Sales progression is often an afterthought when the negotiations are underway and then all of a sudden, you’re ready to process the sale!
So, how do you process the sale of a property in Dubai?
A finance to finance sale progression is a lengthy, time consuming process which can often bring confusion and stress to both parties. It is highly advisable to use the expertise of a sales progression team.
Jess Stephenson, Head of Sales Progression at Allsopp & Allsopp talks us through the steps to transfer a property when both parties have a mortgage.
Step 1. Sign the Paperwork
Once an agreement on the price has been met between the buyer and seller, both parties will sign a Unified Form F and an Agreement of Sale which are binding agreements between the buyer and seller outlining the terms and details of an understanding, including each parties' requirements and responsibilities.
Ideally the buyer will have their pre-approval in place at this stage. This is usually something that sellers will insist on before agreeing to a sale.
Step 2. Property Valuation
After the contracts are signed and the buyers’ pre-approval is in place, the buyer will need to pay for the property to be valued by the bank who is issuing their mortgage. Once this fee has been paid, the bank will instruct the valuation.
Mortgage lenders carry out property valuations to ensure the property is suitable security for a loan and that the market value is enough to cover the mortgage if there is a forced sale.
The bank will instruct a valuation company to carry out the valuation on their behalf. The valuer will need to have access to the property. It is the seller’s responsibility to ensure this access is available. It is not necessary for either party to be at the property valuation, however, the real estate agent will often be present.
The property valuer will then submit a report to the bank including the price they have valued the property at. The bank will then make progress with the final mortgage offer.
Step 3. Final Mortgage Approval
When the mortgage lender has given the go ahead for the mortgage, the buyer will submit a number of documents requested by their bank to get their final mortgage approval.
This process will be revolved around their finances and the bank may ask for credit card statements or other private financial documents.
Depending on circumstances, the bank can take around 7 calendar days to release the mortgage final offer letter.
During this time, if there is no sales progression officer in place, the buyer seller will most likely need to be made aware of the status quo and the processes and timeline.
Step 4. Liability Letter
Once the Final Mortgage Approval letter has been released, the seller can apply for the liability letter from their bank. A liability letter will outline the exact amount of the remaining mortgage owed to the Sellers bank.
The liability letter must include the property details including the plot no and will be addressed to the buyers bank.
The timing here is key! A liability letter can take up to 14 calendar days to be issued and then may only be valid for 7-15 calendar days.
Step 5. Liability Settlement
Once the liability letter is available, the buyer must take this to their bank. The bank will then prepare a managers cheque to pay off the sellers mortgage. The seller may need to be present at the settlement, so this must be clarified before the settlement goes ahead.
The buyer must make sure to take copies of the cheques presented as proof of liability settlement.
Step 6. Clearance Documents
The sellers bank will now release the clearance documents. This could take between 1-4 weeks depending on the circumstances. These include the original title deed, a letter to Dubai Land Department, a letter to the developer, and a letter addressed to the seller.
Each letter will state the same information – that the mortgage is released on the property and the property can be sold.
It is the responsibility of the buyers bank to collect the documents from the seller’s bank. This cannot be done by either the buyer or the seller.
Step 7. NOC
Ensure all your documents are ready and organised to apply for a No Objection Certificate (NOC) from the developer. The NOC is a document from the developer to say that all charges have been settled and they are happy for the property to be sold.
The seller must settle any service charges at least a quarter in advance. These charges will then be reimbursed by the buyer at transfer of the property.
Each developer process can vary slightly and require different documents and may request the presence of both the buyer and seller at the NOC.
Step 8. Transfer
Once the NOC has been received, a copy must be sent to the buyer’s bank for them to book the property transfer date.
It is a good idea for the buyer and seller to calculate how much money they will be giving out and receiving at the transfer to avoid any complications on the day. It is also essential to have all cheques written out before the transfer and double check that all details on the cheques are precise in advance.