1: Before selling a mortgaged property in Dubai, what must the seller typically obtain from the mortgage lender?
- Ejari certificate
- No Objection Certificate (NOC) (Correct answer)
- Title deed clearance form
- DLD approval letter
Correct answer: No Objection Certificate (NOC)
The mortgage lender must issue a No Objection Certificate (NOC) confirming settlement or transfer arrangements before a mortgaged property can be transferred.
Question 2: Which Islamic finance structure involves the bank purchasing the property and reselling it to the buyer at a marked-up price paid in installments?
- Ijara
- Diminishing Musharaka
- Murabaha (Correct answer)
- Wakala
Correct answer: Murabaha
Murabaha is a cost-plus financing structure where the bank purchases the asset and resells it to the buyer at a declared profit margin payable in installments.
Question 3: A UAE national is purchasing their first property valued at AED 8 million. What is the maximum mortgage amount the bank can offer?
- AED 5,600,000 (Correct answer)
- AED 6,000,000
- AED 6,400,000
- AED 7,200,000
Correct answer: AED 5,600,000
For UAE nationals buying a first property valued above AED 5 million, the maximum LTV is 70%, so 70% of AED 8 million equals AED 5,600,000.
Question 4: If a mortgaged property buyer defaults in Dubai, what is the bank's legal remedy under UAE law?
- Immediately seize the property
- File a complaint with RERA
- Initiate court proceedings to foreclose (Correct answer)
- Contact DLD to cancel the title deed directly
Correct answer: Initiate court proceedings to foreclose
Under UAE law, banks must initiate foreclosure through court proceedings and cannot unilaterally seize mortgaged property without a court order.
Question 5: What is the Ijara structure used in Islamic mortgage finance in Dubai?
- Co-ownership with gradual equity purchase
- A lease-to-own arrangement (Correct answer)
- A cost-plus sale arrangement
- A profit-sharing investment partnership
Correct answer: A lease-to-own arrangement
Ijara is an Islamic lease-to-own structure where the bank purchases the property, leases it to the client, and transfers ownership at the end of the agreed lease term.
Question 6: Which federal UAE law specifically governs the creation, registration, and enforcement of mortgage transactions on real property?
- Law No. 7 of 2006
- Federal Law No. 14 of 2008 (Correct answer)
- Law No. 26 of 2007
- Cabinet Resolution No. 13 of 2008
Correct answer: Federal Law No. 14 of 2008
Federal Law No. 14 of 2008 (the UAE Mortgage Law) provides the unified legal framework for property mortgages including creation, registration, and enforcement across the UAE.
Question 7: A non-UAE national purchases an off-plan apartment in Dubai for AED 2 million. What is the maximum mortgage amount the bank can provide?
- AED 1,000,000 (Correct answer)
- AED 1,200,000
- AED 1,400,000
- AED 1,500,000
Correct answer: AED 1,000,000
Off-plan properties are subject to a 50% maximum LTV regardless of buyer nationality, capping the loan at AED 1,000,000 for a AED 2 million purchase.
RERA Mortgage & Finance in Dubai Real Estate 2
Before selling a mortgaged property in Dubai, what must the seller typically obtain from the mortgage lender?