If you own a property on Al Reem Island that is subject to a mortgage, it is likely that your property now falls within the jurisdiction of the Abu Dhabi Global Market (ADGM). The ADGM Real Property Regulations 2024 (Regulations) provide a clear legal structure for mortgage arrangements, enforcement, and borrower protections. Understanding your rights and obligations as a mortgagor (borrower) is critical, particularly if you are making repayments, planning to refinance, or facing a default situation.
The following outlines the key provisions affecting mortgaged property owners under ADGM law and what they mean for you in practice.
Are you eligible to mortgage your property?
Under ADGM law, property owners may mortgage:
- Real Property such as an Apartment or a Unit;
- A Registered Interest in Real Property, such as registered long-term leasehold interests.
However, you cannot mortgage only a portion of your property (e.g., one room or part of a floor) unless the property is formally subdivided and each section is separately registered. This restriction ensures clarity in ownership and prevents the creation of informal or partial charges.
This blog is a part of our ADGM’s Expansion to Al Reem Island: A Comprehensive Guide for Businesses blogpost.
Is your mortgage legally protected?
For a mortgage to be legally valid and enforceable in ADGM, it must be registered with the ADGM Registrar. A properly registered mortgage must include:
- A description of the property and the mortgagor’s interest in it;
- The amount of the debt or obligation being secured; and
- The maturity or due date for repayment.
If your lender has not registered the mortgage, it holds no legal effect under the Regulations. Property owners should confirm that their mortgage is reflected in the official registry, as unregistered security interests may be unenforceable in court.
Do you retain property ownership after the mortgage is registered?
Yes. Under Article 68 of the Regulations, a mortgage does not transfer ownership of the property to the lender. Rather, it operates as a legal charge, a form of security interest that allows the lender to take enforcement action only in specific circumstances.
As a mortgagor, you retain an equity of redemption, which guarantees your right to:
- Repay the loan in full; and
- Reclaim complete control of the property without restriction.
This right cannot be waived, even by agreement, ensuring that borrowers are not permanently deprived of ownership due to unfair mortgage terms.
What if your mortgage terms are amended?
Over time, you may wish to refinance, restructure, or extend your loan facility. ADGM allows registered mortgages to be varied, provided that:
- The variation is formally registered with the ADGM Registrar; and
- The change does not add or remove any parties (i.e., borrowers or lenders) unless a new mortgage is registered.
If you repay your mortgage in full or in part, your lender is obligated to register a discharge of mortgage. This discharge may:
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- Fully release the property from the lender’s security;
- Partially release certain sections or mortgagors; or
- Indicate that no further obligation remains.
Without a registered discharge, the mortgage may continue to appear on your property title—even if you have completed repayment.
What happens if you fall behind on mortgage payments?
Under Article 72, mortgagees (lenders) are granted rights in the event of borrower default. However, enforcement is not automatic. The lender must first:
- Serve you with a written notice providing 30 calendar days to remedy the default; and
- Notify any guarantors or other parties with registered interests.
If you fail to cure the default within the notice period, the lender may:
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- Sell the mortgaged property;
- Enter into possession and collect rent or income from the property;
- Apply for foreclosure (i.e., assume full ownership through court order).
Special protection for mortgages registered before 1 January 2025
If your mortgage was registered before 1 January 2025 and the property is located on Al Reem Island, the lender must apply to the ADGM Court before taking enforcement action. This requirement offers added procedural protection for borrowers under earlier mortgage arrangements which are registered with Abu Dhabi Municipality (ADM).
Can the property be sold without your consent?
Yes, but only under the following conditions:
- You must be in default of your mortgage obligations;
- You must have received the required 30-day notice to remedy the default; and
- The mortgage must be registered in accordance with ADGM requirements.
Even then, the lender must:
- Act in good faith;
- Take reasonable steps to achieve the market value for the property; and
- Comply with all procedures set out in the Real Property Regulations.
If you believe the sale is premature or unjustified, you can apply to the ADGM Court for an injunction to restrain the sale.
How are the sale proceeds distributed?
In the event that your mortgaged property is sold due to enforcement by the lender, the sale proceeds are distributed in the following priority (Article 76):
- Repayment of any prior registered interests;
- Recovery of the lender’s legal and administrative costs related to the sale;
- Repayment of the principal mortgage debt, including accrued interest and fees;
- Settlement of any subsequent or later mortgage holders; and
- Payment of any remaining balance to you, the property owner.
If there is uncertainty about who is entitled to the funds, the lender may deposit the proceeds with the ADGM Court until a determination is made.
Who is a receiver and when can one be appointed?
If permitted in the mortgage agreement, the lender may apply to the ADGM Court for the appointment of a receiver (Article 77). A receiver is a neutral professional who may:
- Manage, lease, or maintain the property;
- Collect rent on behalf of the mortgagor; and
- Oversee the sale process where appropriate.
The receiver acts as your agent (not the lender’s) and is legally bound to act in accordance with the court’s order and applicable regulations. This is often an alternative to immediate sale or foreclosure.
What is foreclosure?
Foreclosure is a legal remedy that allows a mortgagee to acquire full ownership of the mortgaged property following persistent default.
The mortgagee must:
- File an application with the ADGM Court; and
- Prove that the borrower has defaulted and that legal requirements for enforcement have been met.
Once the court grants an order for foreclosure and it is registered:
- Your title as property owner is extinguished;
- The lender becomes the new registered owner; and
- All later interests are removed (subject to certain protections for leases or overriding interests).
Foreclosure is considered a measure of last resort, and courts typically scrutinise such applications closely.
Can the Bank extend further credit against the same mortgage?
Yes. Article 79 permits “tacking” of further advances. This allows lenders to:
- Extend top-up loans or credit facilities;
- Maintain their priority over newer mortgages, provided certain conditions are met.
This is only allowed where:
- The original mortgage expressly permits further advances; or
- The subsequent lender consents to the arrangement.
This mechanism is particularly useful in revolving credit arrangements, working capital facilities, or long-term financial planning.
Thoughtful Points for Property Owners
- Ensure proper registration: Verify that your mortgage has been registered with ADGM. This is critical for enforceability and future transactions.
- Monitor discharge status: Once your loan is repaid, confirm that the discharge of mortgage has been registered to clear your property title.
- Know your notice rights: If you receive a default notice, understand that you are entitled to a 30-day period to rectify the issue before enforcement may begin.
- Use the court process if needed: If you feel that the lender is taking undue advantage of the mortgage, you have the right to request judicial review and remedies through the ADGM Court.
