Should I pay EMIs in UAE if I lose my job in UAE?
It should be noted that in the UAE, the dishonour of a cheque is a criminal offence.
By Ashish Mehta
Published: Sun 22 Mar 2020, 1:00 PM
Last updated: Sun 5 Apr 2020, 2:24 PM
Q- I am an expat living in the UAE for the last eight years. In 2017, I purchased a two-bedroom apartment in the emirate of Dubai by availing a home loan from a bank. However, in January 2019, I was terminated from my employment due to redundancy and since then, I am unemployed. I have lost all my money and savings and I am not sure as to when I shall be employed again. Further, I am unable to sell the aforesaid property owing to decline in the price of the property by 40 per cent. I do not have enough money to pay the equated monthly installments (EMIs) owed to the bank on the home loan. What options do I have to settle my outstanding amount with the bank?
Pursuant to your query, it may be noted that upon availing a home loan from the bank, you become liable and responsible to pay the installments on a timely basis even if you are not employed. The bank may consider that the repayment of the outstanding amounts on your home loan and your redundancy are two unrelated issues. Hence, regardless of the termination of your previous employment and the inability to find another employment owing to which you have lost all your money and savings and are unable to pay the EMIs on the home loan, it may be noted that you are liable and responsible to repay the home loan. In the event of a default on your part, the bank's claim for outstanding amounts against you shall subsist.
Further, the bank may try to invoke all the conditions for securing repayment of the home loan set forth in the home loan agreement in the event of a default which may include encashment of a security cheque issued by the borrower in favour of the bank against the home loan along with any other securities provided by the borrower. Based on the assumption that at the time of availing the home loan, you had issued a security cheque to the bank, the bank may choose to deposit the said security cheque for collection upon recurring non-repayment of the EMI. Thereafter, in the event of your bank account not having the requisite balance as the cheque amount, the security cheque may be dishonoured.
In continuance, it should be noted that in the UAE, the dishonour of a cheque is a criminal offence. This is in accordance with Article 401 of the Federal Law No. (3) of 1987 related to issuance of the Penal Code, which states:
"Detention or a fine shall be imposed upon anyone who, in bad faith, gives a draft (cheque) without a sufficient and drawable balance or who, after giving a cheque, withdraws all or part of the balance, making the balance insufficient for settlement of the cheque, or if he orders a drawee not to cash a cheque or makes or signs the cheque in a manner that prevents it from being cashed.
The same penalty shall apply to anyone who endorses a cheque in favour of another or gives him a bearer draft, knowing that there is no sufficient balance to honour the cheque or that it is not drawable."
Therefore, it may prudent on your part to approach the bank to negotiate and revise the repayment terms of the home loan until you get employed and have a new source of income. Acceptance of the rescheduling of the loan repayment is at the discretion of the bank.
Know the law
Detention or a fine shall be imposed upon anyone who, in bad faith, gives a draft (cheque) without a sufficient and drawable balance or who, after giving a cheque, withdraws all or part of the balance.
Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: firstname.lastname@example.org or send them to Legal View, Khaleej Times, PO Box 11243, Dubai