Barclays Wins First Foreclosure Order Since Start of Dubai Freehold Market
DUBAI — Barclays Bank said on Monday that it had won a Dubai court order for foreclosing a mortgage loan and described the landmark verdict as a sign that “the UAE property market is evolving in line with other mature markets.”
In a statement emailed to Khaleej Times, Zeeshan Saleem, Consumer Banking Director, Barclays UAE and GCC, said the second largest British bank had sought to exercise its legal rights “in some cases” in line with recent enactments of property and mortgage laws that safeguard both lenders’ as well as borrowers’ interests.
“The courts decision in Barclays favour strengthens our belief that the UAE property market is evolving in line with other mature markets.” The bank spokesman, however, did not give further details about the outstanding mortgage amount and the borrower.
Under Dubai’s mortgage law issued in August 2008, upon default, the bank must give the borrower 30 days notice through the notary public before commencing execution proceedings. Borrowers have the right to administer mortgaged property and collect its yields and revenue until it is sold at public auction following a default, legal consultants said.
“Dubai has gone through real estate cycles in the past and this is not the first foreclosure in the city,” said Jesse Downs, Director Research & Advisory Services at Landmark Advisory, a property consultancy.
“However, this is a significant event in the latest market cycle. This is the first wave of foreclosures since the freehold market started in Dubai,” she said.
“The foreclosure order is a sign that Dubai’s property market is maturing, and will help develop the mortgage market. Lenders will now have more confidence in mortgage activities. We at Bank of Baroda believe that legal action should be a the last resort,” said Ashok Gupta, Chief executive of Bank of Baroda GCC Operations.
The foreclosure judgment will give confidence and some relief to huge lenders like Barclays if they are able to recover the amount from the buyers of foreclosed properties, said K. K. Sarachandra Bose Partner of Dar Al-Adalah Advocates & Legal Consultants.
“One thing to be kept in mind is that there is no judicial precedence in the civil law system. Each case will be heard by the courts in its own merits, facts and circumstances, and a judgment issued in one case may not be binding on another case,” Bose pointed out.
He said several enactments in respect to real property laws in Dubai after the global recession helped the lenders and developers to come out from the clutches of those defaulting property buyers, particularly those who fled the country.
“Several buyers fled the country as they either lost their jobs or business. They had also issued post-dated cheques to developers. Recently, the Government of Dubai has issued orders to the police and prosecution not to take criminal action on the bounced cheques related to real property matters,” Bose added.
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