Developer instalments and penalties → NOC
A developer will not issue a sale NOC while money is owed on the unit, and late payments add penalties on top. The solution: the buyer's mortgage pays off the developer balance, penalties included, as part of the transaction, after which the developer issues the NOC.
Who it is for
- You are selling a unit with an unpaid developer payment plan
- Penalties have built up and the NOC is on hold
- You are buying such a unit and want to do it safely
How it works
- 01
Statement of account incl. penalties
First, an exact statement from the developer: principal, post-handover balance and all penalties. The deal cannot be structured without it.
- 02
Buyer's mortgage approval
The buyer's bank must know that part of the loan goes to the developer. The balance and penalties are built into the numbers.
- 03
Payment to the developer
At transfer the bank issues a manager's cheque to the developer for the amount owed. The seller receives the rest.
- 04
NOC and transfer
The developer issues the NOC and the transfer is registered at a DLD trustee office.
What to watch
- Penalties keep growing until the balance is cleared, so timing matters for both sides.
- The bank's valuation may come in below the price. The buyer then covers the gap, which should be planned for.
- All figures must reconcile before transfer day: developer balance, seller's cheque and fees.
Documents
- Developer statement of account incl. penalties
- SPA / Oqood
- Buyer's mortgage documents
- Seller's passport
The bank may ask for other documents too.
From practice
Equity release, developer penalties and a low valuation
The buyer refinanced their own mortgaged apartment and used part of the funds for our unit, which had a post-handover balance and penalties with the developer. We had the penalties included in the statement of account.
The bank's valuation came in low: LTV ended up at 50% instead of the expected 60%. The buyer covered the gap with an additional loan. The deal took two and a half months and closed successfully, with every party satisfied.
This information is for guidance only. Final mortgage terms are set by the bank after reviewing your documents.
Other scenarios
- 01Mortgage buyoutMove your mortgage to another bank, or buy a property the seller still has a mortgage on
- 02Final 20/80, 40/60 paymentFinance the final payment to the developer at handover
- 03Non-residentsTerms for non-residents, and how a UAE job changes them
- 04Equity releaseBorrow against your property, even if it is already mortgaged