UAE court grants landowner permission to develop project amid mortgage dispute with bank

In its final ruling, the court mandated the issuance of the required permit approvals to the municipality, provided the development aligns with zoning guidelines

A Staff Reporter

Published: Sat 16 Nov 2024, 12:55 PM

Last updated: Sat 16 Nov 2024, 1:36 PM

A UAE court has ruled in favour of the complainant in a complex mortgage and construction rights case involving a local bank, delivering a decisive win after a three-month legal battle.

The ruling from Al Ain’s Court of First Instance, the Commercial Circuit, mandates that a local bank headquartered in Abu Dhabi and the Urban Planning Department of the Abu Dhabi Municipality facilitate the businessman’s right to proceed with his project, overturning the bank’s previous resistance.

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The dispute centres on the complainant’s efforts to develop an investment project on his 6,426-square-foot plot in Al Ain’s Al Muwaiji area.

In April 2018, the businessman secured the land with a mortgage, intending to add new buildings and increase its value.

However, despite meeting contractual and regulatory requirements, the bank declined to provide the necessary endorsement to the municipality to approve construction permits.

This refusal effectively stalled the businessman’s project, resulting in substantial financial setbacks.

After failed attempts at resolution, he filed a claim on August 13, 2024, seeking compensation for the loss, amounting to Dh100,000, along with the issuance of approvals to move forward with the project.

Dr Hassan Elhais, legal consultant at Awatif Mohammad Shoqi Advocates & Legal Consultancy, representing the complainant, said that the bank’s refusal was unjustified and in breach of contractual obligations, especially given that he had already submitted a feasibility study affirming the viability of the project.

During legal proceedings, the court assessed detailed records, feasibility reports, and legal arguments regarding the bank’s obligations under UAE mortgage laws.

In its final ruling, issued on October 31, 2024, the court mandated the issuance of the required permit approvals to the municipality, provided the development aligns with zoning guidelines.

“The ruling is a significant step in protecting the rights of landowners within mortgage structures,” said Dr Elhais.

“This case underscores the legal support available to investors in the UAE, ensuring that financial institutions adhere to contractual commitments, especially when they impact property development rights,” he stated.

The verdict is subject to appeal before November 30.

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